Austrian High Court rules on whether a clause in a building society's general terms and conditions stipulating an account management fee is grossly prejudicial

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Background

In the course of a class action, the Austrian Federal Chamber of Labour, as claimant, has challenged several clauses of the general terms and conditions of a building society. One of those clauses provided for an annual account management fee in the amount of €11.28 during the savings phase and €40.00 during the lending phase, payable for the maintenance of the account.

The lower courts considered the account maintenance fee to be a consideration for receiving the lender's (main) service and ruled that it was exempt from content control pursuant to § 879 para 3 Austrian General Civil Code (ABGB). According thereto, a contractual provision in general terms and conditions or contract forms which does not specify one of the main services of both parties is null and void if, considering all the circumstances of the case, it is grossly prejudicial to one party.

Decision

The Court held that:

Remuneration clauses contained in general terms and conditions, which provide for an additional fee in compensation for a service that is usually associated with the fulfilment of contractual obligations, are subject to content review pursuant to § 879 para 3 ABGB.
In this case, the fact that the account management fee demanded by the defendant would grossly exceed its expenditure within the meaning of the ECJ decision C 224/19, C 259/19, Caixabank SA et al. (Caixabank II), is not addressed in the plaintiff's appeal on points of law. Therefore, the inadmissibility of the clause cannot be inferred from its arguments.

Key takeaways

The Austrian High Court has confirmed its view, that due to recent case law in the European Court of Justice (Caixabank II, para 79), a clause in a loan agreement between a consumer and a financial institution requiring the consumer to pay a fee or commission, can – contrary to the requirement of good faith – imply a significant imbalance in contractual rights to the detriment of the consumer, unless the financial institution proves that that commission corresponds to the services actually provided or costs incurred, respectively.
Therefore, according to the Austrian High Court, existing case law in Austria issued before this decision, pursuant to which it was decided that everything the borrower has to provide (including processing or administration fees) beyond the return of capital for the lender's performance of its role, is remuneration and therefore not subject to control, must be reassessed in the light of EU law.
ECJ decision C 565/21 (Caixabank III) as well as strong debates in legal literature have not been taken into consideration in this decision.
The German Federal Court of Justice (BGH) has considered the account management fee for building savings contracts to be an unreasonable disadvantage within the meaning of Section 307 of the German Civil Code (BGB) (BGH, XI ZR 551/21). However, contrary to German law (cf. § 488 BGB), Austrian law does not prohibit charging additional fees next to interest (cf. § 988 ABGB).

OGH, 4Ob74/22v, 17 October 2023