Supreme Court on Wednesday upheld a High Commercial Court ruling in the "Franak" case

The Supreme Court on Wednesday upheld a High Commercial Court ruling in the "Franak" case which ruled that the variable interest rate on loans denominated in the Swiss franc was unlawful while the currency clause was lawful.

The Supreme Court's latest ruling in the dispute between the Consumer association and eight banks over loans denominated in Swiss francs does not carry new risks for the banking system, the central bank (HNB) said on Thursday.

Following the final High Commercial Court ruling in 2014, the accused banks had the obligation to recognise the risks and make the necessary entries by the end of the year, while auditors had the obligation to check if the risks were correctly presented, the HNB said.

The Supreme Court has wholly upheld the final High Commercial Court ruling which found that a variable interest rate on loans in Swiss francs was unlawful and that the currency clause was lawful.

In regard to the Supreme Court ruling, Justice Minister Orsat Miljenic on Thursday said that he had not seen the ruling but that it shouldn't lead to an overload in the courts, however, the question of control mechanisms should be asked with regard to those loans.

Asked whether the state and the Croatian National Bank had failed to protect citizens, Miljenic underscored that if a system error was repeated, the matter should be resolved by control mechanisms and the legislator.

The decision, released by the Supreme Court today, says that unilateral changing of interest rates is unacceptable and that the application of the currency clause is acceptable.

In order to be reimbursed for the amounts they paid because of interest rate changes, debtors must bring private suits at municipal courts.

(Text: Hina)

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