TEU shows how to clear invalid francs

In its judgement delivered on Thursday, the CJEU first recalled that the Consumer Directive 93/13/EEC precludes the bank from seeking the consumer, in view of the annulment of the contract, to repay all the nominal amount of credit, irrespective of the instalments already paid and the amount of credit remaining to be paid.

Secondly, the Court held that the inclusion by the national court (here Polish) of the charge of levying the bank’s claim is not contrary to the consumer protection guaranteed by Directive 93/13/EEC, provided that the consumer has been duly informed of the consequences of the annulment of the contract, including the bank’s possible claims and, despite this knowledge, has deliberately and voluntarily sought to challenge the contractual clauses and consequently the full contract.

In specified a situation, the deduction constitutes 1 of the ways in which the bank obtains repayment of the capital borrowed, to which the bank has the right after the agreement has been declared invalid. The deduction besides avoids the multiplication of proceedings and the associated additional costs which could besides impose on the consumer.

The TEU replied to 5 detailed questions addressed to him by the territory Court in Warsaw, as a associate of justice Michał Maj, a well-known author of many Frank questions to the TEU.

In the opinion of any SO lawyers, he sought to deprive banks of the usage of the offsetting so that they could recover their claim without going to trial for it.

These issues resulted in the case of the 2 Frankowiczs who concluded a debt agreement in 2008, on the basis of which the bank granted them PLN 360 1000 debt for 360 months to finance the acquisition of the apartment. The debt was remunerated at a variable rate representing the sum of LIBOR CHF 3M and a fixed bank margin. The debt was utilized in gold at the exchange rate for CHF according to the ‘Table of exchange’ in force in this bank, likewise the repayment instalments were converted.

The bank rapidly launched the full amount of credit, and by March 2022 it collected from the reasons a full of PLN 327,3 1000 as instalments. In the suit of 17 November 2022, the francs applied for judicial annulment of the debt agreement and for ruling them against the bank of PLN 327,3 thousand, justifying the request that the credit agreement contains unfair conditions for conversion of the gold course – a franc without which execution of the contract is impossible, meaning that the instalments they paid are an undue benefit and the bank must return them.

The Bank claims that the credit agreement does not contain unfair terms and is so binding, which should consequence in the rejection of the consumer’s request and, at the same time, in the event that the court fails to take account of the bank’s position, has raised a plea against consumers to deduct their claim from their claim.

In December 2024, the territory court issued a partial judgement in which it found that this credit agreement was invalid due to the conversion clauses contained therein and that it was not possible to execute the contract without them. However, the course of financial settlement between the parties remains the subject of further dispute in peculiar as regards the effectiveness of the charge of deduction. SO doubted whether the practice of banks to rise a possible charge of set-off while challenging the annulment of the contract was in line with EU consumer law. And he raised these doubts in a preliminary question to the TEU.

What did the court ask?

First, can the bank rise an effective charge of deducting its claim for reimbursement of the credit with the consumer's claim in a suit against the bank for reimbursement of the equivalent amount of the loan?

Secondly, can the bank effectively rise the charge of offsetting besides as a anticipation erstwhile it claims that the credit agreement is valid and does not contain unfair terms?

Thirdly, can the bank effectively call on the consumer to repay the credit paid in the performance of an invalid contract (as a consequence of which the bank’s claim to be due) erstwhile it claims that the credit agreement is valid?

Fourth, can the bank set a two-week deadline for the consumer to return the equivalent of credit?

And fifthly, will the consumer be burdened with part of the costs of the process in so far as his claim for payment has been dismissed in the light of the charge of the deduction raised by the bank?

Evaluation of the judgment

Henryk Walczewski, justice of the Frank Court, briefly assesses the sentence: – EU law, or Directive 93/13, results in consumer defence against unfair contracts – specified as where the consumer proves besides much and the court has a balance of rights and obligations to restore. And that is the task of the national court – a fair conversion of the contract.

In turn, Mr Beata Sobierajska, 1 of the Frankovich attorneys in this case, assesses the conviction as another success of the Frankovichs, due to the fact that in 1 procedure the full problem of the cancellation of the franc credit agreement will be solved. Secondly, the bank must besides have the right to defend its interests. – We agree with this position of the TEU, due to the fact that it will make it easier for our customers to complete – frequently life – the mortgage problem. 1 procedure will solve all consumer problems without having to process the bank for a decade – says Beata Sobierajska.

Signal for banks

Wojciech Bochenek, a legal advisor to specified cases on the part of consumers, considers that the TEU reiterated that banks cannot claim the full amount of capital made available to consumers. “This is an crucial signal for the banking sector, which is presently suing borrowers for the full loan. The CJEU pointed out that Directive 93/13 does not preclude the court from taking into account the charge of deduction which seeks to bring the parties to a quicker conclusion and settlement. He referred to an crucial issue for thousands of borrowers, i.e. the calculation of statutory interest for delaying the deadline from the bank's call for a return on capital, added the legal advisor.

– As long as the bank raises a possible charge of set-off, any call made to the consumer in connection with the capital lent will not have legal effects, in peculiar interest, until the court has annulled the credit agreement. This direction strengthens consumer protection in disputes with banks, as well as their position in settlement negotiations – says Wojciech Bochenek.

Wojciech Wandzel, an lawyer representing banks, emphasizes that the bank can present to the court the position that the credit agreement is valid, and only in the event that it is declared invalid by the court to deduct the claim. “In specified a situation, the borrower’s claim for repayment of the sums paid and the bank’s claim for repayment of the capital paid shall be cancelled by each other, and only that organization to the credit agreement which received more must return the surplus to the other”, the lawyer adds.

– Thus, the TEU advocated a solution allowing both parties to settle their claims in 1 proceeding," argued Wojciech Wandzel.

The weight of the decision

With the railway, Marcin Szymanski, a lawyer representing consumers in franc cases, says that the TEU's Thursday judgement is crucial for both cases of consumer action against banks to establish the nullity of the contract and the reimbursement of invalid benefits fulfilled in the performance of the contract, and for cases of bank action against the consumer to repay the benefit fulfilled in the performance of the invalid contract.

– In the light of judgement C-902/24, there is no uncertainty that, as long as the bank denies the annulment of the contract, its claim for reimbursement of the benefits it fulfils is not required, the lawyer considers.

– The bank's claim of deduction is, of course, admissible, but this claim cannot be effective until the bank's claim is due, so long as the bank claims that the disputed agreement is valid, concludes Marcin Szymanski.

File number: C-902/24