EU Law will not stand in the way of cancelling Swiss franc loans

The law of the European Union will not stand in the way of cancelling Swiss franc loans, European Court of Justice ruled on Thursday, but there should be no blanket rule on restating the loans in Polish currency.

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The European court was ruling on the status of mortgages granted by Polish banks in foreign currency, particularly in the years preceding the financial crisis of 2008-2009. Polish courts had been flooded with cases brought by borrowers complaining that the conditions of the loans regarding to the rate of exchange were unfair, and had sought the guidance of the highest court in the EU.

The judgement states that is allowable for articles in the contracts which are unfair or unjust, to be removed from the loan contracts. If, after the removal of conditions that Polish courts deem unfair, the contracts are no longer watertight, the ECJ ruling says it should be possible to cancel the contracts.

The decision is very supportive of the franc borrowers claims against banks, but at the same time the banks may be relieved that the decisions as to the propriety of the loans are to be left to the courts rather than decided with one stroke of a pen.

The deputy head of Poland’s prosecution service Sebastian Kaleta told the Polish Press Agency that both the ministry and Poland’s ruling coalition stood behind the people who signed loans expressed in francs, and the opinion of the Polish government is shared by the spokesman of the ECJ.

Yesterday the head of the National Bank of Poland Adam Glapinski stated that Poland’s banks are in a very healthy condition and will be able to withstand a verdict which did not go their way in Luxembourg.