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Tuesday, May 28, 2024

Franc loans. There is a judgment of the CJEU

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The Court of Justice of the European Union issued two rulings on Thursday in cases concerning Swiss franc loans. The CJEU stated, inter alia, that European Union law does not prevent consumers from demanding compensation from the bank in the event that a mortgage contract containing unfair terms is found invalid, in addition to the reimbursement of the monthly installments paid.

However, this law prevents banks from pursuing similar claims against consumers, added the Tribunal.

“(…) the possible recognition of the mortgage contract as invalid is the result of the use of unfair terms by the Bank. Therefore, it cannot be allowed either to derive economic benefits from its unlawful behavior or to receive compensation for the inconvenience caused by it.

The District Court in Warsaw turned to CJEU with a request for a preliminary ruling (C-520/21) and asked whether, in the event of invalidity of the loan agreement, banks and consumers may also demand other benefits.

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The case C-520/21 concerned remuneration for the use of capital after the cancellation of the CHF loan agreement. On the one hand, the question was whether the banks could demand any other benefits from the consumer, apart from the return of the paid-out capital and the payment of statutory interest for delay from the time of the request for payment, and on the other hand, the pursuit of claims from the bank that went beyond the reimbursement of monetary benefits.

In this matter, the District Court for Warszawa-Śródmieście, which is examining the case of one of the “francowicze”, turned to the Court of Justice of the European Union.

Suspension of installment payments

The CJEU also issued a ruling on the suspension of loan installment payments. According to the CJEU, the court may order an interim measure in the form of suspending the repayment of loan installments during the case to determine the unfair nature of the terms of the contract.

In the opinion of the Court, a refusal to suspend the repayment of loan installments under interim measures may render, at least in part, the final ruling on the invalidity of the contract ineffective.

“This ruling would not lead to the restoration of the legal and factual situation in which the consumer would be in the absence of the unfair clause, since he would then have to bring another action for payment of the amounts paid during the first trial under the annulled contract. In other words, the restitution effect of the judgment declaring the contract invalid would not be fully achieved. Thus, the effectiveness of the protection provided for in Directive 93/13 would be reduced,” the CJEU ruled.

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