Franc loans

We offer comprehensive handling of so-called franking cases, i.e. concerning the cancellation or de-franking of a credit agreement denominated or indexed to the Swiss franc in particular.

Where to start a dispute with a bank?

  1. free contract analysis
  2. signing a contract with a law firm
  3. filing a claim
  4. case management
  5. obtaining a settlement

We provide a free analysis of the loan agreement

During a face-to-face meeting at the law firm's headquarters, we analyze the contract in terms of the presence of abusive (prohibited) clauses in it, as well as the possible benefits in the event of winning the case and the calculation of legal costs.

It is possible to have the contract analyzed remotely by sending documents to the following address e-mail:[email protected].

To file a lawsuit, we will need a certificate from the bank. In order to speed up the proceedings and to know how many installments have been repaid, submit an application to the bank - a template for a certificate of the amount of credit repaid.

What claims do borrowers have?

In the case of index-linked loans, the borrowers' claims relate to the cancellation, or refranking, of the loan agreement.

In the case of holding a denominated loan, the preponderance of case law, points to the validity of the claim for cancellation of the loan agreement.

What are the implications of the various demands?

In the event of cancellation of the contract:

  • the contract is considered non-existent
  • the bank will reimburse you for all installments and surcharges paid so far
  • the bank can only claim back the amount paid to you in gold

In the case of unfranchising the contract:

  • The agreement continues, but as a loan in Polish zlotys bearing interest at LIBOR
  • The bank refunds you the amount of installments overpaid so far
  • your installment and debt balance decreases

What is the difference between a denominated loan and an indexed loan?

From the point of view of the Polish legal system, it is possible to distinguish three types of loans in which foreign currency appears (in different roles): indexed, denominated and foreign currency.

In an index-linked loan the amount of the loan is stated in the domestic currency and is disbursed in that currency, but is converted into foreign currency according to a contractual clause, also based on the purchase rate of that currency in effect on the day the loan is disbursed, with repayment of the loan in the domestic currency.

In a denominated loan the amount of the loan is denominated in foreign currency and is disbursed in domestic currency, according to a contractual clause based on the foreign currency buying rate in effect on the day the loan is disbursed, and the loan is repaid in domestic currency.

On the other hand, in a foreign currency loan the amount of the loan is expressed in foreign currency and repayment is also made in that currency. Only in the latter case the borrower's claim against the lender is expressed in foreign currency, i.e. the borrower can demand that the lender pay the loan amount in foreign currency. In the other two cases, the borrower's claim against the lender for performance (i.e., payment of the loan amount) relates only to the domestic currency. [Judgment of the Supreme Court of September 30, 2020. I CSK 556/18, LEX No. 3126114]

Example of a denominated credit clause:

"The Bank grants the borrower a loan in the amount of CHF (...) for a period of(...) months. The loan will be disbursed within three business days in the amount of (...) PLN, which is the amount of (...) CHF converted at the exchange rate of (...)".

"The amount of the loan granted (...) CHF. The loan is disbursed in the Polish currency to finance obligations in the Republic of Poland." PKAO BP SA

Example of an indexed loan clause:

"The Bank grants the borrower a loan in the amount of (...) PLN indexed to the CHF exchange rate, under the terms of the agreement (...). GE Money Bank SA (successor: BPH SA)

"The Bank grants the borrower a loan in the amount of (...) PLN denominated (valorized) in CHF, for a period of (...). The amount of the loan denominated (valorized) in CHF or tranches of the loan will be determined according to the foreign exchange purchase rate for the aforementioned currency in accordance with the exchange rate table in effect at the bank on the date of use of the loan or tranche of the loan%r@." Kredyt Bank SA (successor to Santander SA).

Examples of so-called "valorization" clauses included in loan agreements:

"The loan is indexed to CHF/USD/EUR, after conversion of the amount disbursed according to the CHF/USD/EUR buying rate according to the Foreign Currency Exchange Rate Table in force in Bank Millennium on the day of disbursement of the loan or tranche%r@." Bank Millennium SA in Warsaw

"The principal and interest installments and the interest installments shall be repaid in zlotys after being converted according to the CHF selling rate from the exchange rate table of BRE Bank S.A. in effect on the repayment date at 2:50% p.m." BRE BANK SA in Warsaw

"The amount of the loan denominated (valorized) in CHF or tranches of the loan will be determined according to the foreign exchange buying rate for the aforementioned currency in accordance with the exchange rate table in effect at the bank on the day the loan or tranche of the loan%r@ is used." Kredyt Bank SA (successor to Santander SA).

