Supreme Court of Cassation rules contractual clause on indexing dinar debts in francs void

The Supreme Court of Cassation of Serbia announced yesterday that it took a stance in favour of banks negotiating on the currency clause in order to preserve the same amount of loan denominated in dinars and payments indexed in euros but it ruled the contractual clause on indexing dinar debts in francs void.

In its official statement the court added that before the loan agreements were signed the banks were obligated to deliver a written statement about any any all business risks as well as the economic and financial consequences of indexing the domestic currency in Swiss francs.

– After the contractual clause nullification is confirmed the loan conversion would continue keeping with the principle of equal value of performance – that is, the market value of the said loan based on the euro currency rate on the day the contract was signed and interest payment rates set in the loan agreements of the same type and duration, the Court stated.

During the litigation process on the validity of the loan agreement or the contractual clause on indexing dinar debts in francs, the Court will follow the prosecutors proposition and institute a measure to forbid the loan providers to claim security interest unless the process of settlement was already in motion.

In that case the court or the civilian enforcement officer will at the enforcement debtor's request postpone the enforcement without security deposit.

Vucic: Part of the solution

– The courts ruling on contractual clause on indexing dinar debts in francs is a part of the solution the the debtor's were asking for, Serbian President Aleksandar Vucic told TV Prva.

He added that the “citizens who took out those loans were naïve, good and honest people of this country” and that they were “deceived in some way because they were told that what they were doing at that moment was the best course of action”.

He added that it was hard for the state to make the decision to help those indebted in Swiss francs.

– But we are prepared to accept every solution, the banks did not have the right to raise the interest rates as much as they had. Although not binding, the court's decision is so far a step in the right direction, Vucic said.

Vrhovni kasacioni sud Beograd

solution for loans indexed in Swiss francs

contractual clause on indexing dinar debts in francs void

Aleksandar Vucic

cancelling currency clause for loans denominated in Swiss francs