EU court decision on Polish mortgages in Swiss Francs (CHF)

Last week an EU court decided that clauses of a mortgage indexed in CHF are illegal and should be removed. In consequence the mortgage should be considered as a mortgage in PLN or cancelled. The issue is that according to the verdict Polish law is not suitable on the matter and a mortgage rather cannot be turned into a PLN one, but the decision is on the side of the Polish courts.

The good news is that even if the court decides to cancel a mortgage, a debtor has always the right to decide whether it’s a favourable solution for him or not – which means to settle the cancelled agreement with the bank or keep it as it is with “invalid” clauses.

There is still a bit mess in Poland as both lawyers and banks do not really know how the EU court decision will affect the mortgages in Poland. Of course, lawyers claim that it’s a great chance for debtors to take cases to the court and fight, while banks claims that even if the court makes similar decision, they are going to claim for immediate return of the full amount of granted mortgage (if applicable) with all the costs connected with a privilege of holding the capital by a client (spent to buy a property) – which means that the client has been using this amount for many years and the bank was not able to use it in the same time.

Yesterday, there was the first Polish court decision on the case of a client with mortgage indexed with CHF after the EU decision. The court referred to the EU court decision and decided that the mortgage should be changed into a PLN one with LIBOR based interest rate. It’s pretty interesting taking into account the issues mentioned above. As this case took place in the first level of the courts, the bank will appeal against the judgement, so the final decision is still not sure.

Furthermore, the final decision on a key case (the one that is directly connected with the EU court decision) should be announced on the 4^th of November 2019 and it will probably be a crucial guide for further cases and debtors decisions.

Despite the expected verdict it is anticipated that many debtors already decided to take their case to the court or at least will do it in the near future. On the other hand debtors must be prepared that the cases will take longer (much more cases in the courts) and be prepared to bear cost around several up to even over a dozen thousand PLN for the proceedings. It surely may be still profitable (sometimes significantly) if a debtor wins the case. What everybody stressed is that every case is different, so the final court decisions may be different as well.