- 20 Dec 2013 8:00 AM
In its much awaited decision, the Kúria decided FX contracts are to be considered valid even if some points in the contracts are judged void, and said that currency exchange risks should be borne by the debtors. However, the judges referred the question of whether banks were entitled to unilaterally modify contracts, to the European Court. In the wake of the announcement, the Hungarian currency picked up slightly.
The Banking Association welcomed the decision while the National Bank, as well as debtor organizations and a pro-government civic organization expressed their disappointment, as did Fidesz floor leader Antal Rogán and three opposition parties – MSZP, LMP and Jobbik. The government has been grappling with the FX mortgage crisis for several years.
In her angry Magyar Nemzet editorial, Anna Szabó calls the ruling “an unfair decision based on half-truths” which clearly shows that the Kúria sided with banks while “cowardly avoiding tough issues such as the unilateral modification of contracts”. They should have acted with more courage, she writes, “not only because society wants them to, but also because this is their job”. With scathing irony, she agrees with the judges on one single point: that the Kúria (as its spokesman said) is unable to solve social and economic issues.
By passing on the hot potato of unilateral modification of contracts to the European Court, the Kúria in effect said that struggling mortgage holders can wait, as “for the time being only 50-55 per cent cannot pay in time”. Meanwhile, she adds, “the real perpetrators” live the good life, with the former National Bank chief “driving his golden Mercedes in the Buda hills”, one of his former deputies “cursing in the foreign press” and the former head of the Financial Authority honoured with a government medal.
Népszabadság’s editorial claims it is too early for banks and analysts to celebrate, but debtors associations and Antal Rogán should also wait before protesting. The most important question, they say, in agreement with Magyar Nemzet, is still open: is the unilateral modification of contracts acceptable and fair? The decision made by the court, they argue, is exactly what the present government needs. If the reason for raising interest rates is not explained in a transparent enough manner, it can be deemed unfair and if it is unfair, it may be void.
The real reason the government asked the Kúria for a decision is to have the opportunity to intervene – if hundreds of thousands of modified contracts prove invalid, that is exactly the scenario where government intervention is needed, they claim. PM Orbán needed a weapon, Népszabadság concludes, and he may still get hold of it.
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