On Thursday, the EU Court of Justice questioned in its judgment the theory of two condition as the basis for settling the parties, in a situation where the loan agreement is considered invalid.
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According to mBank, after taking into account the judgment of the CJEU by Polish courts, There will be a simplified 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 of limiting banks' claims for a return of capital,” said mBank in the commentary to this decision, which was one of the parties in the case. In his opinion, the CJEU pointed to the method of settlement favorable to both parties to the contract, because generating lower costs, and in most cases excluding the risk of limitation of claims for a refund of capital.
As the bank reminded, the District Court in Krakow wondered if the theory of two condition used by Polish courts is in accordance with EU law, and in particular with Directive 93/13 and whether the goals of this directive is better implemented by the theory of balance. According to the first of the theory, each of the parties to the contract may separately demand the reimbursement of fulfilled benefits in full. In turn, the balance theory assumes that only the difference is subject to settlement, and the refund is only entitled to the page that paid more.
The bank explained that in the latter case the consumer's 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 the capital, he should pay the bank the difference” – he said.
The theory of two condition rejected
The CJEU rejected the theory of two condition, indicating that the settlement cannot be made “regardless of the repayments made by the consumer in the performance of this contract and regardless of the amount to be repaid” – the bank wrote in the commentary. He added that, according to the judgment of the CJEU, domestic courts must withdraw from established case -law when it is contrary to Union law and ensure that after annulment of the contract it was possible to restore equality of its parties.
mBank also assessed that the decision The CJEU should be “additional motivation for consumers” to make a settlement with the bank. According to the bank, the agreement is the fastest and best way for both sides to end the dispute.
