as at 13.02.2023

Do you have or have had a "franking" loan agreement with your bank before 1 May 2004 and are wondering if you can fight the bank? The answer is a resounding YES!

The majority of "franking" loan agreements were concluded between 2006 and 2009. However, such products were offered to clients as early as 2001. If you have a "franking" loan agreement concluded in the period before Poland's accession to the European Union, nothing is lost. You can fight for your rights and demand a determination that the franking credit agreement is invalid.

Are the provisions of Directive 93/13 applicable?

The basis for adjudication in "franking cases" are the provisions of Polish law and the provisions of EU law on consumer protection. Despite the fact that Poland's accession to the European Union took place on 1 May 2004, the provisions of Polish law had been adjusted to the EU regulations since 1991. Poland was even obliged to bring the existing and future Polish law closer to the legislation existing in the European Community. To this end, Poland was to make every effort to ensure legal conformity.

The important point here is that the provisions of Article 3851 of the Civil Code and the following, which concern the protection of the consumer from prohibited (abusive) contractual provisions, were introduced by the Act of 2 March 2000 on the protection of certain consumer rights and liability for damage caused by a hazardous product. Within the scope of its regulation, this Act implemented the directives of the European Communities, in particular Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (EC Official Journal L 95 of 21.04.1993). In view of the above, the interpretation of the provisions of Directive 93/13, as well as the case law of the courts in this respect, will be fully applicable also to franking credit agreements concluded before 1 May 2004. The above position is confirmed by judgments of Polish courts, including the judgment of the Regional Court in Szczecin of 4 November 2021 issued in the case registered under case file I C 659/20.

Are only the provisions of Directive 93/13 relevant?

The answer is: NO

Many courts, when hearing franking cases, begin their analysis of the case by considering whether such a credit agreement is permissible at all under the general provisions of civil law, including banking law. Courts first analyse whether a franking credit agreement is in accordance with the nature of a credit agreement, i.e. whether it meets all the requirements for a credit agreement under the Banking Law. Further, the Courts examine whether the franking credit agreement complies with the general principles of contract conclusion. In Polish law, there is a principle of freedom of contract. This means that the parties may establish certain principles in contracts between themselves in a manner slightly different from the principles arising from the general rules. The idea is to adapt certain issues to the given relationship of the parties. However, these adjustments must not result in the nature of the contract being completely changed or in the circumvention of provisions or fundamental principles that must be included. When such circumstances occur, such an agreement must be considered void. The courts in the franking cases find many arguments to show that the rules established by the Banks in the franking credit agreements support a finding of their invalidity, -primarily because the borrower usually had no influence on the content of such an agreement. These agreements are -often formulated in such a way that they go beyond the permitted freedom to amend contracts. In particular, it is emphasised that it is the Bank that decides the exchange rate at which the capital and interest instalments are converted, and decides the amount of the loan and interest to be repaid. At the same time, what is important, this decision takes place already in the course of execution of the loan agreement, and the borrower does not have any possibility to check on what principles such rate is established. For this reason, too, franking credit agreements are deemed invalid by the courts, regardless of whether they were concluded after 1 May 2005 or before that date.

Are claims for payment under a franking credit agreement entered into before 1 May 2004 time-barred?

As a rule, NO.

Pursuant to the case law of the Court of Justice of the European Union, as well as of the Polish courts, including the Supreme Court, the statute of limitations for claims for payment under a franking credit agreement starts to run only from the moment the borrower became aware of the presence of prohibited provisions in his agreement. The Supreme Court, in its resolution of 7 May 2021, ref. III CZP 6/21, clearly indicated:  The running of the limitation period for the consumer's restitution claims cannot commence before the consumer has become aware or, reasonably speaking, should have become aware of the prohibited nature of the term. This is because it is only then that he could have called upon the trader to return the performance (Art. 455 of the Civil Code). This interpretation is in line with the case law of the Court of Justice of the European Union, which, inter alia, in its judgment of 22 April 2021 in Case C-485/19 and its judgment of 10 June 2021 in Joined Cases C-776/19 to C-782/19.

In view of the above, the Borrower has six years from the moment he became aware of the existence of prohibited provisions in his agreement, including the consequences thereof and the effect of declaring the agreement invalid, to take legal action against the Bank. It should be remembered that calling the Bank for payment before starting a court case is necessary, but does not interrupt or suspend the running of the limitation period. Currently, only taking the matter to court with a payment claim will interrupt the limitation period in this respect.

 What action to take to start a franking case?

Prepare the "franking" loan agreement and all documents related to its conclusion or subsequent changes to the terms of the agreement. Obtain certificates from the Bank, in particular regarding any amounts owed to the Bank to date, including an indication of the rate at which the Bank converted the amounts owed, as well as the amount of the loan (tranches) disbursed to you.

If you need help or would like detailed information regarding your franking credit, please contact us: sekretariat@krpmk.pl