mBank: CJEU judgment on francs favorable for banks and borrowers

The Court of Justice of the EU issued a judgment on Thursday, in which he questioned the theory of two condition as the basis for settling the parties after recognizing the loan agreement as invalid due to abusive clauses. In the opinion of mBank, the decision should be an additional motivation for consumers to conclude a settlement with the bank.

The Court of Justice of the EU ruled on Thursday that after annulment of the franc loan agreement, the bank may not demand the consumer to reimburse the entire nominal loan amount if the borrower has already repaid some of the receivables. According to the CJEU, such demands are contrary to EU law.

The decision of the Court of Justice was made regarding the question of a preliminary ruling of the CJEU by the District Court in Krakow in a case in which mBank was a party.

The CJEU rejected the theory of two condition adopted by Polish courts, indicating in the operative part of the judgment that the settlement cannot be made “regardless of the repayments made by the consumer in the performance of this agreement and regardless of the amount remaining to repay” and indicated that national courts must abandon the recorded case -law when it is contrary to Union law.

In the opinion of the CJEU, the National Court should ensure that after annulment of the contract, it is possible to restore equality of its parties.

The CJEU justified his position by the need to protect consumers, but also used the argument of the need to restore balance between the parties.

“This is a method of settlement favorable to both parties to the contract, generating lower costs, and especially – in most cases excluding the risk of limitation of claims for a refund of capital” – wrote in a statement of mBank.

The first two questions concerned whether the theory of two condition used by Polish courts is consistent with EU law, in particular with Directive 93/13. The point is whether each of the parties to the contract can separately demand the reimbursement of completed benefits in full, which is associated with the consumer with additional costs and formalities.

The Polish court wondered if the balance theory is better pursuing the purposes of Directive 93/13. According to the theory, the balance is only subject to the difference, and the claim for a refund is only entitled to the page that has paid more – the consumer repayments are automatically credited to the bank's claim for a refund of capital.

If the sum of repayments made by the consumer is higher than capital, the consumer receives this surplus than the bank, and if the consumer has not repaid capital, he should pay the bank the difference.

“In the judgment, the Tribunal questioned the theory of two condition as the basis for settling the parties after recognizing the loan agreement as invalid due to abusive clauses. He considered that Polish case -law adopting this principle is contrary to EU law” – said Anna Wonder -Wagner, legal advisor, managing the practice of resolving disputes at the CMS office representing the mBank in this matter.

“The CJEU indicated that the settlement may not be” regardless of the repayment amount made by the consumer in the performance of this contract and regardless of the amount to be repaid. ” This means that if the consumer has paid the bank a higher amount than the amount of loan capital, he may demand a difference from the bank. If, however, the amount of loan capital is higher than the sum of the installments paid by the consumer, the bank may demand a refund of the difference ” – added Bartosz Miąskiewicz from the CMS office.

In the opinion of mBank, the Thursday judgment of the CJEU is beneficial for both banks and borrowers.

“After taking into account the judgment of the CJEU by Polish courts, there will be a simplification of settlement rules between borrowers and banks and court disputes will end faster. The verdict of the EU tribunal also means a reduction in the risk associated with the limitation period for banks' claims for a refund of capital” – mBank wrote in a statement. (PAP Biznes)

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