Blog
Attorney Milena Nowicka
The first and biggest breakthrough: the judgment in the Dziubak case
The CJEU judgment of 15 June 2023 – the end of suing CHF borrowers for non-contractual use of capital!
What did the CJEU judgment of 15 June 2023 change with regard to non-contractual use of capital?
The CJEU judgment of 21 September 2023 – a chance to conclude cases more quickly?
One defective repayment rule is enough for a loan agreement to be invalidated
The situation of CHF borrowers has clearly improved after the landmark CJEU rulings!
In recent years, virtually every successive CJEU judgment concerning CHF borrowers has led to a significant improvement in the position of borrowers. What exactly did the Court decide? What did these rulings mean for people who took out loans in Swiss francs? And why is it now said that such agreements can be invalidated even more easily and quickly?
The widely publicized CJEU judgment of 3 October 2019 (C-260/18) opened the door for CHF borrowers to have their loan agreements invalidated. This was when the Court resolved doubts concerning the loan taken out by the Dziubaks.
Their loan agreement contained unfair terms that violated their rights as consumers (so-called abusive clauses). Normally, in such cases the agreement remains in force, but the unfair provisions are disregarded in its interpretation.
The problem was that, in CHF loan agreements, the abusive clauses concerned the linkage of the loan to the CHF exchange rate. As a result, interpreting the agreement without the provisions relating to the Swiss franc meant that the loan ceased to be a CHF-denominated loan.
Of course, repayment in Polish zloty (so-called “de-franking”) was more beneficial for the Dziubaks than their previous situation. The point, however, was that the nature of their agreement changed completely. The Dziubaks argued that under normal circumstances they would never have entered into an agreement with the wording it assumed after the defective provisions were removed. They therefore believed they should not be forced to continue performing it—especially since they were not at fault and found themselves in this situation as a result of the bank’s unfair practices.
The Court of Justice of the European Union agreed with the Dziubaks. It held that, after removing the unlawful provisions, the nature of the loan indeed changed completely. In this way, the CJEU opened the path for CHF borrowers to free themselves entirely from CHF loans where abusive clauses are present. Borrowers can now decide for themselves whether, due to the existence of abusive clauses, they wish to convert the loan (“de-frank” it) or invalidate it entirely.
After the judgment in the Dziubak case, more CHF borrowers began going to court to invalidate their agreements. This situation was clearly unfavorable for banks. When an agreement was invalidated, the bank had to return all amounts received from the borrower (usually significantly exceeding the principal). The bank itself could only demand the return of the principal—i.e., the amount paid to the borrower—without any interest, commissions, margins, or other costs.
Moreover, it did not even matter that the value of that capital had significantly decreased due to inflation since the loan was granted. Although banks are currently trying to improve their situation somewhat by bringing claims for indexation of the principal, it remains unclear whether courts will accept such claims (the CJEU is also expected to rule on this issue). Even with possible indexation, banks would still find themselves in a difficult financial position.
For this reason, banks looked for ways to reduce losses or discourage borrowers from filing lawsuits. How did they attempt to achieve this? By suing CHF borrowers for non-contractual use of capital.
The assumption was relatively simple: if the borrower was not entitled to use the borrowed amount from the outset, then for years they had been using it unlawfully and even enriching themselves in the process (note that a property purchased, for example, in 2004 with borrowed funds is worth much more in 2023—this was the alleged enrichment due to the bank’s capital). Accordingly, banks demanded the return of the amount of enrichment along with interest for all years of using the capital.
In this way, banks could achieve two potential benefits:
The Court of Justice of the European Union had to decide whether banks’ practices concerning non-contractual use of capital violated consumer rights. In short, the Court’s conclusions can be summarized as follows:
Another landmark ruling also came in 2023 and concerned case C-139/22. This time, the Court addressed the issue of entering unfair contractual terms into the register of prohibited clauses.
Previously, even if a specific provision had already been entered into the register, it had no binding effect in subsequent cases. Courts still had to examine whether that provision was unfair in the particular case at hand.
The Court of Justice of the European Union held, however, that a clause once recognized as abusive remains abusive. In short: if your agreement contains a provision similar to one already entered in the register, the court will effectively recognize it automatically as prohibited. It will not re-examine the issue. What’s more, the provisions in your agreement do not have to be identical to those in the register, nor do they have to concern the same bank—it is enough that they are sufficiently similar.
This means, first, that your case will conclude faster, and second, that even before filing a lawsuit you can know whether your agreement is likely to be declared invalid—provided that a similar clause already appears in the register.
The aforementioned CJEU judgment of 21 September 2023 also addressed another important issue concerning CHF borrowers. In that case, the CHF loan agreement provided for two different repayment rules. One of them constituted an abusive clause; the other did not.
Theoretically, therefore, the agreement would not violate consumer rights if repayment were made under the fair rule. Doubts arose as to whether such an agreement could be invalidated. The CJEU stated unequivocally that it could. The fact that the agreement could theoretically be performed on fair terms did not change the fact that it also contained prohibited provisions. This alone is sufficient grounds to invalidate the loan.
As you can see, since the 2019 judgment the situation of CHF borrowers has been steadily improving. You now not only have a choice as to the consequences of the presence of unfair terms in your agreement. You can also conclude proceedings much more quickly (thanks to the automatic recognition of abusive clauses already listed in the register), and you no longer need to fear lawsuits for non-contractual use of capital.
This is therefore a good moment to free yourself from a CHF loan. The chances of success are very high. One challenge may be deciding whether it is better to invalidate the agreement or convert it (“de-frank” it). There is also the matter of preparing the claim and gathering all necessary documents. Remember, however, that you do not have to act on your own—you can seek the help of a lawyer. This way you will avoid unnecessary stress and wrong decisions, gain a sense of security, and make the entire CHF loan case much simpler for yourself.
