A breakthrough decision on mortgage loans. This ruling is more important than Polish regulations

• The CJEU ruled that the restructuring of Getin Noble Bank, which declared bankruptcy, should not exclude the possibility of suspending loan repayments.
• This was requested by borrowers who are seeking the invalidation of a Swiss franc mortgage loan agreement before a Polish court.
• The CJEU decision means that the provisions of the Polish act are inconsistent with EU regulations.

The Court of Justice of the EU has ruled that the restructuring of a bank that has declared bankruptcy should not exclude the possibility of suspending loan repayments. This was requested by borrowers who are seeking the invalidation of a Swiss franc mortgage agreement before a Polish court.

The case concerns the suspension of instalment payments to a bank in bankruptcy. This was requested by borrowers who took out a mortgage loan indexed to Swiss francs in Getin Noble Bank (GNB) in 2007. In the main proceedings, the borrowers requested a declaration of the unfair nature of the terms in the loan agreement and its invalidation.

When the bank's compulsory restructuring began in 2022, they requested, among other things, that the obligation to repay loan installments be suspended for the duration of their legal proceedings.

However, the Act on the Bank Guarantee Fund requires that security proceedings against a bank undergoing restructuring be discontinued, and the initiation of a new one is inadmissible.

The District Court in Warsaw asked the CJEU whether the impossibility of taking into account the consumer's request is consistent with EU law.

This concerns the compliance of Polish law with the provisions of two EU directives : on remedial actions and restructuring and on unfair terms in consumer contracts.

In response to a question from a Polish court, the CJEU ruled that EU law precludes the dismissal of the application for security submitted by the borrower in the case described.

The Court in Luxembourg recalled that the purpose of the directive on unfair terms in consumer contracts is to ensure a high level of protection of consumer rights and to prevent the use of unfair terms in contracts. It added that it is the Member States' responsibility to ensure the effectiveness of EU law.

In the case at hand, such effectiveness may mean the application of security protecting the consumer against paying amounts higher than those that GNB will be able to claim from the borrower if a judgment is passed on the invalidation of the loan agreement.

The CJEU emphasised that consumer protection under the provisions of the directive does not have a negative impact on the restructuring process.

The CJEU recalled that it was the Warsaw court that argued that the provisions of the loan agreement taken out by the plaintiffs with GNB could be deemed unfair and that the agreement may not be binding after those terms were found to be invalid.

The District Court in Warsaw therefore considered that the application for the application of interim measures should be granted, but this is not permitted by the BFG Act , which prevents security against the assets of an entity undergoing restructuring.

The CJEU decision means that the provisions of the Polish act are inconsistent with EU regulations.