Contracts between banks in cashless payment transactions and third-party claims settlement

The contractual relationships between the banks involved in cashless payment transactions do not have a protective effect in favor of third parties; as the Federal Court of Justice ruled in a recent judgment, the principles of third-party damage liquidation apply in this respect. The payment service provider of the payee is obliged to inform its intermediary bank that the interests of the payer are at risk if the risk is objectively evident. If a bank breaches a duty to warn or inform in payment transactions, the presumption of correct disclosure applies, which reverses the burden of presentation and proof in favor of the party to be informed.

The Federal Court of Justice (BGH) upheld these legal principles in its ruling of 14.05.2024 (XI ZR 327/22), in which it ruled on the claim for damages brought by bank customers against a payment service provider. As part of an investment order, the plaintiffs had instructed their bank to make a six-figure transfer to a bank account of the investment company. The bank debited its customers' account in the corresponding amount and transferred the payment order to another bank, which forwarded it to the defendant. The latter credited the amount to the investment company's bank account. Five days before the amount was credited, the Swiss Financial Market Supervisory Authority prohibited the investment company from accepting deposits from the public, blocked its accounts and custody accounts and prohibited the management from acting without the consent of investigators appointed by the supervisory authority. The defendant learned of this one day before the plaintiff's transfer was credited. Bankruptcy proceedings were opened against the investment company in Switzerland. The banks involved in the transfer have assigned any claims against the subsequent party to the transfer to the plaintiffs.

The BGH set aside the appeal judgment granting the claim and referred the proceedings back to the court of appeal for further clarification.

The defendant payment service provider had breached its duty to warn and inform the bank that had commissioned it. It is true that a payment service provider is only active for fast, technically error-free processing and does not generally have to deal with the underlying value date relationship in cashless payment transactions. In exceptional cases, however, it is necessary in good faith not to execute the payment order without first asking the customer if there is a risk of damage to the customer. This is the case if the service provider is aware that the economic collapse of the payee is imminent or if there is reasonable suspicion that the customer intends to harm a third party in a criminal manner with the payment transaction. However, the bank is not obliged to carry out a general check as to whether the customer is at risk in cashless payment transactions. In the case decided, the fact that the investment company was prohibited from accepting funds from the public and the authority to dispose of its assets was sufficient for a duty to warn to arise; this clearly showed that there was a lack of proper business conduct and that investor funds were at risk. It was irrelevant whether the restrictions on disposal corresponded to the appointment of a strong insolvency administrator under German law or whether only outgoing payments were prohibited by the investigators.

However, the contractual relationships between the banks and payment service providers did not have any protective effect in favor of third parties. The bank customer could, if a bank not contractually affiliated with him breached a duty to warn, claim damages from the assigned right of his bank by way of third-party damage liquidation. In this case, the plaintiff bank customer benefits from the presumption of correct disclosure with the consequence of a genuine reversal of the burden of presentation and proof.

Finally, the BGH clarified that the limitation period in such cases of third-party loss liquidation depends on the knowledge of the contractual partner of the tortfeasor (in the case decided, the second bank involved) for the commencement of the standard limitation period pursuant to Section 199 (1) No. 2 BGB. Only if the knowledge of the latter is not sufficient to trigger the running of the limitation period is the knowledge of the assignee to be taken into account.

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