The year 2025 starts with a groundbreaking event for millions of Polish borrowers. The District Court in Białystok, in a case handled by Czupajło Ciskowski & Partnerzy, has referred preliminary questions to the Court of Justice of the European Union (CJEU) regarding the Free Loan Sanction (SKD). This decision could fundamentally impact consumer rights in Poland, enhancing borrowers’ chances of recovering interest and credit-related costs. The questions directed to the CJEU may prove to be the most significant since the landmark Dziubak case.
What Is the Free Loan Sanction?
The Free Loan Sanction is a legal mechanism that allows borrowers to repay only the principal amount of a loan if their credit agreement contains legal flaws. This means that all interest and ancillary costs could be nullified. This sanction applies to credit and loan agreements up to PLN 255,550 taken for consumer purposes, such as purchasing a car or financing vacations. It is derived from the EU Consumer Credit Directive, which has been implemented into Polish law.
The Free Loan Sanction has become a contentious topic in court disputes as many financial institutions adopt practices deemed unfair by borrowers. Common complaints include charging interest on credit costs, incorrectly calculating the Annual Percentage Rate (APR), and misinforming consumers about their right to withdraw from the agreement.
Key Questions Referred to the CJEU
The District Court in Białystok, in a case represented by Czupajło Ciskowski & Partnerzy, has referred three critical questions to the CJEU, which could shape the resolution of this case and the future of borrower protection in Poland:
- Must national courts examine other grounds for applying the Free Loan Sanction ex officio, even if the borrower did not raise them?
- How specifically must lenders detail the procedure for early loan repayment in the agreement?
- Is the application of the Free Loan Sanction automatic, or does it require assessing its proportionality to consumer rights?
The Most Important Questions Since the Dziubak Case
This case could be as pivotal for borrowers as the renowned Dziubak case, with the referred questions potentially reshaping the legal landscape. One of the questions asks whether courts must examine entire loan agreements for potential flaws leading to the Free Loan Sanction, even if the consumer raised only specific issues. A favorable ruling from the CJEU would significantly strengthen the position of borrowers in Poland.
“If the CJEU affirms this obligation, courts will be required to thoroughly analyze loan agreements for all possible grounds for applying the Free Loan Sanction, rather than limiting their review to issues raised by the consumer,” explains Bartosz Czupajło, managing partner at Czupajło Ciskowski & Partnerzy.
Such a ruling would relieve borrowers from identifying all potential violations in their agreements, shifting this responsibility to the courts. This change would elevate the quality of legal protection for borrowers and potentially improve the financial well-being of millions of Poles.
Potential Impacts of CJEU Clarifications
If the CJEU clarifies how detailed the early repayment procedure must be, it may emerge that a significant portion of Polish loan agreements fail to meet EU legal standards. Polish consumer credit laws require lenders to explicitly define the early repayment procedure, yet most agreements merely mention the right to early repayment without further details. This could render many agreements defective, qualifying them for the Free Loan Sanction.
The third question addresses whether violations leading to the Free Loan Sanction should be assessed in light of their impact on consumer rights—a matter of practical importance in thousands of ongoing cases in Polish courts, which vary in their application of proportionality principles.
Timeline for Recovering Funds
A favorable CJEU ruling would compel banks to adjust their practices, including revising how they inform borrowers about early repayment rules. However, the process for borrowers to recover claims may still be lengthy. Many banks reject consumer claims, forcing borrowers to pursue litigation. In Poland, court proceedings can take 2-3 years in the first instance and up to 4-5 years if appealed. In smaller jurisdictions, cases may be resolved faster, sometimes within a few months.
The wait for a CJEU judgment requires patience, as rulings typically take around 18 months. The first decisions regarding the Free Loan Sanction may appear in 2025, but the resolution of this specific case could extend into the first half of 2026, Czupajło concludes.
Source: ManagerPlus
