In the case of Dexia Nederland BV v XXX and Z , the Court of Justice of the European Union (CJEU) gave judgment in two cases relating to the provisions of The Unfair Contract Terms Directive (93/13/EEC).
The directive provides that a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations, to the detriment of the customer. The questions asked of the CJEU were:
- (1) should the directive regard a term as unfair where there was a mere possibility, rather than a certainty, of causing a significant imbalance; and
- (2) can the user of an unfair term, which has been declared void, claim legal compensation under supplementary national law as an alternative method of recovery.
In answering question (1) the CJEU held that the directive must mean that a term in a risk-weighted contract (such as the share leasing agreement in that case) must be unfair even though that imbalance could only arise if certain circumstances were to take place. It was for the national court to determine whether a term that fixed, in advance, the advantage to a seller or supplier was likely to cause an imbalance. The fact that there was only a possibility of an imbalance did not alter that position.
In answering question (2) the CJEU held that where a national court finds that an unfair term is void, it cannot modify that contract by revising the offending term, so long as the contract itself can survive the voiding of the term. To be allowed to revise the unfair term and implement supplementary national law in order to provide compensation by another method would undermine the objective of the directive.