The issue of whether a bank loan agreement is a reciprocal agreement will soon be dealt with by the Supreme Court, which is to answer the question of the Financial Ombudsman. A hearing on the case – in an extended panel of seven judges – was scheduled for July 12.
The issue of the possible reciprocity of the mortgage loan agreement is one of the main issues that arise when courts resolve cases of CHF loans in the event of cancellation of the loan agreement due to abusive clauses.
The reciprocity issue
Such judicial annulment of the contract entails the problem of settlement by both parties – firstly, the repayment of principal and interest installments by the lender, and secondly, the repayment by the borrower of the loan amount paid by the bank in the nominal amount. How the settlement will proceed depends, among other things, on on the qualification of the invalidated contract and whether it is considered reciprocal. Courts have so far dealt with this issue differently.
Therefore, in the last several months, several issues have been brought before the Supreme Court, which – although formulated in different ways – de facto concern various aspects of the same problem. On the other hand, the Financial Ombudsman’s application regarding this issue was submitted to the Supreme Court in July last year.
According to the Civil Code, “a contract is reciprocal when both parties undertake in such a way that the performance of one of them is to be equivalent to the performance of the other”. At the same time, however, in the case of, for example, annulment of such an agreement, when the parties are to return reciprocal benefits, each of them “has the right of retention until the other party offers to return the benefit received or secures the claim for return”.
Mass invoking the right of retention
In practice, for example – in one of such cases, which was the basis for questions to the Supreme Court – the bank, while appealing against the judgment annulling the contract, stated at the same time that in the event of maintaining its position on the invalidity of this contract, it “raises the allegation of retaining the benefit” due to the plaintiff until she is offered a refund of PLN 230,000 . PLN of the loan paid to the claimant.
“The observations of the Financial Ombudsman show that banks invoke the right of retention en masse in the event of a dispute with a consumer regarding the so-called loans indexed and denominated in a foreign currency” – emphasized the Financial Ombudsman.
In connection with this, the Financial Ombudsman in the application signed by the RF deputy, Ziemowit Bagłajewski, asked the Supreme Court whether “the bank loan agreement (…) is a reciprocal agreement or a bilateral but not reciprocal agreement”. In the latter case, the parties would not have a right of retention.
RF requested that the credit agreement be considered as bilaterally binding but not reciprocal. As he argues in the reciprocal agreement, “the parties provide different benefits, but essentially of equivalent value.” Meanwhile – in his opinion – “the return of the subject of the bank loan agreement after the agreed period is not equivalent to the creditor’s performance, similarly – the reserved interest rate does not give the bank loan agreement the character of a reciprocal agreement”.
“The essence of a reciprocal agreement is the variety of benefits, which is not the case in a bank loan agreement (…) the borrower returns the same benefit, and does not provide other equivalent benefits” – stressed RF.
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Impact of the CJEU judgment
Seven judges of the Supreme Court’s Civil Chamber are to consider the RF’s question at the meeting on July 12, and Judge Władysław Pawlak is to be the rapporteur.
It is not known how the position of the Court of Justice of the EU will affect the resolution of this problem. In November 2021, the District Court in Warsaw referred a series of questions to the CJEU. Basically, they concern mutual settlements after the cancellation of the loan agreement and the limitation periods for claims in such a case. One theme of these questions, however, also relates to the “right of retention”. As stated justifying the application to the CJEU, “the referring court raises doubts as to whether the current interpretation of national law related to the effects of raising the objection of retention is reconcilable with the principle of the effectiveness of protection granted to the consumer”.
Some of these cases have been suspended pending the judgment of the Court of Justice of the EU. The Supreme Court suspended, for example, in February this year the case of the question of the Court of Appeal in Gdańsk from December 2021 and – in April this year. – questions of the District Court in Kraków from September 2022. According to the court in Gdańsk, “a bank loan agreement, analyzed in the context of modern principles of the functioning of a market economy, should be classified as a reciprocal agreement”. According to the Krakow court, the indexed loan agreement cannot be reciprocal.
In March, however, three Supreme Court judges examining one of the borrowers’ cases with the bank formulated questions directly referring to the bank’s application of the retention right after the cancellation of the “franc” loan agreement. This issue does not yet have a deadline for consideration.
Main photo source: TVN24