EU court rules on FX-indexed mortgages in Poland

The European Court of Justice (CJEU) issued a ruling on Thursday in a case concerning "unfair clauses" in foreign-exchange-indexed mortgages issued by Poland's banks, paving the way for Swiss-franc-denominated mortgage contracts to be annulled. 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. 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.