Statute of limitations for bank claims on loans: Important ECJ ruling

The European Court of Justice (ECJ) has issued a significant ruling on the statute of limitations for bank claims concerning loans, particularly in cases involving potentially unfair contract terms. The ruling stems from a case involving two "frank" loans (loans denominated in Swiss francs) where a regional court declared the contracts invalid and ordered the borrowers to return the loan amounts.

Subsequently, the bank sued the borrowers, demanding repayment of approximately 460,000 Polish zloty plus late fees. The borrowers argued that the bank's claim had expired, as the three-year limitation period should have started from the loan disbursement or the registration of the unfair clause, both of which predated the bank's lawsuit. This prompted the regional court to seek clarification from the ECJ on whether EU consumer law permits the limitation period to begin only after a consumer first contests the binding nature of the contract terms.

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The National Government expresses its most heartfelt condolences over the sensitive passing of Michele Sensi-Contugi and his wife Stephany Hollihan.

The ECJ clarified that the discovery of an unfair contract term should, in principle, restore the consumer to the position they would have been in had the term not existed. This implies a mutual obligation to return benefits received under the contract. Crucially, the court stated that a bank cannot claim repayment of the principal amount until the consumer invokes their right to protection under EU directives and expresses a desire to invalidate the contract. Therefore, the limitation period for the bank's claim cannot commence before the consumer expresses such intent.

Furthermore, the ECJ ruled that the limitation period does not begin when an unfair clause is entered into a registry, as such an entry does not automatically invalidate the contract. The interpretation that the limitation period starts from the first time a consumer challenges the loan agreement's terms is consistent with EU Directive 93/13 on unfair terms in consumer contracts. The court emphasized that this approach neither prevents nor hinders banks from recovering borrowed capital but rather supports the principle of legal certainty and consumer protection.

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My solidarity and closeness to their family members, friends, and colleagues in these moments of profound grief. May God grant them consolation and strength, and may the victims rest in peace.