The clients were struggling with the consequences of a foreign currency loan, originally promoted to them as a preferable option due to its low interest rate. The loan had been granted in Swiss francs (CHF), while their income and everyday financial life were in a different currency.

 

Over time, due to the dramatic change in the exchange rate, the monthly instalments increased to such an extent that the clients were no longer able to meet their repayment obligations. As a result, the bank initiated legal proceedings against them, claiming a substantial amount that had been significantly inflated by the currency fluctuations and default interest.

 

Upon carefully reviewing the documentation and the wider evidential material, it became clear that the bank had actively promoted to the clients the Swiss franc loan, without providing the clients with clear, timely and meaningful information enabling them to understand the scale of the risks they were assuming about the real financial risks of borrowing in a foreign currency namely, the exposure to exchange-rate fluctuations, the potential long-term burden on their monthly instalments and the overall impact this could have on the total amount repayable over time.

 

In the course of the proceedings, the case was handled and argued by Ermina Papasolomou, who placed particular emphasis on the legal framework protecting consumers from unfair contractual terms and on the requirement of transparency, as developed by the Court of Justice of the European Union in cases involving foreign currency lending. The Court ultimately accepted that the clients had not been properly informed, that the bank’s conduct was incompatible with the standards of good faith and transparency and that the relevant terms were unfair.

 

The outcome was decisive: the Court ruled in favour of the bank only to the extent of the enforceable balance, while at the same time removing the unfair effects of the foreign currency mechanism. The Court restored the contractual balance by applying the exchange rate as it stood at the time of the loan agreement and rejected the imposition of default interest and other unsupported charges.

 

This case is particularly significant, as it marks the first time a Cypriot court reduced a bank’s claim in a Swiss franc loan case by such a substantial amount — approximately €430,000 — in favour of the borrowers, a result achieved by the founder of our firm, Ermina Papasolomou.

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🔗 Read the court's decision 

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