The case concerned a Swiss-franc-denominated mortgage taken out by a Polish couple from Raiffeissen Bank in 2008. While the funds were made available in Polish zlotys (PLN), the monthly payments were calculated in Swiss francs (CHF) but debited in PLN. At the time the loan was taken out, the amount due, and expressed in CHF, was based on the PLN-CHF buying rate on that day, whereas the monthly repayments were calculated according to the PLN-CHF selling rate at the time the payments were due. This meant that while the borrowers benefitted from the CHF rate initially, they were exposed to currency risk due to the fluctuating PLN-CHF rate.
A Polish court asked the CJEU whether Council Directive 93/13/EEC of 5 April 1993 "permits it to annul the contract where the maintenance of the contract without the unfair terms would result in altering the nature of its main subject matter (...)."
The court ruled that EU law does not preclude the annulment of such contracts concerning credit in Swiss francs.
"In loan contracts concluded in Poland and indexed to a foreign currency, unfair terms relating to the difference in exchange rates cannot be replaced by general provisions of Polish civil law," the CJEU ruled.
According to a press statement by the court, contractual clauses on FX-indexation are core elements of FX mortgage loans, without which the viability of FX-mortgage contracts falls under a heavy question mark.
According to the CJEU press statement: "In this matter, the Tribunal emphasized that cancelling the disputed clauses would result not only in abolishing the indexation mechanism and FX exchange rates, but also - indirectly - in disappearance of the FX exchange rate risk, which is directly connected with the indexation of the loan in question to the currency. Meanwhile the Tribunal reminded that the clauses concerning the FX exchange rate risk determine the main subject of an FX-indexed loan contract, as a result of which the objective possibility of keeping the contract in question in force seems at least uncertain."
The court further ruled that "the consumer must be able (...) to refuse to be protected against the detrimental consequences caused by the annulment of the contract as a whole where the consumer does not wish to benefit from that protection." (PAP)