When, encouraged by the low Swiss franc exchange rate, we took out loans in this currency more than a dozen years ago, few of us realized how badly things could end for us. Banks took advantage of our limited knowledge of loans. And WIBOR and LIBOR sounded to us then like the names of characters in a children's fairy tale. 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. Luiza Słychan and Marcin Zatwarnicki—owners of, and attorneys representing clients through, ZS Adwokaci—are undoubtedly professionals in this field.
How long have you specialized in Swiss-franc claims?
Marcin Zatwarnicki: As a lawyer handling court disputes with entities from the banking sector and insurance companies since 2013, I have observed 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 loan agreements 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 we could talk to face to face.”
So do you focus on clients from Bolesławiec, Jelenia Góra, and Legnica?
Marcin Zatwarnicki: Yes. In our view, the open and direct-contact-oriented nature of our Law Firm is a definite advantage. In Swiss-franc borrowers’ cases—whose trust in the so-called public institution has already been seriously exploited once—it is crucial. At our Law Firm, we, the attorneys, are the people who handle the substance of a client’s case “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 cooperate.
Luiza Słychan: The fundamental issue is building a relationship based on honesty and trust, which can be built only through personal meetings and conversations. Such a relationship cannot develop when the Client cannot contact the lawyer handling the case because they do not know who that person is, or cannot reach them through the wall created by the helpline and the general company email inbox to which we entrusted our case.
You mentioned a company entrusted with handling the case. Isn’t that the same as a law firm?
Luiza Słychan: Unfortunately, many Swiss-franc borrowers do not establish a direct relationship with law firms. They enter into agreements with companies that act as intermediaries between them and the lawyers who represent 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 civil liability insurance in case of an error made while handling a 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 three important judgments concerning Swiss-franc cases in total.
Could you briefly tell us about them?
The first concerns the definition of a consumer under European Union law. This is important because there is a sizeable group of Swiss-franc borrowers who took out loans partly to finance their business obligations. Until now, these borrowers had not attempted to invalidate their loan agreements because there was doubt as to whether they had consumer status and therefore 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 business activity. For example, they bought an apartment to meet their housing needs. However, we know of cases in which, in order to purchase such an apartment, a borrower had to refinance earlier credit obligations with a Swiss-franc loan, and these 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 related to the borrower’s business activity is so limited that it is not predominant overall. For example, a loan of PLN 150,000.00 was allocated in the amount of PLN 130,000.00 to meet the Swiss-franc borrower’s private needs, and only PLN 20,000.00 to a purpose related to 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: A claim for remuneration for the use of capital was a kind of scare tactic used by Swiss-franc banks to discourage Swiss-franc borrowers from going to court to invalidate their loan agreements. The banks said: “Fine, if the agreement is invalidated, we will sue you for additional funds—a fee—for using for 20 or 25 years money that we once lent you.” It often happened that the banks’ claims in this respect exceeded 100% of what the client had received when the loan was disbursed. For example, if a borrower received capital of PLN 150,000.00 from the bank in 2008, the bank would state that, after the agreement was invalidated, it would demand that borrower repay both PLN 150,000.00 and an additional PLN 200,000.00 as remuneration for using it.
Are these claims valid?
Marcin Zatwarnicki: The Court confirmed what the representatives of Swiss-franc borrowers have long been saying—of course they are not. The Court confirmed the developing line of rulings 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 by a consumer and a bank is found to have been invalid from the outset because unfair contractual terms were included in it, the bank, in addition to returning money paid under that agreement and paying statutory default interest from the time it was called upon to pay, may not demand additional benefits from the consumer. This means that a bank’s claim for remuneration for the use of capital is unfounded. Interestingly, if the above situation occurs, the Court granted consumers the right to claim additional funds as compensation for the inclusion of prohibited contractual provisions in their loan agreement.
And the third judgment?
Luiza Słychan: This judgment concerns whether loan-installment repayments may be suspended for the duration of proceedings to invalidate a loan agreement. The issue was controversial because, across the country, 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 so overwhelmed by lawsuits that changes to the law were necessary; borrowers may now bring an action to invalidate an agreement before the court of their place of residence. Ultimately, the Court resolved the issue and stated that courts should suspend loan-installment repayments while awaiting the conclusion of court proceedings to invalidate a Swiss-franc loan. However, the Court indicated that this suspension should apply when the borrower has already repaid what they received from the bank under the loan agreement—for example, they received PLN 150,000.00 and have already returned that amount to the bank. Without suspension of repayments, a Swiss-franc borrower would be forced to initiate a second court case against the bank to recover the installments paid between the start of 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 undermines the coherence and effectiveness of the European consumer-protection system.
How do proceedings to invalidate a loan agreement unfold?
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 inform the Client whether they have claims against the bank from 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 intended result, only then do we commence court proceedings, meaning that we file a lawsuit with the Court.
What is the average duration of court proceedings?
Luiza Słychan: Unfortunately, there is no fixed rule, but you should expect that a final, legally binding ruling in the case may be obtained within a year of filing the lawsuit, 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 hearing our case. But let us remember that we are fighting for large sums of money, and sometimes for our entire life savings, and I think it is worth waiting and being patient.
So would it not be better to take advantage of the settlements now being offered by banks?
Marcin Zatwarnicki: This is always the Client’s choice. Not everyone is ready to put 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 in this type of battle. Preferably an experienced lawyer.