Remuneration for the use of capital

The number of lawsuits related to franking credits. An analysis of current court rulings shows that in most cases, franking credit agreements between banks and consumers are invalidated. Annulment of the Swiss franc credit agreement leads to the need for appropriate settlements. The borrower should return the capital received to the bank, while the bank should return all the payments made by the consumer. In the meantime, banks have been looking for various ways to avoid losing too much on the franking credit. One such idea was the construction remuneration for the use of capital. Fortunately, in its latest ruling, the Court of Justice of the European Union has once again sided with the franking public.

Landmark CJEU ruling - no remuneration for use of capital

The bank may not claim remuneration for the use of capital, when the franking credit agreement was invalidated - this is the most important thesis from the judgment of the CJEU of 15 June 2023 in case C-520/21.

The District Court for WarsawŚródmieście asked the Court whether the parties to an invalid contract franking credit are entitled to claims for the use of capital. The idea here is that the bank expects to be paid for making the money available, i.e. to be compensated for lending its funds to the borrower. On the other hand, the borrower may be entitled to compensation or an increase in the value of the consideration he receives from the bank as compensation for the fact that the bank is using the money paid by the borrower in the form of loan instalments.

In the judgment C-520/21 The Court of Justice of the European Union confirmed that a consumer is entitled to claim compensation from a bank that exceeds the costs resulting from the cancellation of the contract. The General Court is responsible for assessing this extent, taking into account the objectives of the Directive and the principle of proportionality.

At the same time The directive does not allow remuneration to the bank for the use of capital. Banks are therefore not justified in demanding fees for the use of the capital provided.

The CJEU judgment is therefore unfavourable to the banks, as it denies them the right to claim remuneration or other compensation related to the cancellation of the loan agreement. The ruling should put an end to the wave of lawsuits for remuneration for the use of capital.

If you are looking for a franking law firm in Krakow contact me!