The Court of Justice of the European Union has confirmed that the Polish court may cancel the entire credit agreement because of its unfair indexation clauses.
According to the press release of 3 October 2019 The Court of Justice delivered a judgment on Polish borrowers who in 2008 They took out a mortgage loan in Raiffeisen, whose value was expressed in Polish currency but was indexed to the Swiss Franc (CHF).
According to the agreement, borrowers received funds in Polish currency, while the balance of debt and loan instalments were expressed in CHF currency (the so-called purchase rate was used).
The borrowers repaid individual instalments by the bank's collection from the borrower's account in Polish currency, with the value of the instalments being determined on the basis of the sales rate PLN-CHF, valid at the time of the maturity of the instalment.
As a result of such records, borrowers incurred real costs of adverse exchange rate differences.
The sentence does not prejudge “from the vending machine” the fate of other cases concerning Polish francists. Yes, the borrowers will have the opportunity to rely on this judgment, but each will be considered individually,
The borrowers sought annulment of the contract before the Polish court, stating that the provisions concerning the purchase rate of the currency used to make the funds available and the sale rate for the determination of the amounts to be recovered constitute unfair terms in the contract concluded by the bank with consumers.
The Polish court in its investigation sought to apply the solution set out in Kasler and Kaslerne Rabai (C-26/13), replacing an unfair contractual provision by a provision of national law.
However, the Court of Justice of the EU, when examining the case of Polish francists, pointed out that unfair terms of the agreement concerning exchange rate differences cannot be replaced by general provisions of Polish civil law.
The Court pointed out that the contract without unfair terms which it concluded remains binding on the parties with regard to the other provisions contained therein, provided that it can continue to apply without the unfair terms removed and that such maintenance of the contract is in accordance with national law.
In a situation where such a change consisting solely of the deletion of the provisions deemed to be unfair (i.e. abstract clauses) is not effective, as it leads to a change in the nature and purpose of the agreement, it is appropriate to cancel the entire agreement.
The Court stressed that the Directive 1 does not prevent the Polish court from cancelling the disputed agreement.
However, the TEU pointed out that the application of the protection system guaranteed by the Directive against unfair conditions should not be applied against the wishes of the client of the bank and it should be for the client in his individual case to be able to decide whether to benefit from such protection.
The Court's judgment undoubtedly opens up new opportunities for Polish borrowers to investigate the cancellation of their contracts, which may mean real benefits. However, this judgment does not prejudge the fate of other cases concerning Polish frankoviches.
Indeed, the borrowers will have the opportunity to rely on this judgment, but each will be considered individually and the possibility of applying the appointed position of the tribunal will also depend on how similar the conditions in the case will be to the conditions in the case in question.
The possibility of cancelling the contract is undoubtedly an interesting option for the bank's client, who, due to the unfavourable rate of the franc, has been paying credit costs for a long time (which in some cases even outweighs the value of the funding received) because in the event of cancellation, the client will be required to reimburse only the amount of credit made available or the part of it remaining to be paid, without interest. However, in practice, it means that the borrower will be required to reimburse a one-off total of this amount, so depending on his situation, this will not always be a favourable solution.
Source – TEU press release
1 Directive 93/13 of 5 April 1993 on unfair terms in consumer contracts (Official Journal of the European Union L (1993), No. 95, p. 29)
Author: Leszek Dutkiewicz, partner Russell Bedford Poland. Associated with the company from 2011. Director of RBP office in Katowice. In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services.
He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices. Author of a publication on tax, civil and international law issues. Lecturer in tax law training. He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.