The movement against foreclosures has threatened to escalate their fight by taking President Nikos Christodoulides’ veto of a pivotal law to the European Court of Justice. Activists argue that this legislation is crucial for Cyprus to comply with European Union regulations concerning loans and mortgages.
- If the matter proceeds to the European Court of Justice, it could take years before a verdict is reached, as the court typically requires between 16 to 20 months to hear a case and deliver a ruling.
This controversial law was jointly proposed to parliament by the left-wing party Akel and the Ecologists’ Movement. It aimed to allow homeowners to challenge the validity of their debts or unfair mortgage terms, resulting in a suspension of foreclosure proceedings until a court could reach a decision.
President Christodoulides opposed the law, expressing concerns that its implementation would lead to significant delays in the legal system. He suggested that allowing borrowers to overload courts with claims, some of which may be illegitimate, could foster a culture of non-repayment. Such a situation, he warned, would ultimately increase the cost of borrowing and lead to stricter lending conditions.
While the parliament accepted the rejection of four other laws, it insisted on retaining the law regarding unfair terms. This decision has now led to a case that will be heard by the Supreme Constitutional Court next month.
Activists contend that failing to pass this law risks breaching the EU’s directive on unfair terms in consumer contracts. The European Commission states that terms are deemed unfair if they contravene the principle of good faith.
Many borrowers have reportedly faced aggressive and detrimental clauses in their mortgage agreements, leading to steep increases in their repayment amounts. The activists argue that these circumstances should permit homeowners to contest the terms in court, as outlined in the EU directive.
In addition, the activists highlight that denying homeowners the ability to contest foreclosure decisions could infringe upon Article 47 of the Charter of Fundamental Rights of the European Union, which guarantees the right to an effective remedy and a fair trial.
Conversely, government sources defend Christodoulides’ veto, stating that his decision to refer the matter to the Supreme Constitutional Court is merely an institutional review of constitutionality rather than a political dispute. They assert that the law represents an overreach of legislative authority into the executive’s domain, which could undermine the established framework governing foreclosures.
If the matter proceeds to the European Court of Justice, it could take years before a verdict is reached, as the court typically requires between 16 to 20 months to hear a case and deliver a ruling.
