Nicosia, Cyprus. Activists opposing foreclosures have threatened to take President Nikos Christodoulides’ veto of a parliament-approved law to the European court of justice, arguing it is essential for Cyprus’ compliance with EU rules on loans and mortgages.
Proposed law and intended effect
The law was jointly submitted to parliament by Akel and the Ecologists’ Movement. It provided that pursuing a legal remedy, such as challenging the amount of debt owed by a homeowner or invoking unfair terms in a mortgage agreement, would suspend the foreclosure process until a court issued a final decision.
President’s objections and legislative process
Christodoulides argued that the provision would lead to mass delays by enabling borrowers to overload courts and cite bogus claims. He said this could encourage non-repayment of loans, increase future borrowing costs, and result in restrictions on loan issuance.
He rejected the law alongside four others. Parliament accepted the other four rejections but insisted on the law concerning unfair terms, with the matter set to be heard by the supreme constitutional court next month.
Activists cite EU directives and rights charter
The activists said failing to pass the law would put Cyprus in breach of the EU’s unfair terms in consumer contracts directive. They cited the European Commission’s position that contract terms are unfair and not binding on consumers if, contrary to the requirements of good faith.
They said borrowers have in many cases faced malicious and abusive clauses that sharply increased repayment requirements after taking out a mortgage, and argued this should allow court challenges under the EU directive.
They also said that denying borrowers recourse against foreclosure decisions would violate Article 47 of the Charter of fundamental rights of the European Union, which concerns the right to an effective remedy and to a fair trial.
Government position and possible timeline
A government source said Christodoulides’ referral to the supreme constitutional court is “an institutional review of constitutionality and not a political confrontation”.
The source added that the law represents an “intervention by the legislative power into the core of executive competences” and could weaken the existing legal framework governing foreclosures.
If the issue reaches the European court of justice, a hearing could take years, with the court typically taking between 16 and 20 months to hear a case and issue a ruling.
What impact do you think the court proceedings could have on borrowers facing foreclosure?
