In anticipation of the judgment of the Polish Supreme Court on Swiss franc loans

Thousands of borrowers, lawyers, and bankers are waiting for the judgment of the Polish Supreme Court the issuing of which has already been postponed several times. The judgment is expected to clear a number of doubts, as well as inconsistencies in the judgments of courts of lower instances, concerning Swiss franc loans. Originally, the judgment was to be given on 25 March 2021. However, it was postponed to 13 April due to Małgorzata Manowska, the First President of the Polish Supreme Court, falling ill to COVID-19.

Growing uncertainty

Thousands of cases concerning Swiss franc loans are currently pending before Polish courts. Many of them have been suspended until the Polish Supreme Court has given its judgment. The situation is the worst for the persons who have already gone through a lawsuit and are only waiting for the judgment, but their courts have already postponed them twice, and not only because of COVID-19. The longer the delay, the more lobbying opportunities for banks. Their lawyers are already saying that the two judges of the Supreme Court who have Swiss franc loans should perhaps be excluded from the adjudicating panel.

A new judgment on the horizon

The judgment has once again been postponed, to 11 May. The reason? Pandemic restrictions and the number of judges of the full panel of the Civil Chamber of the Supreme Court (a total of 28 persons have to be present in the courtroom) did not allow for the sitting of 13 April to take place in sufficiently safe conditions. The change of date is also related to an upcoming judgment by the EU Court of Justice, which, in the opinion of the Polish Supreme Court, may create significant context for interpretation with respect to the questions contained in the request sent by the First President of the Polish Supreme Court to the Civil Chamber of the Polish Supreme Court.

What the EUCJ is to decide about

Five questions have been sent to the Court of Justice. They concern:

1. Agreement dishonesty.

   Is a national court obliged to conclude that an agreement executed with a consumer is dishonest also if, at the date of adjudication, as a result of amendments made to the agreement by the parties in the form of an annex, the given condition has been modified in such a way that it no longer is dishonest, and concluding that this condition, in its original wording, was dishonest, could result in declaring the entire agreement void?

2. The bank’s margin.

   Does the directive permit a national court to conclude that only some of the elements of a contractual condition concerning the exchange rate for the currency in which the loan has been advanced to the consumer are dishonest, i.e. eliminate the provision concerning the unilaterally and unclearly specified margin of the bank that is an element of the exchange rate, while retaining the unambiguous provision related to the average exchange rate published by the central bank (the National Bank of Poland), which does not create the need to replace the eliminated contents with any legal regulation and will result in reinstating real balance between the consumer and the enterprise, even though the essence of the provision concerning the carrying out of a performance by the consumer is changed in the consumer’s favor?

3. Prevention of dishonest practices.

   Even if the national legislator introduces measures preventing constant use of dishonest contractual conditions by means of enacting regulations that impose on banks the obligation to specify in detail the methods and dates of determining the currency exchange rate on the basis of which the loan amount and the principal and interest payments are calculated, as well as the principles of converting the disbursement or repayment of the loan into that currency, does public interest prevent concluding that only some of the elements of the contractual obligation are dishonest, as described in question two?

4. Non-binding nature of the agreement.

   Should the non-binding nature of an agreement be understood in such a way that it constitutes a sanction that may occur as a result of constitutive court judgment issued at the explicit request of the consumer, with consequences arising as of the moment of agreement execution, i.e. ex tunc, and the claims for restitution of the consumer and the bank become enforceable at the moment of the judgment becoming final and binding?

5. The obligation to inform the consumer.

   Does the directive impose on a national court the obligation to inform the consumer (who demands that the agreement be declared void as a result of the elimination of dishonest conditions) about the legal consequences of such a judgment, including the potential ones?

The questions concern the issue of the potential lapse of the prescription periods for the bank’s claims and the potential remuneration due to the bank on account of the customer using the principal of the loan if the agreement is voided. They also touch upon the issue of counting the prescription periods for claims of the return of the principal. The EUCJ judgment is to be given on 29 April 2021.

What has the First President of the Polish Supreme Court asked about?

The First President of the Polish Supreme Court has asked the Civil Chamber, which is to reply as a full panel of judges, questions the answers to which are to help settle the discrepancies between the interpretation of legal regulations by the Supreme Court and by the common courts in judgments concerning Swiss franc loans. The answers to these questions will be of crucial nature.

1. In the case of concluding that the provision of an indexed or denominated loan agreement that concerns determining the exchange rate of the foreign currency is unlawful and does not bind the consumer, is it possible to assume that this provision is replaced by another method of determining the exchange rate of the foreign currency that follows from legal regulations or custom?
2. In the case of it being impossible to determine the foreign currency exchange rate binding the parties in a loan agreement indexed to that currency, can the agreement bind the parties in all other aspects?
3. In the case of it being impossible to determine the foreign currency exchange rate binding the parties in a loan agreement denominated in that currency, can the agreement bind the parties in all other aspects?
4. In the case of an invalid or ineffective agreement (in performance of which the bank disbursed to the borrower all or some of the loan and the borrower is repaying the loan), do separate claims on account of undue performance arise for both parties, or is there only one claim, equal to the difference between the performances carried out to the benefit of the party whose total performance was of higher value?
5. In the case of the loan agreement being invalid or ineffective due to the unlawfulness of some of its provisions, does the prescription period for the bank’s claim for the return of the amount disbursed on account of the loan commence at the moment of disbursement?
6. In the case of the loan agreement being invalid or ineffective and any of the parties having a claim for the return of a performance carried out in performance of that agreement, does that party may also demand a remuneration on account of the other party using its funds?

Waiting for the decision

Swiss franc loans have been sparking controversies for years and the judgment of the Polish Supreme Court may simplify the entire process. However, the case is so complex that there are a number of questions, both from Polish courts and the EU Court of Justice. The decision of one will affect the judgment of the other, so today, eyes are on the judgment of the EUCJ, which will be issued on 29 April. And perhaps, after that date, the Civil Chamber will reply to the questions asked by the First President of the Polish Supreme Court.