Zatwarnicki Słychan Adwokaci on Swiss-Franc Loan Cases

Zatwarnicki Słychan Adwokaci was established in 2019. It is run by two attorneys from Bolesławiec – Marcin Zatwarnicki and Luiza Słychan. At a time when one of Poland’s largest banks is offering settlements to Swiss-franc borrowers, we discuss the current situation of Swiss-franc borrowers and what led them to specialize in bank loans linked to the Swiss franc exchange rate.

Let us start at the beginning. What led you to specialize in claims brought by Swiss-franc borrowers?

Marcin Zatwarnicki: You could say that the specialization chose us, rather than us choosing the specialization [laughs]. As a lawyer handling court disputes with entities from the banking sector and insurance companies since 2013, I had been observing how the situation of Swiss-franc borrowers was developing since early 2018. However, it was ultimately the large number of inquiries from residents of Bolesławiec and the surrounding area that led the Firm to focus on supporting Swiss-franc borrowers.

Luiza Słychan: Exactly. We received many calls asking whether it was possible to meet regarding a loan agreement linked to the Swiss franc exchange rate. One theme dominated these conversations: “We do not want to entrust our case to someone from Wrocław or Warsaw whom we do not know. We want someone with whom we could speak face to face.”

Does the size of the Firm matter?

Marcin Zatwarnicki: Yes. In our view, the size of the team working at ZSadwokaci and the local nature of our Firm are definite advantages. It must be borne in mind that in every case, a Client needs direct contact with the lawyer handling the substance of their case. This is of course important in every type of case, but in Swiss-franc cases – where borrowers’ trust in so-called institutions of public trust has already been brutally exploited once – it is of fundamental importance.

At our Firm, we are the only people handling a client’s case substantively “from A to Z” – the two attorneys. One of us always conducts the first meeting with the Client; we prepare the substantive position in the case, and we are the ones who attend hearings with the Client. From our Clients’ accounts, we know that this is not standard practice at other large entities with which other Swiss-franc borrowers cooperate.

Luiza Słychan: The fundamental issue is building a relationship based on honesty and trust. In our view, such a relationship can be built only through personal meetings and conversations with the Client. Importantly, these conversations do not always concern matters strictly related to the case entrusted to us. Such a relationship certainly cannot develop if the Client cannot contact the lawyer substantively handling their case, either because they do not know who that person is or because they cannot reach them through the wall created by the hotline and general company email inbox of the firm to which we entrusted our case.

Why do you refer to a company entrusted with handling the case rather than a law firm?

Luiza Słychan: Because unfortunately, many Swiss-franc borrowers do not enter into direct cooperation with attorney-at-law firms or, for example, legal counsel. Instead, they conclude agreements with companies that act as intermediaries between them and the lawyers representing them. In our view, this is highly disadvantageous for the client, because these companies are not subject to the same liability as attorneys. We are required to have third-party liability insurance in case of an error made while handling a Client’s case. At the same time, such a potential failure would also be subject to review under the rules governing attorneys’ disciplinary liability.

What is the current situation of Swiss-franc borrowers?

Marcin Zatwarnicki: At present, three dominant issues are stirring our Clients’ emotions. First, the wait for the Supreme Court resolution in case reference CZP 11/21; second, the mediation process before the Polish Financial Supervision Authority, during which one of Poland’s largest banks is offering settlements to Swiss-franc borrowers; and third, the ongoing procedure to change the reference rate from LIBOR to SARON.

In the context of the Supreme Court resolution you mentioned, the most important question seems to be whether to wait for it at all or to take action regardless of its content.

Marcin Zatwarnicki: Exactly. Let us remember that the resolution in the case I mentioned was supposed to be issued long ago, but unfortunately we still cannot wait for it. At the same time – as demonstrated by the number of judgments currently being issued in Swiss-franc cases – the ordinary courts are not waiting for the resolution in the above-mentioned case and are essentially issuing judgments favorable to borrowers and decisions granting interim protection every day. This is due, among other things, to the fact that, as a rule, most of the issues submitted to the Supreme Court for consideration in proceedings under case file reference III CZP 11/21 have already been resolved in the existing case law of ordinary courts and in other resolutions issued by the Supreme Court. To illustrate the scale of court proceedings concerning agreements linked to the Swiss franc exchange rate, please note that, according to data presented by the Stop Bank Abuse Association, more than 2,300 judgments favorable to borrowers were issued before courts of first instance in 2021 to date. During the same period, as many as 94% of appellate proceedings before courts of second instance ended with the dismissal of banks’ appeals.

Luiza Słychan: I also think it should not be forgotten that proceedings concerning claims under a Swiss-franc loan agreement are a process that extends significantly over time.

To illustrate this, please bear in mind that cooperation between our Firm and the Client involves several stages. At the beginning, the prospective Client provides us with the available loan documentation, which we analyze free of charge. We then tell the Client whether they have any claims against the bank from which they took out the loan linked to the Swiss franc exchange rate, and what those claims are. Only at the next stage is an agreement with ZSadwokaci signed. After the agreement is signed, we submit a complaint to the bank – the lender – presenting the Client’s demands and the legal arguments supporting them. If the complaint does not produce the intended result, we then commence court proceedings by filing a claim with the Court.

What is the average duration of court proceedings?

Luiza Słychan: Unfortunately, there is no rule, but one must reckon with the possibility that a final judgment in the case may be obtained within a year of filing the claim, or that it may take more than two years. Much depends on the litigation strategy adopted by the bank’s attorney, which is often aimed at prolonging the proceedings, as well as on the efficiency of the Court hearing our case.

Would it therefore be better to use the possibility of mediation before the Polish Financial Supervision Authority?

Marcin Zatwarnicki: In reality, it depends on the Client’s motivation. Not everyone is ready to place the resolution of their case “in the hands” of the Court. In addition, for many borrowers, court proceedings are a major source of stress. We approach such situations with understanding and respect the decisions made both by those of our Clients who choose court proceedings and by those who submit applications for mediation. We offer each of them our support and advice. It must be remembered that the subject of loans linked to a foreign-currency exchange rate is highly complex and, regardless of the procedure through which we choose to protect our interests, it is worth having an attorney experienced in this type of battle on our side.

To conclude our conversation, please explain what consequences the aforementioned change from LIBOR to SARON has for the performance of Swiss-franc loan agreements.

Luiza Słychan: At first glance, this change appears to be technical, and borrowers are therefore being persuaded that they should not be concerned about it. We believe, however, that such a change – depending on the wording of individual loan agreements – may have significant implications for whether the loan agreement can continue. It may turn out that, as a result of the discontinuation of LIBOR, there will be no reference rate binding on the parties under the agreement, on the basis of which the amount of the borrower’s obligation to the bank would be determined.

We know that some banks have begun contacting Swiss-franc borrowers with requests to sign annexes to their existing agreements. Here we recommend great caution, because we cannot rule out a situation in which such an annex – owing to its wording – prevents the effective challenge of unfair terms contained in a particular loan agreement. We recommend particular caution in this regard.

Thank you very much for this conversation.

Marcin Zatwarnicki: Thank you, and we invite you to contact ZSadwokaci if any of your readers have additional questions about Swiss-franc loans.