THE EUROPEAN COURT OF JUSTICE HAS RULED: MILLIONS OF LOAN AGREEMENTS REVOCABLE

In its judg­ment of Septem­ber 9, 2021, the European Court of Justice ruled that al­most every loan agree­ment is re­voc­able even years after it was con­cluded due to in­suf­fi­cient man­dat­ory dis­clos­ures. The CJEU thus fol­lowed the view that in­suf­fi­cient in­form­a­tion was provided in many private loan agree­ments. This ex­er­cise of the so-​called “per­petual right of re­voc­a­tion” has the con­sequence that both the loan agree­ment and the ac­tual pur­chase agree­ment are re­versed and the con­sumer re­ceives his money back in re­turn for the re­turn of the ob­ject of purchase.

Us­ing the ex­ample of a car loan, it im­me­di­ately be­comes clear the enorm­ous op­por­tun­ity this of­fers con­sumers: It is noth­ing less than the pos­sib­il­ity of be­ing able to re­turn their vehicle without loss, ir­re­spect­ive of the diesel scan­dal, if the pur­chase was fin­anced via a loan!

FAR-REACHING IMPLICATIONS, NOT ONLY FOR CAR LOAN AGREEMENTS

In gen­eral, it can be said that the CJEU’s de­cision could al­low con­sumers to exit a fin­an­cing agree­ment early and thus gain an im­mense fin­an­cial ad­vant­age. The banks are now threatened with a huge wave of re­voc­a­tions, not only for car loans, but in prin­ciple for any fin­anced con­sumer goods.

Al­though the cases un­der­ly­ing the re­fer­ral or­ders are ac­tu­ally pur­chases of vehicles af­fected by the emis­sions scan­dal that were fin­anced via Volk­swa­gen Bank GmbH, the CJEU re­fer­ral af­fects any fin­anced pur­chase, no mat­ter how large (home theater sys­tem, wash­ing ma­chine) or small (cell phone) it may be.

Con­sumers should there­fore find out now what a pos­sible course of ac­tion might look like in their spe­cific case.

FAULTY WORDING: ALMOST ALL CONSUMER LOAN AGREEMENTS AFFECTED

The word­ing used by Volk­swa­gen Bank GmbH in its loan agree­ments can be found in vari­ous for­mu­la­tions in al­most every con­sumer loan agree­ment con­cluded in Ger­many between June 11, 2010 and today.

With the de­cision of the Ravens­burg Re­gional Court to sub­mit the for­mu­la­tions used to the CJEU for re­view, banks are now fa­cing a re­newed wave of re­voc­a­tions. As re­cently as Novem­ber 2019, a rul­ing by the Ger­man Fed­eral Su­preme Court (BGH) made it look, at least in part, as if “late” re­voc­a­tions could be aver­ted with the legal ar­gu­ment of for­feit­ure or ab­use of the right of revocation.

PREVIOUS RULINGS OF THE BGH: CONSUMER UNFRIENDLY

Spe­cific­ally, on Novem­ber 5, 2019, the Fed­eral Court of Justice (BGH) had re­jec­ted the ap­peals of two car buy­ers and ruled that con­sumers can­not re­voke their car loans years after the con­clu­sion of the con­tract (rul­ing of Novem­ber 5, 2019, XI ZR 650/18 and XI ZR 11/19). Al­though this rul­ing only re­ferred to the con­tract forms ex­amined in de­tail (BMW Bank, Ford Bank), it was nev­er­the­less a deeply consumer-​unfriendly rul­ing and weakened the legal po­s­i­tion of consumers.

As part of its decision-​making pro­cess, the CJEU, which is con­sidered to be consumer-​friendly, has now also ad­dressed the BGH case law and provided legal cer­tainty. With the ECJ’s de­cision, it is now clear that the BGH ruled con­trary to European re­quire­ments last year. Mil­lions of con­sumers could then be­ne­fit massively fin­an­cially from a consumer-​friendly de­cision by re­vok­ing their loan agreements.

PERPETUAL RIGHT OF REVOCATION: THE UNLIMITED RIGHT OF REVOCATION FOR CONSUMERS

If, in the case of con­tracts con­cluded after June 11, 2010, the fin­an­cing bank has used in­cor­rect re­voc­a­tion in­form­a­tion or has omit­ted man­dat­ory in­form­a­tion re­quired by law, (car) buy­ers can still re­voke and re­verse the con­tract after the 14-​day re­voc­a­tion period has ex­pired, even after years! The con­sumer is then en­titled to the so-​called “per­petual right of with­drawal”, be­cause the period had never be­gun to run.

In par­tic­u­lar, many con­sumers fin­ance the pur­chase of a vehicle through a car loan. Very of­ten, the con­veni­ent of­fer of the car man­u­fac­turer to handle the fin­an­cing dir­ectly through the in-​house bank is used. But un­like most other con­sumer loans, this adds a spe­cial fea­ture to the car loan: the selling car deal­er­ship be­comes the in­ter­me­di­ary for the loan, be­cause it pre­pares the con­tract, uses the forms provided by the bank for this pur­pose, and ul­ti­mately con­cludes it. Through this in­volve­ment of the seller, a loan re­voc­a­tion then also has the ef­fect that the car buyer is no longer bound to the vehicle to be financed.

Re­vok­ing the loan thus of­fers the chance to get rid not only of the car fin­an­cing alone, but also of the car it­self. In this case, the vehicle goes to the bank, fur­ther in­stall­ment pay­ments by the bor­rower no longer ap­ply, the bank must re­fund all in­stall­ments already paid and any spe­cial pay­ments, and no com­pens­a­tion for use must be paid. How­ever, the bank re­tains the con­trac­tu­ally agreed interest.