Following the recent rulings of the Court of Justice of the European Union on June 15, 2023, the legal situation for banks in Swiss franc cases has become very difficult. Not only are the courts invalidating these contracts, but they are also increasingly willing to grant injunctions to borrowers by suspending their obligation to make further loan payments. Courts are granting such relief not only in new cases where lawsuits were filed after June 15 of this year, but the CJEU ruling is also affecting ongoing proceedings in which courts had previously refused to suspend the obligation to make loan payments. Appeals against previous denials are being granted, or the same judicial panels are now granting motions for injunctive relief even though they had previously dismissed such motions.
Foreign-currency borrowers (so-called “franc borrowers,” but also those who took out loans in euros, dollars, or yen) can currently obtain a binding court ruling within a month that exempts them from the obligation to continue making loan payments. This puts borrowers in a very favorable position, because not only do they obtain a quick court order exempting them from the obligation to make further monthly loan payments, but also, while awaiting the final resolution of the case, the amount of their monetary claim is increased by statutory interest.
Right now, the annual interest rate is 12.25%! This makes it an excellent investment. Nowhere else can a consumer get such a high interest rate from a bank. This leads to a situation where the loan pays itself off without the borrower having to contribute any of their own funds. For example, if a bank granted Mr. Kowalski a Swiss franc loan in the amount of 600,000 PLN in 2008, and by August 2023, decided to sue the bank to void the loan agreement, and after the lawsuit was filed, the court suspended the obligation to continue repaying the loan—but until the court granted a preliminary injunction, Mr. Kowalski had paid a total of 500,000 PLN to the bank toward the loan repayment— so even though Kowalski is no longer making loan payments, his claim against the bank continues to grow due to accruing interest. In this case, his claim against the bank increases by approximately 5,100 PLN each month. This means that if Kowalski’s lawsuit is finally decided in his favor in two years, his claim against the bank will total approximately 622,500 PLN (500,000 PLN principal + 122,500 PLN interest). Thus, Kowalski’s claim will exceed the loan principal, and once the contract is legally invalidated, not only will he not have to pay anything additional to the bank, but, on the contrary, the bank will be required to refund Kowalski a surplus of 22,500 PLN after offsetting mutual claims. In other words, foreign-currency borrowers not only gain debt relief through a court ruling declaring the loan agreement void, but also, in the course of the proceedings, secure a highly profitable return on their capital—one that is normally unattainable in the banking market.
Banks are trying to salvage their situation. For these reasons, a campaign funded by the Polish Bank Association has recently appeared on television, promoting settlements in the so-called “franc cases.” The banks are well aware of the difficult position they find themselves in, so a settlement with a borrower—in which, in exchange for a minor concession, they obtain a waiver of the borrower’s claims—is very much in their interest. At this point, we urge borrowers to consult a law firm specializing in Swiss franc cases to calculate what they could potentially recover in court before signing a settlement with the bank, and only after comparing this information with the bank’s “settlement” offer should they decide whether the “settlement” proposed by the bank is truly beneficial for them.
Another way of discouraging borrowers from taking their cases to court is the recent spate of media reports detailing court rulings that grant banks the right to index-link the principal amount of a loan. However, in my opinion, these rulings are inconsistent with the case law of the CJEU, and even if they have appeared in isolated cases, I do not foresee them lasting long. Such rulings will likely be overturned on appeal, and the judges who issued them will adjust their line of reasoning. It should be emphasized that, in its judgment of June 15, 2023, the CJEU unequivocally challenged the right of banks to seek any compensation beyond the repayment of the loan principal. Importantly, the Court’s ruling was in response to a question from a Polish court specifically regarding the possibility of indexing the principal amount of a loan.
