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The reference in CR and TP v Soledil sits squarely within a long line of cases in which the Court of Justice of the European Union (the "Court") has emphasised that the system of consumer protection established by Directive 93/13 of 5 April 1993 on unfair terms in consumer contracts (the "Directive") is built on the premise of effective judicial oversight, even where consumers themselves fail to invoke their rights.
The long‑running dispute between CR and TP and the property developer Soledil once again placed before the Court of Justice a fundamental question at the intersection of consumer protection and national procedural autonomy: can national rules on res judicata prevent a court from examining the unfairness of a contractual term when no such assessment has ever been carried out?
Facts of the case
The case originated from a 1988 preliminary sale agreement containing a penalty clause allowing the vendor to retain an advance payment of approximately €72,870 if the purchasers failed to conclude the final contract.
Although the final sale never materialised, and the matter passed through arbitration and multiple levels of judicial review, the Italian courts confined themselves to reducing the penalty under Article 1384 of the Civil Code, first in 2009 and again in 2018, without ever addressing whether the clause was unfair under the Directive.
When the purchasers finally raised the unfairness argument before the Corte suprema di cassazione, the court found itself constrained by domestic rules preventing issues deemed incompatible with the nature of its earlier judgement from being examined on remittal.
Against this backdrop, and mindful of the court's established case‑law emphasising the duty of national courts to assess unfair terms of their own motion, particularly in cases involving manifestly excessive penalty clauses, the Italian Supreme Court referred a series of questions to Luxembourg.
Relevant articles
Therefore, to what extent can national procedural autonomy limit the ex officio control required by EU consumer law, particularly in cases involving manifestly excessive penalty clauses?
The Court went on to clarify whether Articles 6(1) and 7(1) of the Directive, read in conjunction with Article 47 of the Charter of Fundamental Rights of the European Union restrict national procedural rules from being applied so as to prevent such an assessment, even where consumers invoked the issue only at a late stage in the proceedings.
The relevant articles read as follows:
Article 6(1) of the Directive:
"Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms"
Article 7(1) of the Directive:
"Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers"
Article 47 of the Charter:
"Everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article. Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. Everyone shall have the possibility of being advised, defended and represented. Legal aid shall be made available to those who lack sufficient resources in so far as such aid is necessary to ensure effective access to justice."
The Court's reasoning
The Court of Justice approached the reference by reaffirming the foundational principles of Directive 93/13: consumer protection is recognised as a matter of public interest, and national courts are required to safeguard its effectiveness regardless of the procedural stage of the case.
The Court recalled that Articles 6(1) and 7(1) of the Directive impose a positive obligation on national courts to assess the unfairness of contractual terms whenever they have the necessary elements before them, even if the consumer has not raised the issue. This obligation is not discretionary; it is integral to the Directive's objective of restoring balance between consumers and traders.
Turning to the Italian procedural rules at issue, the Court acknowledged the importance of res judicata in ensuring legal certainty and the proper administration of justice. However, it stressed that national procedural autonomy cannot undermine the effectiveness of EU consumer protection.
Where the application of res judicata would prevent a court from examining the unfairness of a contractual term that has never been reviewed, such rules must yield to the requirements of EU law.
The Court also addressed the consumers' late invocation of the unfairness argument. It held that consumer inaction cannot deprive them of the protection conferred by the Directive, nor can it relieve national courts of their duty to examine unfair terms ex officio. The Court emphasised that consumers often lack the legal knowledge or bargaining power to identify unfair terms, and the Directive is designed precisely to compensate for this structural imbalance.
Finally, the Court noted that the penalty clause at issue (i.e., the fact that the vendor was allowed to retain over EUR 72,000) was of a type that typically warrants close scrutiny under the Directive.
The fact that the Italian courts had merely reduced the penalty under domestic law, without assessing its fairness under EU law, underscored the need for judicial intervention.
Conclusion
The Court held that Articles 6(1) and 7(1) of Directive 93/13, read in conjunction with Article 47 of the Charter, preclude national procedural rules that prevent a court from examining the unfairness of a contractual term where (i) the term has never previously been subject to judicial review, (ii) the consumer has not raised the issue until a late stage, and (iii) the application of res judicata would make such review impossible.
In essence, the Court ruled that national rules on procedural finality cannot bar the ex officio assessment of unfair terms when such assessment is necessary to safeguard the rights conferred by EU law.
The decision also highlights a recurring tension in EU consumer law: the balance between legal certainty and substantive justice. Res judicata is a cornerstone of national legal systems, yet the Court has repeatedly shown that it cannot be used to shield unfair terms from scrutiny. Critics may argue that this undermines procedural autonomy and risks reopening litigation long thought settled. However, the Court's reasoning is grounded in the structural imbalance between consumers and traders.
The case also exposes a deeper issue within national courts, being the tendency to treat penalty clauses as purely domestic matters, governed by national rules on reduction or moderation.
The Court's judgment makes clear that such clauses fall squarely within the scope of the Directive and must be assessed accordingly. The Italian courts' failure to do so, despite the manifestly excessive nature of the penalty, illustrates the ongoing need for judicial awareness of EU consumer law obligations.
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