Swiss-Franc Loans: How to Recover Money from Banks | Zatwarnicki Słychan Adwokaci

When, encouraged by the low Swiss franc exchange rate, we 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 a bank and recover your money. Undoubtedly, professionals in this field are Luiza Słychan and Marcin Zatwarnicki – the owners of and lawyers representing clients from Zatwarnicki Słychan Adwokaci law firm.

And the last three judgments of the Court of Justice of the European Union clearly work in favor of borrowers.
How long have you specialized in Swiss-franc claims?

Marcin Zatwarnicki: As a lawyer, I have conducted court disputes with entities from the banking sector and insurance companies since 2013.

Luiza Słychan: We receive many calls asking about the possibility of a meeting concerning 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.”

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 significant advantage. In Swiss-franc borrowers’ cases—whose trust in the so-called public institutions has already been seriously exploited once—this is crucial. 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 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 a 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 helpline and the general company email inbox to which we entrusted our 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 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 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: Last year was definitely a good time for Swiss-franc borrowers. This is because the Court of Justice of the European Union issued 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 considerable group of Swiss-franc borrowers who took out loans while using part of them 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 them to be consumers—meaning they entered into the loan agreement for private purposes, unrelated to their 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 use a Swiss-franc loan to refinance earlier credit obligations, 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 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 150,000.00 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 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: 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. 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 the money 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 a bank in 2008, the bank would state that, after the agreement was invalidated, it would demand that the borrower return both PLN 150,000.00 and an additional PLN 200,000.00 as remuneration for using it.

Are these claims justified?

Marcin Zatwarnicki: The Court confirmed what representatives of Swiss-franc borrowers had been saying for a long time—of course they are not. The Court confirmed the emerging line of rulings by Polish courts, which reject such bank claims. The Court of Justice of the European Union stated that when a loan agreement concluded by a consumer and a bank is held 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 time it was called upon to pay, demand additional benefits from the consumer. This means that a bank’s claim for remuneration for the use of capital is unjustified. Interestingly, should the above situation arise, the Court granted consumers the right to seek additional sums 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 seeking to invalidate a loan agreement. This was a controversial issue because, across the country, some courts granted such suspensions—for example, the Swiss-Franc Division of the Warsaw Regional Court—while others dismissed such motions. This led to the Swiss-Franc Division becoming so overloaded with lawsuits that changes to the law were necessary; borrowers can now bring an action to invalidate an agreement before the court of their place of residence. Ultimately, the Court resolved this issue and held 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 returned that amount to the bank. If repayment is not suspended, the Swiss-franc borrower may be forced to initiate a second court case against the bank to recover the installments paid between the commencement of the invalidation proceedings and the final judgment in that case. The Court indicated that consumers 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 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 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 desired result, only then do we begin court proceedings, meaning we file a lawsuit with the court.

What is the average duration of court proceedings?

Luiza Słychan: Unfortunately, there is no rule, but you should expect that a final judgment in the case can 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.

Would it therefore 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 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 field of loans linked to a foreign-currency exchange rate is complicated, and regardless of the procedure through which we decide to protect our interests, it is worth having an experienced representative on our side in this type of battle. Preferably an experienced lawyer.