Upstract Image1

Related Practice Areas

Related Practice Areas

Upstract Image2

Related Industry Sectors

Related Industry Sectors

Share

The Larnaca District Court issued a decision in lawsuit no. 589/13 dated 29/10/2021, in which amongst others, the Court dealt with allegations of the existence of abusive clauses in the disputed loan agreement as it involved a loan in a foreign currency and specifically in the Swiss Francs.

The Court, rejecting the allegations regarding the existence of abusive clauses, stated that in order for them to be examined by the Court, a general reference of relevant allegation in the defense is not sufficient. However, the Court examined the substance of the allegation of not providing an explanation of the foreign exchange risk by the credit institution to the primary debtors, rejecting it, based on its finding in the testimony presented by the credit institution, and in particular the following:

  1. The status of primary debtors. In this case, the primary debtors were an accountant and a chartered surveyor and, therefore, due to their professions, they knew about the existence of foreign exchange risks.
  2. A competent officer of the credit institution had contacted the primary debtors, explaining to them by telephone the foreign exchange risks of concluding a loan in a foreign currency.
  3. Prior to the disbursement of the loan proceeds, the borrowers had signed declarations stating that they had been fully informed by the credit institution’s competent officers regarding the risks which may arise from a possible fluctuation of the exchange rate of the Swiss franc in relation to the British pound or/ and from the increase in price of the Swiss franc, giving relevant numerical examples. In the specific documents they also stated that despite the risks, they decided to proceed with the lending, without any undue influence from the bank’s employees.

Therefore, the existence of foreign exchange risk in cases of concluding loans in foreign currency is not in itself a reason capable of leading to the cancellation/invalidation of a contract. The court takes into account a variety of facts, including the status of the debtor and the terms of the contract before the Court concludes that the validity of the credit facility is affected.

By Georgia Karamalli.

For more information visit our microsite on Banking & Finance or contact This email address is being protected from spambots. You need JavaScript enabled to view it.

Back to News
Nicosia

1 Kinyra Street, 5th floor
1102 Nicosia

Larnaca

115 Faneromenis Avenue,
Antouanettas Building
6031 Larnaca

Limassol

12 Platonos Street,
3027 Limassol

Paphos 

4 Nicou Nicolaidi & Kinyra,
2nd floor, 8011 Paphos

Paralimni

164A Georgiou Gourounia,
1st floor, 5289 Paralimni

Monday – Friday

8:00 – 18:00

TEL: +357 24 201 600

FAX: +357 24 201 601

Privacy Policy