Budapest – Hungary’s Constitutional Court began hearing arguments Tuesday in cases brought by hundreds of individuals affected by the country’s 2011-2014 foreign currency loan crisis, a period marked by a significant appreciation of the Hungarian forint against the Swiss franc and other currencies. The court is considering whether the original loan contracts were unfair and violated constitutional rights, and whether the subsequent 2014 legislation designed to address the crisis provided adequate redress.
The court’s third five-member council heard arguments in two separate cases, both challenging lower court rulings that had dismissed claims seeking the invalidation of the loan agreements. According to a statement released by the court, no decision was reached on either case – identified as IV/2295/2025 and IV/2613/2025 – but proceedings will continue, with a future date for a ruling to be announced.
The core of the complaints centers on the argument that the Hungarian state failed to adequately protect the constitutional right to property when it allowed banks to offer loans denominated in foreign currencies, primarily the Swiss franc. Petitioners argue that the 2014 law, while attempting to mitigate the crisis, did not provide sufficient compensation for the financial losses incurred by borrowers as the forint strengthened.
Representing the petitioners, lawyer István Kriston argued on Monday, in a Facebook post, that the 2014 law, intended to address the exchange rate differential, ultimately caused financial harm to consumers, violating their right to property protection as enshrined in Article XIII, paragraph (1) of the Fundamental Law (Hungary’s constitution). He contends that the legislation created a demonstrable financial disadvantage for borrowers.
The 2011-2014 currency loan crisis stemmed from a period when Hungarian banks aggressively marketed loans denominated in Swiss francs, taking advantage of lower interest rates compared to forint-denominated loans. However, as the forint appreciated significantly against the Swiss franc, borrowers found themselves facing substantially increased debt burdens, even as their incomes remained in forints. This led to widespread defaults and financial hardship for many Hungarian families.
The 2014 law, intended to provide relief, introduced mechanisms for capping interest rate increases and allowing some borrowers to convert their loans into forints at a fixed exchange rate. However, critics argue that the law was insufficient, leaving many borrowers still facing significant financial strain and failing to fully address the unfairness of the original loan contracts.
Kriston outlined three possible outcomes from the Constitutional Court’s review: the annulment of the challenged lower court rulings, the rejection of the constitutional complaint, or a substantive dismissal of the complaint. Should the court reject or dismiss the complaints, Kriston stated his intention to bring the case before the European Court of Human Rights (ECtHR) in Strasbourg, alleging a violation of the Rome Convention and seeking compensation for his clients.
This move to the ECtHR is not unprecedented. In 2012, the Hungarian Constitutional Court itself ruled that a sudden reduction in the mandatory retirement age for judges was unconstitutional, as noted in ECtHR case 20261/12 (BAKA v. Hungary). The court expressed confidence that Hungarian authorities would respect the ruling and reinstate the affected judges. This case highlights a pattern of challenges to Hungarian legal decisions at the European level.
The current cases before the Constitutional Court also echo broader concerns about the rule of law in Hungary. Recent years have seen accusations of government interference in the judiciary, including changes to the composition of the Constitutional Court itself and the dismissal of the President of the Supreme Court, András Baka, who subsequently successfully appealed to the ECtHR. As reported in academic research, the dismissal of Baka was seen as a move by Prime Minister Viktor Orbán to consolidate control over the judicial system. (“The Strasbourg Court Meets Abusive Constitutionalism: Baka v. Hungary and the Rule of Law”)
Transparency International Hungary’s recent constitutional complaint regarding the Sovereignty Protection Act was rejected by the Constitutional Court in December 2024, prompting the organization to pursue the case in Strasbourg. (Transparency International Hungary and Hungarian Helsinki Committee). This pattern of domestic rulings being challenged internationally underscores the ongoing scrutiny of Hungary’s legal framework and its adherence to European standards.
The outcome of the current cases before the Constitutional Court will have significant implications for hundreds of thousands of Hungarian borrowers still grappling with the legacy of the foreign currency loan crisis. A favorable ruling could pave the way for further legal challenges and potential compensation, while a rejection would likely lead to a surge in applications to the ECtHR, further straining relations between Hungary and European legal institutions.
