Woźniak Legal has successfully represented a Polish FX mortgage borrower over validity of the Swiss franc loan taken by the borrower (acting as a consumer) in 2008 in the amount of PLN 1,000,000 from Svenska Handelsbanken AB, branch in Warsaw.
On 12 January 2023, the Court of Appeal in Warsaw changed the decision of the court of the I instance issued in 2021 and finally decided that the Swiss franc loan taken by the FX borrower from Svenska Handelsbanken AB in 2008 is invalid due to unfair terms included in the loan documentation and failure to provide the borrower with sufficient information about the loan and the foreign exchange issues. This brought an end to the two year proceedings in the Polish courts regarding this case.
Filip Kowalczyk, who has been representing the Polish borrower, said “It is really uplifting and encouraging that the Court of Appeal changed the decision of the lower court and took the position that the Swiss franc borrowers should be protected by the legal system if the unfair terms were offered to the borrower at the time when the loan was granted. The current case law on CHF denominated loan in the EU is hugely complicated. Therefore, these cases are very difficult to handle.”
The last month’s verdict of the Court of Appeal in Warsaw is an important decision on the highly controversial topic of the Swiss franc loans. Hundreds of thousands of Poles took out mortgages in foreign currencies, mainly in Swiss francs, attracted by lower interest rates in the 2000s. They are now paying far bigger instalments than expected after the Swiss franc soared against the zloty and following interest rate hikes in Switzerland.
Many mortgage holders took banks to court, while banks started offering settlements to find an out-of-court solution. According to PAP news agency, in 2022 there were at least 9,600 court verdicts, most of them in favour of borrowers.
In the judgement of 12 January 2023, the Court of Appeal in Warsaw has ruled that when a financial institution grants a loan denominated in a foreign currency, it must provide the borrower with sufficient information to enable him to take a prudent and well-informed decision. Laconic information to the borrower that there is a foreign exchange risk when you take the loan in Swiss franc is not the same as providing you with full information about the nature of a loan denominated in a foreign currency, the scale of the risk and consequences. Moreover, the information to the borrower should be given in a clear and understandable language so that the borrower can fully understand the risk connected with taking a loan denominated in a foreign currency and that he may be forced to pay back the amount much bigger than he has ever expected.
The Court of Appeal in Warsaw has further explained that the borrower should have the real influence on the content of the loan agreement and this right should not be artificial. If the need arises – the bank should be able to provide evidence that the borrower was given the opportunity to negotiate the various aspects of the agreement such as the amount of the loan, term of the loan or commission.
As regards the unfair terms incorporated in the loan agreement with Svenska Handelsbanken AB, the Court of Appeal in Warsaw has explained that when a financial institution grants a loan denominated in a foreign currency, it should be clear how the repayment is arranged and that the bank should not be allowed to choose the exchange rate unilaterally. In the loan agreement with Svenska Handelsbanken AB, there were no clauses on what would be the exchange rate for the repayment installments and thus the bank had not been limited in any way on how to calculate the installments.
There is more news for the FX mortgage borrowers in Poland. On 16 February 2023, Anthony Michael Collins – Advocate General of European Court of Justice (an adviser to the European Union's top court) backed the opinion of the Polish borrowers with Swiss franc-denominated mortgages. Advocate General said in a statement that the banks cannot pursue claims for extra remuneration from thousands of borrowers with mortgage contracts which are deemed invalid because they contained unfair terms.
While the advocate general's opinion is not binding, the European Court of Justice usually follows this opinion when making a final ruling, which is expected in June this year.
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