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EC: Slovak courts do not protect citizens from unfair loans

The European Commission is criticising Slovakia for not protecting the rights of its citizens against loans proffered under unfair condition. When judges consider property seizures, they do not automatically check whether the loan contract was fair, only doing so if the debtor files for such a motion. Sometimes, a flat or a house can be seized for debts of no more than several hundred euros.

The European Commission is criticising Slovakia for not protecting the rights of its citizens against loans proffered under unfair condition. When judges consider property seizures, they do not automatically check whether the loan contract was fair, only doing so if the debtor files for such a motion. Sometimes, a flat or a house can be seized for debts of no more than several hundred euros.

European Commissioner for Justice Viviane Reding said state bodies apply European-wide rules while not being able to protect consumers from vast bypassing of legal norms – and thus deprive them of the protection rendered by the law of the European Union. She opined that judges should check on the fairness of contracts automatically. Brussels has sent a 30-page letter to the Slovak government outlining concerns, the Sme daily wrote in its Thursday, August 1, issue. This letter is the first phase of proceeding that tries to make EU countries respect European law. If carried to the end a lawsuit at the European Court of Justice and a fine follows.

Reding said that loan companies avoid fair contracts and sometimes force people to accept decisions by private arbitration courts, which tend advantage lenders. The rules of such proceedings are often unclear. State courts are being bypassed. While the state admits some flaws, Justice Minister Tomáš Borec denies there is a systemic failing of courts. It seems that it was the cases of a single company, Pohotovosť, that drew EU attention to this issue. Pohotovosť was also excluded from the Association of Consumer Loan Companies.

The EC also worries that enforcement remains a problem in Slovakia. After a court or committee finds a contract’s conditions unfair, it continues to be used. Reding also claims in her letter that the Supreme Court does nothing to improve the issue, as its verdicts give no clue for lower-instance courts as to whether check automatically the fairness of contract conditions. Štefan Harabin, chair of the SC reacted, told Sme, that judges are independent and thus cannot bear any responsibility for verdicts of other judges.

(Source: Sme)
Compiled by Zuzana Vilikovská from press reports
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