Swiss Franc Loan Holders Score a Point in Disputes with Banks

5 April 2017

TEMIDA | Just before the Supreme Court hearing, the bank withdrew the cassation regarding the low contribution insurance.

The withdrawal of the cassation complaint means that the bank reimburses its customers for the insurance premiums paid for low own contribution. For other borrowers, this is not necessarily a good ending.

They Won PLN 60 Thousand

In December 2007, spouses Sandrine and Wojciech K. obtained a mortgage loan in Swiss Francs from Bank Millennium (amounting to over PLN one million after conversion). The agreement included an additional provision that they were to reimburse the bank for low-interest insurance premiums. The premiums amounted to 3% of the unpaid contribution for three years, in this case over PLN 20 thousand. Due to the increase in the franc exchange rate, the premium kept increasing. When the borrowers realized that they were not receiving any equivalent performance in return, they filed an action [against the bank].

In December 2014 the District Court for Warszawa-Mokotów awarded the requested amount, i.e. PLN 60,000, and in January 2016 the Regional Court in Warsaw upheld the judgment. In the opinion of both courts, the bank did not provide its clients with sufficient information on the insurance mechanism and alternative collaterals, thus blatantly infringing the claimants’ interests. Consequently, the contested provision of the agreement was considered contrary to good practice, the Bank appealed to the Supreme Court, but shortly before the hearing, it withdrew its cassation complaint.

Why did the bank decide to do that?

‘We decided to take advantage of the right we are entitled to and withdraw the motion for a cassation’ says Iwona Jarzębska from the Bank Millennium headquarters.

Supreme Court Judge Roman Trzaskowski in substantiating the decision said that the withdrawal of the cassation is not subject to the Supreme Court’s assessment, but is undoubtedly advantageous for the claimants.

Court Gambit

In the lawyers’ opinion, the decision is advantageous for the bank.

Iwo Gabrysiak, attorney-at-law, thinks that the bank stood no chance of winning this case in the Supreme Court.

In turn, Dominik Gałkowski, attorney-at-law, understands the withdrawal of the complaint since the bank may choose a different case to lead to a precedent and to the establishment of a favourable case law line.

‘Paraphrasing Sun Tzu’s ‘The Art of War’: one should know when to fight and when not to fight’ Gałkowski says.

‘The Supreme Court judgment confirming the abusive nature of these payments would be very troublesome for the bank, especially in the context of the class action against Millennium concerning these insurances accepted for examination’ comments Marcin Szymański, attorney-at-law, the borrowers’ counsel.

This tactic, however, is not necessarily good for other borrowers recovering the premiums.

‘The lack of the Supreme Court’s judgment means the lack of a signpost for common courts: one will rule this way, the other will rule otherwise, and most of them will spend twice as long considering the case. And that’s what it’s all about, it’s a logical emergency brake implemented by banks’ risk departments’ says Mariusz Korpalski, legal adviser. ‘A judgment of the regional court, even a final one, has – with all due respect – lesser precedential importance  than the judgment of the Supreme Court.’

Interviewer: Marek Domagalski

The text originally published in: Rzeczpospolita, 5 April 2017