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The Supreme Court ruled on the bank’s right to unilaterally amend the interest margin of a loan


The Supreme Court has issued a precedent ruling (KKO 2016:10) regarding a bank’s right to unilaterally increase the agreed interest margin of a long-term loan. According to a provision in the bank’s general terms and conditions, the bank may unilaterally increase the agreed interest margin if the increase was justified by increased financing costs of the bank that the bank could not reasonably have foreseen when the loan agreement was entered into.

The Supreme Court focused on interpreting the meaning of the expression “the bank’s financing costs”. The bank argued that an increase of some of the costs would justify an increase of the interest margin. The Court however rules in favour of the borrowers and held that the expression refers to the bank’s financing costs in total and therefore, partly increased costs did not justify an increased interest margin.

In determining the case, the Court drew attention to the well-known fact that if the wording of a general term (which typically has been drafted by one of the parties only) turns out to be ambiguous, it shall be interpreted in favour of the other party. 

For more information, please contact the undersigned. A more detailed summary of the case is available in Finnish.

For further information, please contact:
Kirsti Myllylä

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