Bank loans denominated and indexed to foreign currency ‒ a Polish, Ukrainian or Europe-Wide problem?

The institution of a bank mortgage denominated/indexed to foreign currency (referred to generally and not very precisely as “foreign currency loan” or “loan adjusted to foreign currency”) is an instrument commonly used by a broad group of citizens of European states for acquiring capital with a view to purchasing a housing unit. Until recently, such loans were popular not only in Poland and other countries belonging to the so-called “New Union” (those whose accession took place within the last decade or so: Czech Republic, Slovakia, Romania, Hungary and Croatia), Austria, Spain, Italy, Portugal, but also outside of the borders of the Union: in Russia, Serbia and Ukraine (however, one difference was the currency in which obligations were evaluated – whilst loans in EU countries were dominated by the Swiss Franc, Ukrainian lendees more frequently relied upon loans “adjusted” to the U.S. dollar). Regardless of differences persisting in legislative regimes, peculiarities of national legal systems and local economic and social conditions, in all those countries doubts have arisen whether a drastic change in currency rate (which results in an obligation to pay off a loan on conditions much less attractive than beforehand) constitutes a legally relevant circumstance that could permit one to release oneself from having to perform one’s contractual duties or, at least, facilitate granting some relief in fulfilling increasingly more onerous obligations towards banks. To discuss the permissibility and legal aspects of foreign currency loan contracts is complicated not only from the juridical point of view, but is also of interest to society, politics and economics. Still, the problem attracts strong emotions, particularly among lendees who took out a foreign currency loan and now feel deceived due to a change of the currency rate. The lendees and their organizations often expect involvement, particularly from EU bodies, where, in their estimation, domestic authorities have failed or “succumbed to the banking lobby”. Unfortunately, having observed the course of events over the last several years, one may surmise that the low number of judgments in cases concerning denominated bank loans, and especially the sceptical approach of the Court of Justice, have generated a lot of disappointment.