The Court of Justice of the European Union (CJEU) has clarified the scope of Directive 93/13/EEC on unfair terms in consumer contracts in relation to closed-end investment funds. Accordingly, provisions in the rules of such a fund may be subject to unfair terms review if they govern the contractual relationship with an investor who acquired the investment certificates outside their professional activity.
Dispute over the redemption of investment certificates
The proceedings arose from an offer made by a Polish closed-end investment fund to three natural persons for the acquisition of investment certificates. One of the investors was a doctor, while the other two were his retired parents.
Acquisition on the basis of pre-formulated terms
On 7 June 2016, the fund sent the investors a written offer to acquire the certificates. The terms governing the issue of the certificates were set out in an annex that was designated as the only legally binding document.
On the recommendation of a bank employee, each of the three individuals acquired two investment certificates, each valued at PLN 186,714.14, equivalent at the time to approximately EUR 44,290. To do so, they completed standardised forms. In those forms, they confirmed that they had read and accepted the terms of issue, the acquisition rules and the fund rules.
Rejection of the redemption requests
On 26 March 2019, the investors requested the redemption of all certificates. The fund had previously split each person’s holdings into 2,000 certificates. The fund rejected the requests by reference to a provision in its rules that permitted it to reduce redemption requests.
The investors subsequently brought an action before the Warsaw Regional Court on 20 September 2021. Each sought PLN 356,962.74, equivalent at the time to approximately EUR 84,660, plus statutory default interest from 30 September 2019.
In the claimants’ view, the provision in the fund rules concerning the reduction of redemption requests was unlawful. In particular, they objected that the term did not impose any limit on the reduction and made fulfilment of the redemption requests dependent on the fund’s liquidity. Whether that condition was met was entirely within the fund’s control.
Dismissal at first instance and questions referred to the CJEU
By judgment of 2 November 2022, the Warsaw Regional Court dismissed the action. It held that the fund rules did not constitute a contract. They could therefore not be reviewed under the Polish provisions governing unfair terms in consumer contracts. The closed-end investment fund thus prevailed at first instance.
The investors appealed to the Warsaw Court of Appeal. That court stayed the proceedings and referred the matter to the CJEU under Article 267 TFEU (Treaty on the Functioning of the European Union).
Subject matter of the questions
In essence, the Warsaw Court of Appeal asked the CJEU to clarify the following points:
-
It sought to ascertain whether a natural person is to be regarded as a consumer within the meaning of Article 2(b) of Directive 93/13/EEC if they acquire certificates in a closed-end investment fund outside their professional activity and primarily for the purpose of investing savings.
-
It also sought clarification as to whether a closed-end investment fund is to be classified as a seller or supplier within the meaning of Article 2(c) of the Directive.
-
Finally, the court asked whether a provision in fund rules concerning the rights and obligations of unit holders and the conditions and time limits for redemption may constitute a contractual term that has not been individually negotiated within the meaning of Article 3(2) of the Directive. This also concerned situations in which the investor was able to inspect the rules before joining the fund and accepted them in writing when subscribing for the certificates.
The questions arose against the background of divergent decisions by Polish courts concerning the applicability of consumer protection provisions to the acquisition of certificates in closed-end investment funds.
Relevant consumer protection provisions
Article 1(1) of Directive 93/13/EEC applies to unfair terms in contracts concluded between sellers or suppliers and consumers. As a general consumer protection measure, the Directive is, in principle, applicable across all sectors of the economy.
Consumer and seller or supplier
Under Article 2(b) of the Directive, a consumer is any natural person who, in contracts covered by the Directive, acts for purposes outside their trade, business or profession.
Under Article 2(c), a seller or supplier is any natural or legal person who, in such a contract, acts for purposes relating to their trade, business or profession. It is irrelevant whether that activity is publicly or privately owned.
Both concepts depend on the capacity in which the parties act within the specific contractual relationship. The decisive factor is therefore not merely the abstract status of a person or organisation, but the purpose for which they act in connection with the contract in question.
Terms not individually negotiated
Article 3(2) of the Directive applies in particular to terms drafted in advance, where the consumer was therefore unable to influence their substance. This applies especially to standard-form accession contracts.
If only certain aspects have been individually negotiated, the Directive may continue to apply to the remainder of the contract. If the seller or supplier claims that a standard term was individually negotiated, it bears the burden of proving that assertion.
Fund rules not entirely excluded
Recital 10 of the Directive lists contracts relating to the incorporation and organisation of companies among the contracts excluded from its scope. However, the CJEU made it clear that, in view of the consumer protection objective pursued by the Directive, exclusions must be interpreted strictly.
Corporate and contractual provisions
According to the information provided by the Warsaw Court of Appeal, the rules of the fund concerned performed a dual function. On the one hand, they constituted its instrument of incorporation and, on the other, they formed the basis for investors’ participation.
Among other matters, the rules contained provisions concerning:
-
the nature and purpose of the fund,
-
the name and registered office of the management company,
-
representation and investment policy,
-
the conditions and procedure for redeeming certificates,
-
the calculation of available liquidity.
The CJEU distinguished between provisions of company law and provisions defining the substance of a reciprocal contractual relationship. The fact that fund rules contain provisions on the fund’s incorporation, nature and purpose does not mean that all of their provisions are excluded from the scope of the Directive.
