When, encouraged by the low Swiss franc exchange rate, we eagerly took out loans in this currency more than a decade ago, few of us realized how badly it could end for us. Banks took advantage of our limited knowledge of loans and our lack of awareness of the consequences of borrowing in a foreign currency. And WIBOR and LIBOR sounded to us then like the names of cartoon characters. We cannot turn back time, but we can help ourselves and take the bank to court. The most important thing is to use a professional law firm that knows how to win against the bank and recover your money. Undoubtedly, professionals in this field are Luiza Słychan and Marcin Zatwarnicki – the owners and attorneys representing clients at Zatwarnicki Słychan Adwokaci.
How long have you specialized in Swiss franc borrower claims?
Marcin Zatwarnicki: As a lawyer who has conducted court disputes with entities from the banking sector and insurance companies since 2013, I have been observing how the situation of Swiss franc borrowers has developed since the beginning of 2018.
Luiza Słychan: For several years, we have received many calls asking about the possibility of meeting to discuss a loan agreement linked to the Swiss franc exchange rate. One theme dominated such 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.”
That is why you focus on clients from Bolesławiec, Jelenia Góra and Legnica?
Marcin Zatwarnicki: Yes. In our view, the open and direct-contact-oriented character of our Law Firm is a clear advantage. In Swiss franc borrower cases—whose trust in the so-called public institution has already been seriously exploited once—this is of key importance. At our Law Firm, we, the attorneys, are the people who handle the client’s case substantively “from A to Z.” We prepare the substantive position in the case and attend hearings with the Client. From our Clients’ accounts, we know that this is not standard practice at large entities with which other Swiss franc borrowers work.
Luiza Słychan: The fundamental issue is building a relationship based on honesty and trust, which can be established only through personal meetings and conversations. Such a relationship will not develop if the Client cannot contact the lawyer handling the case because they do not know who that lawyer is, or cannot reach them through the wall created by the company’s helpline and general email inbox after entrusting it with the case.
You mentioned a company entrusted with handling the case. Is that not the same as a law firm?
Luiza Słychan: Unfortunately, many Swiss franc borrowers do not cooperate directly with law firms. They enter into agreements with companies that act as intermediaries between them and the lawyers representing them. In our opinion, this is highly unfavorable 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 the Client’s case.
What is the current situation of Swiss franc borrowers?
Marcin Zatwarnicki: June is definitely a good month for Swiss franc borrowers. This is because the Court of Justice of the European Union issued a total of three important judgments concerning Swiss franc cases.
Could you briefly tell us about them?
The first concerns the definition of a consumer under European Union law. This is significant because there is a substantial group of Swiss franc borrowers who took out loans partly to finance business obligations. Until now, these borrowers had not attempted to invalidate their loan agreements because there was doubt as to whether they qualified as consumers and therefore benefited from the protection associated with that status. The Court adopted a broad definition of a consumer.
What does that mean?
Luiza Słychan: The protection guaranteed to Swiss franc borrowers under European law required the borrower to be a consumer—that is, to have entered into the loan agreement for private needs, unrelated to their business activity. For example, they might have bought an apartment to meet their housing needs. However, we know of cases in which, in order to purchase such an apartment, the borrower had to use a Swiss franc loan to refinance earlier credit obligations, which could include, for example, small business loans or leases. Such a borrower will now also be treated as a consumer because, as the Court indicated, the purpose of the loan connected with the borrower’s business activity is so limited that it is not dominant overall. For example, a loan of PLN 150,000 was used in the amount of PLN 130,000 to meet the Swiss franc borrower’s private needs, and only PLN 20,000 for a purpose connected with their business activity. The next judgment concerned what is known as remuneration for the use of capital. How did the Court of Justice of the European Union address this issue?
