This is the second phase of this precedent for the gold lending market. A proceeding was held before the EU Court of Justice on 11 June. The most important, however, will be a judgement which usually agrees with the Opinion of the Advocate General of the TEU. It will most likely be settled in the next fewer months.
Some lawyers anticipate a ruling that takes account of consumers' expectations and their attorneys, to open up a fresh large field for borrowers' processes, this time gold, with banks – in the form of franc cases.
Contracts with the indicator
In the present case, the CJEU was addressed by the Częstochowa territory Court (Judge Marcin Borkowski). He is examining the borrower's claim, which in PKO BP S.A. in 2019 took out a housing debt for just over PLN 400 1000 for 240 months. In September 2023, the borrower sued the bank, alleging that it had not been informed before the conclusion of the contract how the WIBOR benchmark was designated, which was crucial for determining the interest rate of that loan. He besides demanded to pay over PLN 10 1000 of overpayments paid on the basis of an abusive, in his opinion, WIBOR.
SO raised a number of doubts which it included in the questions referred for a preliminary ruling to the TEU:
- first, whether the Consumer Directive (93/13 EEC) allows the examination of contractual provisions relating to variable interest rates on the basis of the WIBOR benchmark;
- and, in the event of a affirmative consequence to this question, can the provision of a WIBOR-based interest rate agreement be considered contrary to the good religion of the bank, resulting in an imbalance between the rights and obligations of the parties to the contract to the detriment of the consumer, due to incorrectly informing him of the hazard of a variable interest rate?
- Finally, should a contractual provision on WIBOR-based interest be considered to be unfair, is it possible to proceed to operate an agreement in which the interest rate on the debt will be based on the second interest component, i.e. the bank's margin, which would be more favourable for borrowers?
Case in the TEU
The borrower's representative, Mr Sebastian Frejowski, pointed out at the proceeding before the EU Court that the subject substance of the dispute was not the legality of WIBOR but the correctness of the bank's performance of information obligations to the consumer with respect to the indicator.
– Therefore, it can be considered that after the trial it is not disputed that mortgage credit agreements based on WIBOR are legal and the indicator itself is simply a fair indicator, whereas the essence of the charge now boils down to whether the bank decently or inadequately carried out information duties – lawyer Michał Romanowski, the typical of PKO BP, commented on the hearing.
In turn, the government proxy indicated that WIBOR is simply a benchmark certified by an authorised public administration body under the EU BMR Regulation and, even if so, has a virtue of fairness.
What does the spokesperson say?
In its Thursday opinion, Laila Medina first proposes that the Court should answer to the first 3 questions of the territory Court in Czestochowa that Article 1(2) of Council Directive 93/13/EEC on unfair terms in consumer contracts must be interpreted as meaning that the contractual condition included in the mortgage agreement between the consumer and the bank, which provides that the interest rate applicable to the debt is simply a variable interest rate based on the WIBOR 6M benchmark, falls within the scope of that Directive where national provisions do not supply for the compulsory application of that rate and its circumstantial rate, irrespective of the choice made by the parties to the contract.
Secondly, Article 4(2) of that Directive should be interpreted as allowing for the assessment of the unfair nature of the condition contained in the mortgage agreement between the consumer and the trader, which provides for the application of the variable interest rate based on the WIBOR 6M benchmark to that agreement, if that condition has not been formulated in a simple and understandable language (transparency requirement).
In order to comply with this requirement, the trader must inform the consumer in a sufficiently precise and precise manner of the name of the benchmark utilized and the name of its administrator, as well as of the possible consequences for the consumer resulting from the application of that benchmark.
The way in which the creditor provides this information, either straight or indirectly, must consequence in full disclosure of the method utilized and the main elements causing fluctuations in the rate of the indicator and not giving a distorted image of the nature of the indicator.
Finally, Article 3(1) of Directive 93/13 must be interpreted as requiring the national court to measure whether the contractual condition relating to a variable interest rate based on WIBOR, contrary to the request of good faith, creates a crucial imbalance in the contractual rights and obligations of the parties to the detriment of the consumer. In the general assessment of the unfair nature of the contractual condition, the national court must verify whether the creditor, who treats the consumer in a fair and equitable manner, could reasonably presume that the consumer would accept specified a condition by means of individual contract negotiations. To this end, it should be verified that the consumer has given informed consent to the risks arising from the application of the contractual condition at issue after receiving complete and accurate information.
