In a landmark decision, the Hungarian Supreme Court has ruled that the abuse-of-rights doctrine extends to financial consumer protection — a clear precedent set to reshape and relax the obligations of credit institutions and all service providers bound by statutory complaint-handling rules when it comes to consumers’ excessive, abusive behaviour.
Background: abuse of the right to complain
The underlying dispute arose between a credit institution and a former consumer in connection with the vast number of complaints he filed with the financial service provider. After all contractual relationships between the parties had been terminated, the consumer:
- filed an excessive number of written submissions;
- contacted the credit institution’s call centre numerous times on a daily basis; and
- repeatedly visited the institution’s branch offices despite the service provider’s stated wish to have no future relationship with him.
An assessment led to the conclusion that the former consumer had exercised his right to complain in an abusive manner, deploying it exclusively as a means of exerting pressure and retaliation (i.e. in a manner incompatible with the intended legal function of the right to complain). Recognising the abusive nature of this conduct, the credit institution refused to provide substantive responses to the submissions. As a consequence of that refusal, the former consumer launched consumer-protection proceedings before the Central Bank of Hungary, acting in its supervisory capacity.
In the course of those proceedings, the Central Bank disregarded the former consumer’s abusive conduct. It took the position that, since the underlying sectoral regulations do not render the prohibition of abuse of right applicable in the context of complaint handling, the former consumer’s potentially abusive behaviour did not exempt credit institution from its obligation to process and respond to consumer complaints.
Supreme Court decision
The credit institution challenged the decision of the Central Bank in administrative-court proceedings. Relying on the settled case-law of the Constitutional Court, it argued that the general prohibition of abuse of rights limits the manner in which consumer rights (including the right to complain) can be exercised. The credit institution further submitted that the legal consequence of abusive conduct is the exclusion of the intended legal effect. As a result, the credit institution cannot be compelled to respond to complaints that are abusive in nature, treating such complaints as though they had never been submitted.
Despite these arguments, the courts of first and second instance rejected the credit institution’s reliance on the prohibition of abuse of rights.
The Supreme Court, however, took a fundamentally different approach. Accepting the arguments advanced by the credit institution and overturning both the administrative decision and the judgments of the lower courts, it unequivocally held that administrative rights (including the right to complain) can be abused. The Supreme Court stated:
- An administrative authority … is obliged to examine the facts arising in connection with the client’s good faith …, which requires it to prevent any participant in the proceedings from exercising procedural rights in bad faith.
- In order for the consumer protection authority to exercise its powers in accordance with their proper purpose …, it is also required to take into account situations where a party exercises, in an abusive manner, the rights granted by the rules subject to the authority’s control in relation to the private‑law legal relationship affected by the inspection. As established by the Constitutional Court in its Decision No. 31/1998 (VI. 2.) AB, the prohibition of abuse of rights applies across the entire legal system. … Even the fundamental right to administration and the right to lodge a complaint may be exercised abusively.
Consequences of the ruling
The Supreme Court’s judgment is of outstanding importance since it represents the first Hungarian court decision to clearly confirm that the general prohibition of abuse of rights prevails within the field of financial consumer protection.
Owing to its precedent‑setting nature, the effect of the decision extends well beyond the facts of the individual case and will have an impact on the entire consumer-protection sector. The general principle articulated by the Supreme Court applies to all service providers subject to statutory complaint‑handling obligations, including insurers, investment service providers and other market participants.
Moreover, the judgment is binding on all consumer-protection authorities, including the Central Bank, which must now assess in every consumer-protection proceeding whether the consumer’s conduct is compatible with the intended legal purpose of the right he or she seeks to enforce.
In practical terms, the decision enables service providers to incorporate substantive defence mechanisms into their internal complaint‑handling policies to address complaints submitted for the purpose of exerting pressure or retaliation.
After the Supreme Court’s decision, parliament may need to amend the statutory framework governing complaint handling to give express recognition to the prohibition of the abuse of rights. Such an amendment would enable complainants (i.e. predominantly consumers) to understand this limitation through the legislation.
In the proceedings, the CMS litigation team represented the credit institution.
For further information on the recent decision of the Supreme Court and the possibilities arising from it, contact your CMS client partner or the CMS experts who contributed to this article.
The article was co-authored by Belian Ferenc Czeller.
