Judgments C-520/21 and C-287/22 of the Court of Justice of the European Union
The recent high-profile judgments of the Court of Justice of the European Union of 15 June 2023 (C-520/21 and C-287/22) on the issue of CHF mortgage agreements may have a significant impact on Polish financial institutions.
The first judgment (C-520/21) responds to a question referred for a preliminary ruling by a Polish court as to whether the parties to a CHF-indexed/denominated loan agreement which has been annulled, are entitled to assert claims against each other, other than reimbursement of the amounts actually paid. The main issue concerned the possibility of claiming additional ‘compensation’ for the time of performance of the loan agreement.
The Court, in line with the Advocate General’s opinion of February this year, stated that such claims may be brought by parties to an invalid contract, depending on their status. Borrowers may make claims going beyond the reimbursement of monthly instalments and expenses, as long as these claims do not preclude the objectives of Directive 93/13 or the principle of proportionality. Banks, on the other hand, may not receive any compensation for the adverse consequences of annulling a loan agreement, if these consequences arose out of the bank’s unlawful action.
The second judgment (C-287/22) has answered the question of whether a national court adjudicating a case brought by a consumer challenging the validity of a loan agreement, may dismiss a consumer’s application for an interim measure, having regard to consumer protection regulated by Articles 6(1) and 7(1) of Directive 93/13.
The Court stated that, in the light of Directive 93/13, the national court should be able to grant consumers interim measures (securing of an action) by suspending, for the duration of the proceedings, the obligation to pay monthly instalments including the principal and the interest due under the loan agreement. However, the need to grant security must be assessed from the perspective of ensuring the full effectiveness of a future judgment on a potentially unfair contractual term, having regard to all the circumstances of the case.
Despite some challenges, we believe that through a strategy based on a proper interpretation of the law and an effective litigation approach, the banking sector can adequately manage potential claims. If approached appropriately, banks’ claims can be successfully pursued, thus reducing potential losses.
We assist our clients in responding appropriately to these developments – we prepare analyses of the impact of the judgments on the banks’ operations and assist with risk assessment and litigation strategy.
If you are interested in our support, do not hesitate to contact us