However, this assessment cannot mention to the WIBOR indicator as specified or to the method of determining it – it points to its position Laila Medina.
The opinion of the CSF may not only be applicable to residential loans but besides to another contracts, including loans with variable interest rates based on WIBOR.
Prof. Michał Romanowski, PKO's typical in this case, is not content to say that the opinion of the Ombudsman is in line with his predictions. It emphasises that the Advocate General of the TEU has not challenged the fairness of the WIBOR indicator and that national courts cannot examine this indicator and the method of determining it. “The banks should inform their customers about its name, the WIBOR admin and the consequences of applying specified an indicator to the contract, and it is up to the national courts to measure whether the client has been correctly informed about WIBOR and its consequences, in accordance with the scope of the BMR Regulation and the applicable national legislation,” notes Michał Romanowski.
Mr Sebastian Frejowski, the borrower's lawyer in this case, is besides satisfied with the opinion of the TEU. “I justice this opinion as a good run before the TEU judgment, primarily for developing in it the bank’s information obligations to fulfil to the borrower in order to consider that they were decently implemented,” says Sebastian Frejowski.
File number: C-471/24
Radosław Górski
Legal adviser
The Ombudsman’s opinion opens the way to judicial review of gold credits based on WIBOR and increases the likelihood of a complete failure of the banking sector in disputes with consumers. The Ombudsman confirmed that the deficiency of reliable information on the hazard and the way in which the indicator is set makes the contractual provisions on the interest rate untransparent and unfair. Most of the contracts in Poland, in my opinion, do not meet these standards, which puts banks in a akin situation as with frank loans.
The assessment of the unfair nature of the contractual provisions in the case of the contract afraid by the question referred for a preliminary ruling, according to the Ombudsman, cannot mention to the WIBOR indicator as specified nor to the method of determining it. At the same time, information about the method of determining this indicator must be provided to the borrower, but after hundreds of analyses of credit agreements I know only a fewer cases where banks have partially fulfilled this obligation.
Jędrze Jachira
lawyer
The WIBOR-based interest clauses may be examined for dishonesty if they are not clearly and clearly presented to the consumer. The banks should so study on the indicator mechanics and its impact on credit costs. Although the opinion is not binding on the TEU, it provides a favourable forecast for borrowers before the final judgment. The Advocate General of the Court of Justice again pays peculiar attention to the importance of full informing the consumer of what has a crucial impact on the borrower's obligations.
Wojciech Wandel
lawyer
The Advocate General of the Court of Justice has indicated that while national courts may examine the variable interest rate clause, they cannot examine the methods of determining the WIBOR benchmark. This is very crucial due to the fact that in the proceedings before SO in Czestochowa (and akin ‘vibor’ procedures), the borrower fundamentally questions the WIBOR indicator and its methodology. Although the borrower is doing so, as is evident from the course of the proceeding before the TEU, under the pretext of alleged failure to comply with the information obligations, the substance of the borrower's allegations is inactive applicable to the index and methodology of its creation.
These issues, as the Ombudsman points out, cannot at all be assessed by a court examining a case in which the borrower disputes an agreement containing a variable interest rate clause.
Henryk Walczewski
Judge from the Frank Court
The court cannot analyse WIBOR in a mortgage dispute. The application of the WIBOR benchmark derives from EU law (Regulation 2016/1011 of the BMR), which directs the rules for calculating the index and the national law of its administrator. In doing so in Poland, WIBOR applies to mortgage credit agreements (mortgage credit law, Art. 10(1)(5)). The amount of WIBOR is determined by its admin – bank – and the borrower has no influence on its amount. You gotta complain to the admin before the administrative court. The BMR Regulation sets out how to deal with complaints about benchmarking (Article 9), input data and calculation method (Articles 11 to 14). It is legally impossible to conclude a credit agreement without the above rules.
