September 2023

Judgment of the Athens Single-Member Court of First Instance on the Usurious Interest Rate in a Leasing Contract

The decision No. 5147/2023 of the Athens Court of First Instance was issued, suspending the enforcement proceedings against our client for a part of a total alleged claim of approximately €1,000,000. The latter presumed that the cheque communicated by a leasing company under special liquidation is invalid as based on an invalid payment order, in the absence of a settled monetary claim following the inclusion of illegal extra-banking default interest in the amount awarded. The illegal application of late payment interest made the claim uncleared, as the payments made by the alleged debtor were also charged to cover illegal funds, which also affected the provability of the claim in the documents of the collecting agency. In particular, according to the relevant ground of objection, which was presumed to be well-founded, leasing companies, as financial institutions in general (pursuant to Article 4(4) of Law 4261/2014), are required to apply the legislation on credit institutions with regard to the amount of interest and the general interest rate and other charges on loans or other credits granted by them. Thus, leasing companies must also comply with the PTE (Act of the Governor of the Bank of Greece) 2393/15.7. 1996, according to which 'The default interest rate applied by credit institutions operating in Greece on loans in drachmas or in foreign currency, concluded or renewed from 1 August 1996 onwards, may not exceed the interest rate on outstanding debt provided for in the relevant contract by more than 2,5 percentage points (2,5 %) per annum'. The application of an extra-banking rate, which in the contract at issue is calculated at twice the contractual rate of 2,50 %, therefore renders the latter illegal and usurious. This practice by leasing companies may also give rise to criminal liability for usury against their representatives.