WARSAW, September 2 (Reuters) – On Thursday, Poland’s Supreme Court may issue guidance on how to deal with foreign currency loans, but analysts say disagreements over whether some of its judges have been illegally appointed means the final decision is unlikely.
Thousands of Poles took out Swiss franc mortgages over a decade ago to take advantage of low interest rates in Switzerland, but faced much higher costs as the value of the Polish zloty fell.
The guide will address key issues in foreign currency loan cases, such as whether banks can charge interest on a qualifying loan that is considered to be in breach, and when the period begins during which banks can claim cash reimbursement.
The court, sitting with all the Civil Chamber judges present, was supposed to issue the guidance in May, but postponed the decision to seek views from institutions including the central bank, the KNF financial regulator and the Children’s Ombudsman.
However, analysts say the conflict between old and new justices at the Supreme Court means a final ruling on Thursday’s leadership is unlikely.
Many old judges in the Supreme Court believe the new judges were illegally appointed as a result of reforms by the ruling Law and Justice Party (PiS), which critics say politicized the judiciary.
Some old judges say that sentences handed down with the participation of new judges may be questioned in the future.
“In my opinion, a decision will not be made,” said Andrzej Zorski, a lawyer specializing in Swiss franc mortgages, referring to the possibility of a decision being made on Thursday.
“The main (reason) is that we still have a conflict between the old and new judges.”
According to the Polish Banking Association, at the end of June, there were about 58,000 cases in Polish courts concerning mortgage loans in Swiss francs. Votum Robin Lawyers data show that mortgage holders win over 90% of cases.
According to the Polish Credit Information Authority, there are about 415,000 active mortgage agreements in Swiss francs, totaling about 94 billion zlotys ($ 24.67 billion).
However, despite the risks for the banking sector, the WIG index of Warsaw banks hit a two-year high on Wednesday.
According to Kamil Stolyarski, head of stock market research at Santander Bank Polska, investors are paying more attention to the likelihood of interest rate hikes after Poland reported its highest inflation in 20 years on Tuesday.
“The Swiss franc portfolios represent a risk, but it is unlikely to materialize in the coming months or weeks,” he said. (1 dollar = 3.8107 zloty) (Reporting by Alan Charlisch and Pavel Florkevich, editing by Robert Biersel)