Polish banks face new lawsuits as EU ruling backs borrowers

Polish banks faced a new wave of lawsuits after the European Union’s top court sided with borrowers holding foreign-currency mortgages in a key ruling on Thursday.

Around 700,000 Polish households took out mortgages in Swiss francs more than a decade ago, attracted by low interest rates.

They were hit hard when the zloty depreciated sharply against the franc, nearly doubling the costs of their loans.

But some of the contracts were later found out to have contained the so-called abusive clauses, misleading provisions that the borrowers invoked in domestic courts as grounds to deem such deals null and void.

Now, the EU tribunal said the banks are not allowed to seek compensation from clients or charge for the cost of capital if a loan agreement contained “unfair terms” and was declared invalid in court.

“It can neither be accepted that the bank derive economic advantages from its unlawful conduct, nor that it be compensated for the disadvantages caused by such conduct,” the court said in a statement.

At the same time, it ruled that EU law does not preclude a possibility for clients to seek compensation from banks, but would let national courts have a final say on the matter.

“Such a possibility may help to deter sellers of suppliers from including unfair terms in contracts concluded with consumers,” the Luxembourg-based court added. Its decision is the latest blow for the Polish banks in their ongoing legal battles with the borrowers holding mortgages denominated in Swiss francs.

“Banks expected billions, and most likely they will not get nothing from consumers, and will also bear the costs of court proceedings,” said Radoslaw Gorski, a lawyer who filed the initial lawsuit that led to the EU court ruling.