Interest rates on Swiss franc borrowers may be at risk. Will the CJEU come to the rescue?

In Polish cases concerning the invalidation of a loan agreement (especially in “franc” cases), there is an ongoing dispute which, from the point of view of an ordinary borrower, can be summarized as follows: whether, after the invalidity of the agreement, the consumer is entitled to a refund of all amounts paid to the bank together with interest calculated from the date of the bank's request for payment (the two-condition theory), or whether he is entitled to any money only after “settlement” of the capital paid by the bank (the balance theory).

The theory of two conditions means that after the contract is declared invalid, each party has its own separate claim for the return of what it has provided – regardless of the fact that it may also be the other party's debtor. The consumer can demand a refund of all payments, and the bank – if it wants – can demand a refund of the capital paid.

The balance theory from the consumer's perspective means that the consumer's benefits become “undue” only when the total sum of payments exceeds the capital. And most importantly: the balance theory assumes automatic compensation ex officio, without a declaration of deduction.

It is easy to notice that at the level of judicial practice in Poland, a large group of judgments has been formed that apply the so-called balance theory or limit consumers' right to interest (e.g. awarding it only on the finality of the judgment and only on the “overpayment” over the principal). Such court practices, which are negative for consumers, are used throughout the country – and also appear in the jurisprudence of the Supreme Court.

The problem is that the application of the balance theory and depriving consumers of the right to interest have no legal basis. Such practices are certainly beneficial to banks, protecting them against the economic effects of sanctions for the use of unfair contract terms.

2. I am the consumer representative in case C-510/25. What does the Polish court ask?

I am the consumer's representative in the preliminary ruling case C-510/25 (so-called Adazik), referred to the CJEU by the District Court in Warsaw. The case concerns the consequences of declaring the invalidity of a credit agreement concluded with consumers containing unfair contractual provisions.

What does the Warsaw court ask the CJEU about (in simple terms)?

· Does Art. 6 section 1 in connection with Art. 7 section 1 of Directive 93/13/EEC oppose settlement in the “balance theory” model, in which the court ex officio offsets the consumer's claim for the return of benefits with the bank's claim for the return of capital, and as a result, the consumer “acquires” the claim only after exceeding the paid capital?

· Do the same provisions preclude limiting the consumer's right to interest for delay on all services provided to the bank in the performance of an invalid loan agreement?

The court in Warsaw, which referred questions for a preliminary ruling to the CJEU, has serious doubts as to the lawfulness of the application of the balance theory and as to depriving consumers of the right to interest, as expressed in the justification of the decision to refer the case to the Court.

The CJEU's answer to such questions will ultimately clarify whether a significant group of judges in Poland rule contrary to European Union law.

In my opinion, the arguments are that depriving consumers of interest and applying the balance theory (understood as automatic ex officio compensation) violates EU law. Therefore, I share the doubts of Judge Tomasz Niewiadomski, who referred questions to the Court for a preliminary ruling.

3. Current stage of proceedings before the CJEU: submissions, we are waiting for further procedural decisions

In the preliminary ruling case described above, the parties have already presented their positions in writing (I also submitted written comments to the CJEU).

Now – as in every preliminary ruling case – the Court must decide whether a hearing will be scheduled (it is not always scheduled), and then when a decision will be made.

4. Why the balance theory is indefensible because of its illegality

In my opinion, the balance theory is a construction that weakens consumer protection and is contrary to the objectives of Directive 93/13: instead of removing the effects of unfair terms and restoring balance, it protects the interests of the dishonest entrepreneur and rewards banks that benefit greatly from such settlements.

The most important practical consequences of the balance theory:

• The consumer usually loses his/her own claim for reimbursement of most payments and loses the basis for charging interest for the period from the request until he/she “overpays” the capital.
• Settlement based on the balance theory is particularly unfavorable for those consumers who repaid their loans in foreign currencies. They lose the opportunity to recover the paid installments in CHF from the bank, which they could then sell at the current exchange rate – often even significantly higher than the exchange rate applicable on the date of repayment of individual installments.
• To illustrate how disadvantageous the application of the balance theory is to the consumer, the following example can be used. If the consumer transferred a total of CHF 100,000 to the bank, under the two-condition theory, he would recover the entire amount in foreign currency, i.e. CHF 100,000 (which, at the current exchange rate of approximately PLN 4.50/CHF, corresponds to approximately PLN 450,000), plus any interest due. In turn, the balance theory would include the CHF 100,000 paid by the consumer towards the loan capital at the CHF exchange rate on the day the individual payments were made. Assuming for simplicity that the average CHF exchange rate at the time of loan repayment was PLN 2.50-3.00, the consumer's benefit is settled according to the historical currency purchase rate, and its value would only be approximately PLN 250,000-300,000 (so PLN 150,000-200,000 less)
• The bank does not bear any negative consequences of delaying the proceedings, because until the loan principal is repaid, the bank does not give anything back to the consumer and does not pay him any interest.
• The bank actually has a bonus in statute of limitations disputes, because automatic “balancing” may allow it to recover capital even after many years of inactivity.
• The risk of lawsuit costs shifts to the consumer: when a consumer sues for all of his benefits, under the balance theory he may be deemed to have lost the dispute and be ordered to pay the costs.

