Wo?niak Legal has successfully represented Polish FX mortgage borrower in another case regarding Swiss franc loans

Wo?niak Legal has successfully represented a Polish FX mortgage borrower over validity of the Swiss franc loan taken by him and his wife (both acting as consumers) from Deutsche Bank Polska, to purchase the house. ?

On 23 May 2024, the Civil Court in Warsaw decided that the Swiss franc loan taken by a borrower and his wife from Deutsche Bank Polska is invalid due to unfair terms included in the loan documentation and failure to provide the borrowers with sufficient information about the loan and the foreign exchange risks associated with taking a loan in a foreign currency.

The judge, after having announced the verdict, gave headline reasons ex tempore, with full reasons to follow. The judge said, inter alia, that:

“When a financial institution grants a loan denominated in a foreign currency, it must provide a 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.”

This verdict of the Civil Court 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. ? ?

The Civil Court 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. The court found that the borrowers had no influence on the content of the agreement, which was entirely prepared by the bank and presented to them only for signature. ?

As regards the unfair terms incorporated in the loan agreement with Deutsche Bank, the Civil Court in Warsaw has explained that when a financial institution grants a loan denominated in a foreign currency, it should be clear how the amount of the loan to be paid out in PLN and repayment is arranged and that the bank should not be allowed to choose the exchange rate unilaterally. In the loan agreement with Deutsche Bank Polska, there were no clauses on what would be the exchange rate for the amount of the loan to be paid out in PLN and for the repayment installments (except for the clause that the bank will use exchange rate for foreign currencies set out in the bank’s table of foreign currencies exchange rates) and thus the bank had not been limited in any way on how to calculate the amount of the loan to be paid out in PLN and the installments.