On 22.11.2023, the Harju County Court rendered an important decision, in which it analysed whether the regular termination of the payment service agreement concluded by the credit institution with the company was lawful. The credit institution had cancelled the contract on an ordinary basis on the grounds that the customer no longer met the bank's risk requirements.

The Harju County Court held that the circumstances on the basis of which a payment service provider may terminate a contract on an ordinary basis can arise primarily from the payment service provider itself, for example in a situation where the terms of the payment service provider's contract have changed and the person no longer meets the new conditions. In the case of ordinary termination of a payment service, account can only be taken of the circumstances existing at the time of the termination and not of circumstances which may arise in the future. The Court also referred to the earlier case-law of the Supreme Court, according to which an ordinary termination of a current account contract cannot be without justification, since it may be contrary to the principle of good faith and without action to terminate a contract with a person with whom the payment service provider has a legal obligation to conclude a payment service contract.

The termination of a payment service contract cannot be subject to ex post justification. In addition, it cannot be done in legal proceedings on new grounds. The Court of Justice stated that the statement in the application for termination of the contract that the customer was not covered by the risks set out in the general conditions of the credit institution should be justified. This means that the credit institution must already indicate in the termination notice the reasons for which risks it considers to be uncovered and in what way. The Court also noted that, although the application of the rules relating to the avoidance of international sanctions is based on doubt and need not be based solely on irrefutable facts, the credit institution has the obligation to give sufficient and reasonable reasons and evidence for its doubts.

Hopefully, this and similar litigation will result in a clear case law that credit institutions may not terminate contracts so lightly as there is no alternative for a legal entity - it cannot continue to do business without a payment services contract.

N.B. The judgment has not yet entered into force.

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Liis and Kristel specialise in civil law and litigation. Janno advises clients primarily on commercial and litigation matters and, as a pilot, also on aviation law.

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