This is – in my opinion – a list of the most important negative effects for consumers that Directive 93/13 is intended to prevent.

5. For balance: the balance theory is sometimes presented as a protection against capital suits by banks. However, there is no need to take actions contrary to EU law to protect the consumer against a bank's lawsuit.

Supporters of the balance theory believe that the balance theory protects consumers against banks' lawsuits for the return of capital, arguing that the principle of settlements based on the balance theory was allegedly introduced by the Court of Justice of the EU in the judgment C-396/24.

However, the cost of such consumer “protection” is very high – the consumer receives a much smaller amount (and I mean not only the lost interest, but also the lost right to reimbursement of all payments in a foreign currency with benefits from the exchange rate difference).

Above all, however, such consumer protection against unjustified bank enrichment is already built into the EU standard – without the need for automatic ex officio compensation and the need to apply the illegal balance theory.

See also: Swiss franc borrowers get summonses. They may have to pay high interest rates to banks

In my comments in the preliminary ruling case, I pointed out that the CJEU judgment of June 19, 2025 in case C-396/24 has become a source of divergent (and – in my opinion – erroneous) interpretations in Poland. Some courts and part of the banking market found that the CJEU in the judgment questioned the principle of two conditions and allowed the balance.

My position regarding this judgment is different: in the judgment, the CJEU did not introduce the balance theory and did not order compensation of claims ex officio.

The Court only said that if a bank seeks repayment of capital by refusing to reimburse the consumer, the national court must take into account the amounts already repaid by the consumer so that the bank does not recover more than it actually provided and does not thus expose the consumer to additional costs and settlement difficulties. However, such settlement may take place within the instruments provided for in national law (e.g. after successfully reporting the deduction), and not through automatic ex officio compensation.

Consumer protection therefore does not require resorting to the unlawful balance theory. It is enough to honestly apply what the CJEU indicated in C-396/24 – without creating a mechanism in Polish judgments that “incidentally” cuts the consumer's interest and limits his claims.

6. Interest on demand is a condition for real consumer protection and a brake on dragging out disputes

In Poland, I still come across justifications in which the court says something like this: “interest on the demand is a privilege for the consumer” and “the bank should not pay until there is a final judgment.” I have also presented such judgments to the Court as an example of a practice which, in my opinion, is flagrantly contrary to EU law.

If the bank retains the consumer's money despite a request for payment and refuses to return it, it is using someone else's funds, and interest is a simple consequence of delay in settlements.

In my position, I referred to the fact that in the judgment of June 15, 2023 in case C-520/21, the CJEU indicated that the parties to an invalid contract may – in accordance with national law – claim, among others: statutory interest for delay calculated from the date of request for payment.

Interest also has a preventive function: it is intended to discourage entrepreneurs from delaying proceedings and “holding” consumers' money.

Moreover, the CJEU in previous rulings opposed the interpretation according to which the consumer would be entitled to interest only from the moment of submitting an additional declaration (e.g. awareness of the effects of invalidity), if he had already demanded payment.

So, if a Polish court tells a consumer: “interest only upon finality”, the effect will be as follows: the bank can litigate for years, submit appeals and cassation complaints – and do it practically without the cost of using the consumer's money and without any consequences. In my opinion, such an interpretation of the provisions encourages the delay of disputes and is contrary to the objectives of Directive 93/13/EEC.

Summary

In case C-510/25, the Polish court asked questions that – in my opinion – are crucial today for the uniformity of case law, the effectiveness of consumer protection and the deterrent function of Directive 93/13, and concern both Swiss franc and zloty borrowers (who will also win against banks in many cases in a few years).

My opinion is clear:

• Directive 93/13 opposes the balance theory if it is intended to operate as an automatic ex officio compensation depriving the consumer of the claim and interest;
• the right to interest from the date of payment is an element of effective protection;
• any solution – judicial or legislative – that will lead to a “balance” or limit the right to interest will be contrary to EU law, because it will weaken the deterrent effect of Directive 93/13 and consolidate the economic advantage of the entrepreneur over the consumer.

This also applies to the effects of withholding mutual benefits: some courts in Poland – in my opinion, unjustifiably – deprive consumers of the right to interest on the basis that banks have filed allegations of withholding, which allegedly “cancel” the right to interest on the withheld amounts.

So I hope that the legislator will consider every decision on this issue and will be able to resist the banking lobby.

I also appeal to judges who already apply the practices described above to refrain from applying the balance theory and depriving consumers of interest until the judgment in case C-510/25 is issued. In this way, we will avoid the need to annul or change unlawful judgments.

Author: Radosław Górski, legal advisor, runs his own law firm