When, encouraged by the low exchange rate of the Swiss franc, we took out loans in this currency a dozen or so years ago, few of us realized how badly things could turn out. 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 a bank and recover your money. Undoubtedly, professionals in this field are Luiza Słychan and Marcin Zatwarnicki – the owners and attorneys representing clients at the law firm Zatwarnicki Słychan Adwokaci.
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 had been observing how the situation of Swiss-franc borrowers was developing since the beginning of 2018.
Luiza Słychan: For several years, we have received many calls asking about the possibility of meeting 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.”
Is that why 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 significant advantage. In Swiss-franc borrowers’ cases—people whose trust in the so-called public institution system has already been seriously exploited once—it 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 legal 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 created only through personal meetings and conversations. Such a relationship will not arise if the Client cannot contact the lawyer handling their case because they do not know who that person is, or cannot reach them through the wall created by the company’s helpline and general email inbox after entrusting it with their 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 establish a direct relationship with law firms. They sign agreements with companies that act as intermediaries between them and the lawyers representing them. In our opinion, this is highly unfavorable for the client, as these companies are not subject to the same liability as attorneys. We are required to hold third-party 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 was definitely a good month for Swiss-franc borrowers. That 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 important because there is a sizable group of Swiss-franc borrowers who took out loans partly to finance their business obligations. Until now, these borrowers had not decided to seek invalidation of 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 them to be consumers—they had to have concluded the loan agreement for their 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, a borrower had to refinance earlier credit obligations with a Swiss-franc loan, and these could include, for example, small business loans or leases. Now such a borrower will also be treated as a consumer because, as the Court indicated, the loan’s purpose connected with the borrower’s business activity is so limited that it is not dominant overall. For example, a loan of PLN 150,000.00 was used in the amount of PLN 130,000.00 to meet the Swiss-franc borrower’s private needs, and only PLN 20,000.00 for a purpose related to their business activity.
The next judgment concerned what is referred to 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 borrowers from going to court to have their loan agreements invalidated. 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 regard 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 a bank in 2008, the bank would state that after the agreement was invalidated it would seek repayment of both PLN 150,000.00 and an additional PLN 200,000.00 as remuneration for its use.
Are these claims justified?
Marcin Zatwarnicki: The Court confirmed what attorneys representing Swiss-franc borrowers had been saying for a long time—of course they are not. The Court confirmed the emerging 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 by a consumer and a bank is found to have been invalid from the outset because it contains unfair contractual terms, the bank may not, in addition to returning the money paid under the agreement and paying statutory default interest from the date of the demand for payment, seek any additional benefits from the consumer. This means that the bank’s claim for remuneration for the use of capital is unfounded. Interestingly, in the event described above, the Court granted consumers the right to seek additional sums as compensation for the inclusion of unfair contractual provisions in their loan agreements.
And the third judgment?
Luiza Słychan: This judgment concerns whether repayment of loan installments may be suspended while proceedings to invalidate the loan agreement are pending. This was a controversial issue because, nationwide, some courts granted such suspensions—for example, the Swiss-Franc Division of the Warsaw Regional Court—while others dismissed such applications. As a result, the Swiss-Franc Division became so overwhelmed by the number of 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 payments 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 150,000.00 and have already repaid that amount to the bank. Without suspension of repayments, a Swiss-franc borrower would be forced to bring a second court case against the bank to recover the installments paid between initiating the action to invalidate the agreement 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.
What does the procedure for invalidating a loan agreement involve?
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 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—in which we present the Client’s demands and the legal arguments supporting them. If the complaint does not produce the desired result, only then do we begin 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—meaning conclusive—judgment in a case can 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 attorney, 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 large 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 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 field of loans linked to a foreign-currency exchange rate is complicated, 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. Preferably an experienced lawyer.
