April 2021

Decision of the Athens Court of First Instance on the Recognition of the Invalidity of an Interest Term in a Credit Agreement

The decision of the Athens Court of First Instance No. 3312/2020 has been published, according to which an abusive interest rate determination clause in a credit agreement was deemed to be abusive. Specifically, the Court held that the contested term for determining the interest rate on a loan was not compatible with consumer protection law and in particular with the principle of transparency. That was because it left it solely to the bank to change the interest rate at will by means of a simple publication in the press, without linking that change to any predetermined criteria known in advance to the borrower. In particular, a crucial passage from the decision is reproduced below: 'That provision is held to be invalid as being abusive, first, in so far as it provides for unreasonable criteria for the adjustment of the applicable interest rate, since it follows from its content that the bank's decision to that effect, taken without the influence of reasonable criteria for a change in the contractual interest rate provided for in advance, is sufficient, such as 'the risk assumed by the holder', 'general product risk', 'market and competitive conditions', always combined with the condition of a change in the European Central Bank's main intervention rate, as shown in the above-mentioned major point (I6).

(For more on this issue, see here).