Polish top court unlikely to rule on FX loans amid judges' row

Poland’s Supreme Court may issue guidance on the treatment of cases involving foreign currency loans on Thursday but analysts say disagreements over whether some of its judges were illegally appointed mean a final decision is unlikely.

Thousands of Poles took out mortgages in Swiss francs more than a decade ago to take advantage of low Swiss interest rates, only to face far higher costs when the value of the Polish zloty slumped.

The guidance would address key issues in foreign exchange loan cases, such as whether banks can charge interest on a loan with a clause deemed to be abusive and when the period during which banks can claim the reimbursement of money begins.

The court, sitting with all the judges of the Civil Chamber present, had been due to issue the guidance in May, but postponed a decision to ask for opinions from institutions including the central bank, financial regulator KNF and the children’s rights ombudsman.

However, analysts say a conflict between old and new judges in the Supreme Court means a final decision on the guidance on Thursday is unlikely.

Many old judges in the Supreme Court believe that new judges were appointed illegally as a result of reforms by the ruling Law and Justice (PiS) party, which critics say have politicised the judicial system.

Some old judges say verdicts reached with the participation of new judges could be questioned in future.

“In my opinion, the resolution will not be made,” said Andrzej Zorski, a lawyer specialising in Swiss franc mortgage cases, referring to the chance of a decision on Thursday.

“The main (reason) is that we still have a conflict between old and new judges.”

According to the Polish Bank Association there were about 58,000 cases concerning Swiss-franc mortgages in Polish courts at the end of June. Data from Votum Robin Lawyers shows that mortgage holders win more than 90% of cases.

Poland’s Credit Information Office says there are about 415,000 active Swiss franc mortgage contracts with a combined value of about 94 billion zloty ($24.67 billion).

However, despite the risks to the banking sector, Warsaw’s WIG Banks Index was at a two-year high on Wednesday.

According to Kamil Stolarski, Head of Equity Research at Santander Bank Polska, investors are more focussed on the chances of interest rates rising after Poland reported its highest inflation in 20 years on Tuesday.