Hungary’s top court to take legal uniformity decision on FX loans

By bne IntelliNews November 26, 2013

Hungary’s supreme court, the Kuria, agreed on Nov 22 to launch a legal uniformity procedure on questions about the validity of FX-denominated loans, reads a motion published on the court’s website on Nov 25.

The judiciary aims to propose a standard procedure for courts handling lawsuits brought against banks by troubled FX borrowers.

The court aims to determine whether FX loans are foreign currency loans or forint loans and to determine their validity. It aims to oblige banks to provide borrowers with information for the legal consequences of failing to meet these obligations.

The motion also targets to define the legal measures courts may take if the FX contracts are found to be fully or partly invalid, and to determine when unilateral changes to contracts meet transparency requirements.

The Kuria is expected to discuss the standard procedure on Dec 16.

The supreme court’s ruling is expected to serve as a basis of the government’s FX borrower assistance scheme. Hungary’s authorities aimed to phase out FX mortgage loans in few years in order to ease the burden on borrowers.

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