This is at the heart of Wednesday's resolution of the seven-member civilian Chamber of the ultimate Court chaired by president Joanna Misztal-Konecka. The settlement is beneficial for the Frankish, as it is the banks that mostly scope for the right of detention.
There's Frankows again.
The intent of the court’s application of the right of detention at the request of a organization to an agreement which has proved invalid is that it should receive a refund of its benefit together with its provision to the another party. However, banks not only search this tool to safe the return of the credit they have taken, but besides to force the consumer to settle the dispute or to postpone the settlement. Banks could apply a deduction or settlement of common debts, but they like to apply detention laws, which many courts have allowed.
This issue resulted in the case of 2 francoquis who concluded a debt agreement with the bank (previous Santander Bank) indexed to the franc (better than the gold loan, due to the fact that the instalment was 20% lower) and from May 2008 to June 2016 repaid the debt in full. In January 2017, the borrowers declared to the bank that they were evading the legal effects of the conclusion of the agreement due to breaches on the bank side and calling on it to pay PLN 225 1000 with interest. This proved unsuccessful. They so filed a suit before the territory court stating that the contract had been concluded in breach of the bank's basic information obligations: they were not given an explanation of the intent and indexation mechanism, they were not informed of the hazard of a large increase in CHF. Consequently, SO ruled them the requested amount and the Poznań Court of Appeal dismissed the Bank's appeal. It besides failed to take into account the bank's request to apply the right of detention, indicating that it could not lead to a dismissed action, but simply to postpone its implementation.
Legal question
The Bank appealed to the ultimate Court, and this, in connection with the doubts surrounding the application of the law of detention, referred to the wider composition of the SN the question of law: - Is the organization entitled to detention (Article 496 of the above-mentioned Article 497 KC) if the repayable common benefits of both parties to the contract are of a monetary nature?
The three-member composition of the SN indicated in its conclusions the justification for the question that the analysis of the case-law shows that there are arguments in favour of the anticipation of applying the right of detention in the case of single-kind benefits as well as of excluding specified possibility. However, it allows to agree that, in the case of common cash benefits, the right of retention does not apply, especially as regards the common benefits of the parties resulting from an invalid credit agreement linked to the abroad currency.
Bank attorneys, counsellors Marta Marmulewska and Michał Pastewka, pointed out that the offsetting was going to definitive settlement of the parties, but frequently only partial (up to the amount of the smaller claim), and the right of detention secured the full another party, which is crucial for the bank that in the event of the cancellation of the contract securing its mortgage expires.
The SN was of a different opinion, as confirmed by the resolution, and Krzysztof Grzesiowski, the Judge-Rapporteur, recalling the pending decisions of the TEU limiting the application of the right of detention (C-28/22 and C-424/22) indicated in the explanatory memorandum that the right of detention was to exert force on the debtor to comply with his or her benefit and to give way erstwhile the creditor has another safety erstwhile he or she can benefit from the deduction. File number: III CZP 31/23
Marcin Szymanski, lawyer, partner in Drzewiecki, Tomaszek & Partners
When both parties are required to reimburse benefits of the same type, in peculiar cash, the usual way of settling is to benefit from the deduction (Article 498 KC). Each organization may, by making specified a declaration, lead to the write-off of both claims to a lower level. The exercise of the right of detention pertrys an unnatural condition in which both parties stay their creditors without a security. This issue has become peculiarly applicable in franc cases against credit agreements containing unfair clauses. The right of detention was frequently utilized by the losing banks to hold settlement with the consumer. The resolution of the SN undoubtedly deserves approval, but it is only a pity that it came so late.
