EU Court: Opinion in Case C-520/21 Bank M. on consequences of the cancellation of a contract

Thursday 16th February 2023

Opinion in Case C-520/21 Bank M. (Conséquences de l’annulation du contrat)

(Consumer Protection)

From the early 2000s, banks in Poland made tens of thousands of mortgage loans denominated in or indexed to the Swiss franc (CHF) with consumers who sought to purchase properties. Since those mortgage loans afforded borrowers the benefit of interest rates far lower than those applicable to loans denominated in Polish zloty (PLN) they were very much in demand.

With the onset of the Global Financial Crisis, the exchange rate between the CHF and the PLN deteriorated from the perspective of holders of the latter currency.

Thousands of borrowers, including the applicant in the main proceedings, filed lawsuits against the banks from which they had taken out their mortgages. They argued before the Polish courts that the conversion clauses from PLN to CHF and from CHF to PLN in their mortgage loan agreements were unfair. In a significant number of cases the courts accepted that argument and deemed the mortgage loan agreement void in its entirety.

Arising out of one such dispute, the Sąd Rejonowy dla Warszawy – Śródmieścia w Warszawie (District Court of Warsaw – Śródmieście, Warsaw, Poland) asks the Court of Justice whether parties to a mortgage loan agreement between a consumer and a

bank that has been declared void in its entirety on the ground that it contains an unfair term may pursue claims that go beyond reimbursement of the monetary consideration made under that agreement and the payment of default interest at the statutory rate from the date of the demand for reimbursement.

Background Documents C-520/21