More than two months ago, on 3 October, the Court of Justice of the European Union issued a ruling on mortgage CHF borrowers in response to questions referred for a preliminary ruling by the District Court in Warsaw, before which one of the cases against the bank is pending. This ruling represents a very important legal stage in the way franc borrowers assert their rights in court in relation to credit agreements containing prohibited contractual clauses.
Recently there have been many comments, both from banking experts estimating potential risks for the banking sector and lawyers representing borrowers. However, all agree that more lawsuits are expected in these cases.
Will Polish courts be flooded by a wave of Swiss franc borrowers lawsuits? Listening to the public discussion in recent weeks in Poland, this seems to be a very likely scenario. However, are other solutions possible? Could the solution to the problem of franc mortgage agreements containing abusive clauses be mass settlements between borrowers and banks?
Let us look at such a scenario.
First of all, it is worth noting that the average duration of the court litigation in these cases is well over two years in the first instance. If either party would like to appeal against the judgment of the first instance, the next several months should be added to this time. Not without significance, however, is the fact that on 7 November this year the amended provisions of civil procedure came into force, which reformulate the Polish civil procedure. It is likely that the courts will need some time to find themselves in the new procedural reality, which foresees several important novelties, which will be extremely important. These novelties are intended to contribute, among others, to faster processing of cases.
Paradoxically, however, it may transpire that in order for the regulations to achieve their goal, the training of judges related to mediation skills, i.e. such moderation of discussions between the parties to a dispute at its initial stage (here, during the so-called preparatory meeting) that the parties reach – assumed by the authors of the amendments – an agreement. This is related to the introduction of a completely redesigned procedural element, the aforementioned preparatory meeting, which is to precede court proceedings and which, in the intention of the amendment, is to aim, among others, at an amicable resolution of the dispute. It seems that this institution may also be a good tool in franc borrower cases, because at this initial stage the judge will be able, after familiarizing himself with the parties’ positions, to estimate the expected duration of the trial and – as the authors of the amendment wish – indicate the potential direction of the decision. This is the moment when the judge will be able to persuade the parties to conclude an agreement.
In a situation where the parties need more time to negotiate, the judge – as it is the case so far – may refer the parties to mediation. It seems that resolving individual franc borrowers cases by way of a settlement is a very good solution for both parties to a dispute. On the one hand, the consumer suing the bank has the opportunity to settle the dispute more quickly and possibly free himself from credit agreement with foreign exchange risk and prohibited clauses. On the other hand, the bank will be able to very actively mitigate the risk associated with a contract containing prohibited clauses and an ongoing lawsuit.
Importantly, the parties in such settlement negotiations may decide to annex the contract by replacing the invalid contractual clauses with possible valid clauses or to shape the legal relationship between them in such a manner that, in the event of cancellation of the credit agreement, they may conclude a new agreement which would serve the purpose of refinancing the credit.
The confidentiality of mediation or settlement negotiations also seems to be a great advantage for a bank which values its reputation and customer relationships.
There are several mediation centres in Poland which have very good practice in resolving business disputes, including disputes between financial institutions and consumers. It is enough to mention the Mediation Centre at the Polish Financial Supervision Authority or the International Mediation Centre established by bilateral chambers of commerce operating in Poland. It seems that both these institutions may be an excellent platform for the amicable settlement of disputes between banks and consumers.
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