A ruling by the Court of Justice of the European Union (CJEU) on 30 April declared that shifting full foreign exchange risk onto borrowers without clear prior information constitutes an unfair contractual term, potentially rendering such agreements void, according to bne IntelliNews.
The decision obliges Hungarian courts to revisit past cases, sparking fears of a legal cascade that could destabilise the country’s financial sector.
The verdict, which centres on a 2007 Swiss franc-denominated car leasing contract, is hailed as the most favourable ruling for borrowers in Hungary’s decade-long forex loan crisis. If enforced broadly, it could invalidate thousands of consumer loan and leasing agreements, compelling lenders to restore borrowers to their original financial positions before signing such contracts.
Prior to the 2008 global financial crisis, Swiss franc loans dominated Hungary’s retail lending market, offering rates 5-7 percentage points lower than forint-based alternatives. However, as the forint plummeted during market turmoil, repayments skyrocketed, plunging households into financial distress.
At its peak, 62% of Hungarian mortgages were forex-denominated, primarily in Swiss francs, with non-performing loans (NPLs) surging to 25%.
The CJEU emphasised that contracts imposing exchange rate risk on consumers without adequate disclosure are invalid in their entirety if they cannot function without the unfair clause. Simply removing the problematic term—as permitted under Hungarian law—is insufficient. Borrowers must be reimbursed as though the contract never existed, a requirement that could force systemic financial restitution.
Hungary’s National Economy Minister, Marton Nagy, distanced the government from intervention, stating the matter is “now for the courts” following the presentation of the 2026 budget bill. He underscored that courts must determine whether banks adequately disclosed exchange rate risks, urging the Kuria (Hungary’s supreme court) to reopen closed cases.
The National Bank of Hungary declined to comment, affirming respect for judicial rulings. The Kuria echoed this, noting CJEU decisions are “acknowledged and upheld” by relevant chambers.