Rules governing the conditions and procedure for redemption may instead be contractual in nature. If they establish rights and obligations between the fund and its unit holders, the Directive may apply to the resulting contractual relationship, provided that its other requirements are also met.
Redemption rules as part of the subscription contract
The investors had received a written offer to acquire the certificates and accepted it by signing standardised forms. In those forms, they declared that they were aware of and accepted the redemption conditions and the fund rules.
Subject to verification of the facts by the Warsaw Court of Appeal, the CJEU therefore proceeded on the basis that there was a separate contract for the acquisition of the certificates. In its assessment, the contested provisions of the fund rules concerning their redemption had been incorporated into that subscription contract and thus formed part of the contractual relationship between the fund and the investors.
A different interpretation would have enabled a seller or supplier to shield disadvantageous contractual terms from unfair terms review merely by formally including them in the fund rules. This would undermine the protective purpose of the Directive.
Written acceptance is not a substitute for negotiation
According to the case-law of the CJEU, the system of protection established by the Directive is based on the assumption that consumers are generally in a weaker bargaining position and have less information than sellers or suppliers. This may result in consumers accepting pre-formulated terms without being able to influence their substance.
Terms drafted in advance and used uniformly
According to the CJEU’s assessment, the redemption provisions had been drafted before any contact with the subsequent subscribers. They were intended to apply uniformly to an indeterminate number of contractual relationships. In addition, they were not open to negotiation and constituted a prerequisite for entering into the contractual relationship.
In those circumstances, the provision constitutes a contractual term that has not been individually negotiated within the meaning of Article 3(2) of the Directive. This is not altered by the fact that an investor was able to inspect the rules before joining the fund and accepted their content in writing when subscribing. The decisive issue is whether the investor was actually able to influence the specific term.
The Advocate General had already taken this position in his Opinion. In his view, a provision in fund rules governing the principles and time limits for redeeming certificates could constitute a contractual term that had not been individually negotiated even if the investor had previously read and accepted it in writing.
Investors may be consumers
Consumer status is determined according to a functional and objective criterion. The national court must establish whether the specific contract is attributable to a professional activity or was concluded outside such an activity.
Neither an individual’s knowledge nor the volume of information actually available to them is decisive for this purpose. Nor does an intention to obtain financial benefits from an investment preclude consumer status.
According to the information provided by the Warsaw Court of Appeal, the three investors had acquired the certificates for purposes outside their professional activities. Subject to verification by that court, they were therefore to be regarded as consumers within the meaning of Article 2(b) of the Directive.
The fact that the rights arising from the investment were both proprietary and membership-related did not preclude that classification. The Polish Financial Ombudsman considered that the decision afforded customers of closed-end investment funds a higher level of protection for their individual rights under the rules governing unfair terms.
Fund may act as a seller or supplier
The concept of a seller or supplier must likewise be interpreted functionally and objectively. It covers activities regardless of whether they are carried out for profit. Nor are entities excluded solely because they perform tasks in the public interest.
According to the findings made in the proceedings, the fund concerned conducted its investment activities in its own name and on a permanent and organised basis. In dealings with third parties, it was represented by an investment company with separate legal personality that was not itself contractually linked to the unit holders.
Subject to verification of those circumstances by the Warsaw Court of Appeal, the fund was therefore to be regarded as a seller or supplier within the meaning of Article 2(c) of the Directive. Similarly, the Advocate General had stated that a closed-end investment fund may be classified as a seller or supplier with regard to a provision in its rules that determines the rights and obligations of a consumer investor.
Scope of the decision
According to the judgment, provisions in the rules of a closed-end investment fund fall within the scope of Directive 93/13/EEC where the following conditions are met:
-
The fund invests the capital raised through offers for the acquisition of investment certificates in transferable securities or money market instruments.
-
The unit holder acquired the certificates outside a professional activity.
-
The provisions of the fund rules govern the conditions for redeeming the certificates.
-
Those provisions thereby shape the contractual relationship between the fund and the unit holder.
Such a redemption provision is not individually negotiated where the investor was aware of it before joining the fund and accepted it in writing but was unable to negotiate its substance.
The CJEU thus ruled on the interpretation of the requirements under EU law, not on the investors’ claims for payment. The final assessment of the dispute in the main proceedings and the decision on its costs are matters for the Warsaw Court of Appeal. Costs incurred by other parties in submitting observations to the CJEU are not recoverable.
On 20 October 2026, the Polish Financial Ombudsman stated that the CJEU had confirmed that provisions in the rules of closed-end investment funds, including principles and time limits governing the redemption of investment certificates, may be subject to unfair terms review.
Significance for contractual relationships with investment funds
The CJEU’s judgment of 15 October 2026 in Case C‑63/25 makes clear that the formal classification of a provision as part of a fund’s rules does not preclude its review under consumer contract law. The decisive factors are its function within the specific contractual relationship, the status of the contracting parties and the consumer’s actual ability to influence the substance of the term.
Questions concerning the incorporation of pre-formulated terms, the scope of unfair terms review or the contractual significance of provisions in fund rules always require an assessment of the contractual relationship concerned. MTR Legal Rechtsanwälte advises companies, investors and private individuals on these matters as part of its contract law advisory services.