Marcin Zatwarnicki: The claim for remuneration for the use of capital was a kind of scare tactic used by Swiss franc banks to discourage borrowers from going to court to invalidate their loan agreements. Banks would say: “Fine, if the agreement is invalidated, we will sue you for payment of additional funds—remuneration—for having used for 20 or 25 years money that we once lent you.” It often happened that banks’ claims in this respect exceeded 100% of what the client had received when the loan was disbursed. For example, if a borrower received PLN 150,000 in capital from the bank in 2008, the bank would state that, after the agreement was invalidated, it would seek both repayment of PLN 150,000 and an additional PLN 200,000 as remuneration for using it.
Are these claims legitimate?
Marcin Zatwarnicki: The Court confirmed what representatives of Swiss franc borrowers have been saying for a long time—of course not. The Court confirmed the developing line of judgments by Polish courts, which reject this type of bank claim. The Court of Justice of the European Union stated that when a loan agreement concluded between a consumer and a bank is declared invalid from the outset because it contains unfair contractual terms, the bank may not, in addition to returning money paid under the agreement and paying statutory interest for delay from the date of the demand for payment, seek additional benefits from the consumer. This means that the bank’s claim for remuneration for the use of capital is unfounded. Interestingly, if the above situation arises, the Court granted consumers the right to seek additional sums of money as compensation for the inclusion of unfair contractual provisions in their loan agreement.
And the third judgment?
Luiza Słychan: This judgment concerns whether repayment of loan installments may be suspended for the duration of proceedings to invalidate a loan agreement. The issue was controversial because, nationwide, some courts granted such suspensions—for example, the Swiss Franc Division of the Regional Court in Warsaw—while others dismissed such applications. This led to the Swiss Franc Division becoming clogged with so many lawsuits that legal changes were necessary; borrowers can now bring an action to invalidate an agreement before the court of their place of residence. Ultimately, the Court resolved the issue and held that courts should suspend repayment of loan installments while awaiting the conclusion of court proceedings to invalidate a Swiss franc loan. However, the Court indicated that the suspension should apply when the borrower has already repaid what they received from the bank under the loan agreement—for example, they received PLN 150,000 and have already returned that amount to the bank. Without a suspension of repayments, the Swiss franc borrower would be forced to bring a second court case against the bank to recover installments paid between commencing the invalidation proceedings and the final judgment in that case. The Court indicated that a consumer cannot be placed in such a position because this would undermine the coherence and effectiveness of the European consumer-protection system.
How does the procedure for invalidating a loan agreement proceed?
Marcin Zatwarnicki: Proceedings concerning claims under a Swiss franc loan agreement are a process that takes time. The Client provides us with the available loan documentation, which we analyze free of charge. We then tell the Client whether they have claims against the bank with which they took out a loan linked to the Swiss franc exchange rate, and what those claims are. Only at the next stage do we sign an agreement with the Client, ZS Adwokaci. After that, we submit a complaint to the bank—the lender—setting out the Client’s demands and the legal arguments supporting them. If the complaint does not produce the desired result, only then do we commence court proceedings, meaning we file a statement of claim with the Court.
What is the average duration of court proceedings?
Luiza Słychan: Unfortunately, there is no rule, but one should expect that a final judgment in the case may be obtained within a year of filing the claim, although it may also take more than two years. Much depends on the litigation strategy adopted by the bank’s representative, which is often aimed at prolonging the proceedings, as well as on the efficiency of the Court deciding our case. But let us remember that we are fighting for substantial sums of money, and sometimes for our entire life savings, and I think it is worth waiting and being patient.
Would it therefore not be better to accept the settlements now being offered by banks?
Marcin Zatwarnicki: That is always the Client’s choice. Not everyone is prepared to place the resolution of their case “in the hands” of the Court. For many borrowers, court proceedings are highly stressful. We offer each of them our support and advice. The area of loans linked to a foreign currency exchange rate is complicated, and regardless of the procedure through which we protect our interests, it is worth having an experienced representative on our side who is seasoned in this type of battle. Preferably an experienced lawyer.