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The Constitutional Court’s Decision on monetary conversion and exchange rate freeze in credit agreements

The Constitutional Court’s Decision no. 62 of 7 February 2017 settled a number of controversial aspects of the consumer protection legislation, establishing:

The applicability of the monetary nominalism principle, on the basis of which the sum awarded as a loan must be repaid in kind, regardless of the valuing or devaluing of the sum, to the extent that the parties have not agreed otherwise. This principle also implies that both sides undertake the risk that the borrowed sum may be worth less over time.

The obligation to repay exactly what was received represents the object of the contract, being an essential obligation of the borrower, expressly regulated by law and imposed by fundamental principles of law.

Currency risk is an element of the contractual price, where the credit was awarded in a foreign currency, as long as the borrower must repay the loan in the same currency.

The applicability of the monetary nominalism principle does not preclude the applicability of the hardship theory, the courts being entitled to operate the monetary conversion to the rate applicable at the date the contract was concluded, or at the date of the conversion, or even at a different rate, established by the court, should the legal conditions be fulfilled.

The legal provisions mentioned must be applied only to borrowers acting in good-faith who find themselves in impossibility to perform their contractual obligations, due to subsequent events that could not have been foreseen and only to the extent that the consumer has invoked and proved their applicability.