"The loan is used in zlotys, while converting the amount of the loan according to the foreign exchange purchase rate for CHF in accordance with the "Table of rates" in effect at the Bank on the day the loan%r@ is used." Kredyt Bank SA (successor to Santander SA).

Legal basis for pursuing borrowers' claims

The legal basis for asserting the claim is primarily Article 385[1] et seq. of the Civil Code on prohibited contractual provisions in consumer trade.

According to Article 385[1] § 1, provisions of a contract concluded with a consumer _not individually agreed upon,_ are not binding on the consumer if they shape his rights and obligations in a manner contrary to good practice, grossly infringing his interests (prohibited contractual provisions). This does not apply to provisions defining the main benefits of the parties, including the price or remuneration, if they are formulated in an unambiguous manner.

Not individually agreed are those provisions of the contract on the content of which the consumer had no real influence. In particular, this applies to contractual provisions taken from a model contract proposed to the consumer by the counterparty (Article 385[1] § 3 of the Civil Code).

Given the above, the following prerequisites must be met in order to consider a given contract provision as non-binding in accordance with Article 385[1] § 1 of the Civil Code:

  • The contract was concluded with a consumer;
  • The contract provision was not individually agreed upon;
  • The provision of the contract shapes the rights and obligations of the consumer in a manner contrary to good practice, grossly violating his interests;
  • contractual provision does not relate to the main benefits of the parties, such as price or remuneration (unless they are not explicitly formulated).

Both the assessment of the compliance of a contractual provision with good morals, as well as the assessment of whether the provision shapes the rights and obligations in a way that grossly violates the interests of the consumer, is made at the time of the conclusion of the contract.

The abusiveness of the valorization clauses in the franc loan agreements, is primarily due to the fact that these clauses did not refer to objective indicators that were influenced by each party. The clauses left the bank free to shape the amount of the borrowers' obligation by referring to an exchange rate table set by the bank. The bank's rate table is the only source of information on the amount of exchange rates used for the purposes of the loan agreement, with borrowers having no way of verifying against the objective criteria by which the rate was determined. Borrowers are unable to estimate the amount of their obligation on their own, which demonstrates the lack of transparency of these provisions. In addition, the Bank took into account a different CHF exchange rate when converting the value of the loan disbursed (buy rate) and a different one when calculating the value of the principal and interest installments (sell rate). Thus, borrowers were burdened with additional, unjustified costs resulting from the differences between the buying and selling exchange rates. This represents, so to speak, the bank's additional earnings, a hidden commission that the borrowers were unable to estimate.

Legal basis for reimbursement of borrowers' benefits

The invalidity of the loan agreement results in the fact that the payments made by the borrowers to date in performance of the agreement should be considered undue, resulting in the bank's obligation to return them in full under Article 410 § 1 and 2 of the Civil Code in conjunction with Article 405 of the Civil Code with Article 58 § 1 of the Civil Code.

The legal standard expressed in Article 410 § 2 of the Civil Code stipulates that a benefit is undue if the one who made it was not obligated at all, or if the legal act obligating the benefit was invalid and did not become valid after the benefit was made.

In the case of unfranchising, i.e., when the Court finds that the borrowers are not bound by the prohibited contractual provisions, but the contract can continue, there is no basis for paying installments using the valorization clause (prohibited provisions), and the installments paid so far, fulfilled in excess of the value of the loan installments to which the borrowers would have been obliged if they had paid the loan in disregard of the abusive provisions, is a benefit fulfilled without legal basis, which gives rise to the bank's obligation to return the unduly paid part of the benefit under Art. 410 § 1 and 2 of the Civil Code in conjunction with Article 405 of the Civil Code and Article 385[1] § 1 of the Civil Code.

Is litigation necessary?

In order to pursue a claim for the cancellation of a loan agreement, or its de-franchising, the bank does not automatically frank or de-franchise itself, so the court route is essential.

Can a settlement be profitable for borrowers?

The bank's settlement proposals are worth consulting a lawyer and making an estimate of the benefits that are possible to achieve through litigation or settlement. The conclusion of a settlement with the bank usually comes with a waiver clause, and for this reason it is not possible to sue for the object of the settlement in the future.

Court costs

In addition to the costs of a professional attorney, the plaintiff bears the cost of the court fee, which is no more than PLN 1,000 (Article 13 UKSC). In the course of court proceedings, if the court appoints expert evidence, there may be a need to pay an advance for the expert's fee for making calculations (cost of about PLN 1,000. - PLN 3,000).