Over the past decade, the protection of consumers who took out Swiss franc loans for the purchase of property in France has been at the centre of intense legal debates, due to the particularly significant litigation generated by these toxic loans. Following an extensive evolution of case law, consumers have acquired the benefits arising from the protection afforded by the unfair contract terms regime, which has enabled many of them to obtain the annulment of their toxic Swiss franc loans.
However, cross-border borrowers had until now been excluded from these developments, as lower courts and the Court of Cassation considered that they could not be exposed to foreign exchange risk. These decisions were highly questionable from a legal standpoint, all the more so since the reasoning did not withstand scrutiny of the facts: cross-border workers all very concretely suffered from foreign exchange risk and found themselves in critical financial situations due to the unfavourable evolution of the euro/Swiss franc exchange rate.
This situation has now changed and a reversal of case law now opens the prospect of the possibility of annulment of Swiss franc loans for cross-border workers.
The Court of Cassation, in two judgments of 9 July 2025 (Civ. 1st, 9 July 2025, appeal No. 24-19.647, FS-B; Cass. 1st Civ., 9 Jul. 2025, No. 24-18.018, Published in the Bulletin), explicitly reverses its case law, in a major and welcome development, to extend to cross-border consumers who received their income in Swiss francs at the time of entering into the loan agreement the benefit of the solutions previously adopted on the basis of unfair contract terms. This reversal, resulting from the judgments of 9 July 2025, including the highly anticipated Cass. 1st Civ., 9 Jul. 2025, No. 24-19.647, Published in the Bulletin, constitutes a major victory for all cross-border workers who took out Swiss franc loans. A qualification is however provided by the judgment Cass. 1st Civ., 9 Jul. 2025, No. 24-18.018, insofar as, in that case, an information notice on foreign exchange risk had been provided to the borrowers, which led the Court of Cassation to uphold the decision of the lower court judges who had dismissed the unfair nature of the disputed clauses.
Cass. 1st Civ., 9 Jul. 2025, No. 24-19.647, Published in the Bulletin
Cass. 1st Civ., 9 Jul. 2025, No. 24-18.018, Published in the Bulletin
1. Prior Case Law: Limited Protection for Borrowers
Until this new case law, the position of the courts and the Court of Cassation itself was relatively fixed, even unfavourable to cross-border borrowers.
- The Chambery Court of Appeal of 27 May 2021 (CA Chambery, 2nd Ch., 27 May 2021, No. 19/01334, upheld by the Court of Cassation, Cass. 1st Civ., 1 March 2023, No. 21-20.260, Published in the Bulletin) had held that, for loans granted in Swiss francs and repayable in the same currency by borrowers receiving their income in Swiss francs at the time of entering into the contract, “there was no foreign exchange risk to the detriment of the borrowers“. Consequently, the clauses relating to the loan amount and the terms of instalment payments were considered “perfectly clear” and not unfair. This Court of Appeal had thus dismissed the claims of a couple who had taken out CHF loans in 2008 and 2009 and received their income in Swiss francs.
- Following this precedent, the Colmar Court of Appeal, in its judgment of 3 July 2024 (CA Colmar, Ch. 1 a, 3 Jul. 2024, No. 23/00138, which gave rise to the judgment of 9 July 2025: Cass. 1st Civ., 9 Jul. 2025, No. 24-19.647) applied the same logic. It found that a borrower who had “always received income paid in Swiss francs“ (including a pension after early retirement) could not “claim to have suffered, and to suffer, any foreign exchange risk“. In the absence of any demonstrated foreign exchange risk, the Colmar Court concluded that the borrower had received “concrete, sufficient and accurate information” and rejected her claim regarding the unfair nature of the clauses. This decision applied to four loans taken out between 2005 and 2010 by an individual working and receiving income in CHF in Switzerland.
In this context, case law considered that the absence of any divergence between the currency of income and the currency of the loan negated the foreign exchange risk, and consequently rendered the clauses clear and not unfair.
2. The Reversal of 9 July 2025: A Victory for Cross-Border Workers
The judgment of the Court of Cassation of 9 July 2025 (Cass. 1st Civ., 9 Jul. 2025, No. 24-19.647) overturns the decision of the Colmar Court of Appeal (CA Colmar, Ch. 1 a, 3 Jul. 2024, No. 23/00138). In doing so, it effects an explicit reversal of its own prior case law (notably that of 1 March 2023: Court of Cassation, Cass. 1st Civ., 1 March 2023, No. 21-20.260, Published in the Bulletin).
- The new definition of foreign exchange risk: The Court of Cassation now holds that loans granted in a foreign currency and repayable in the same currency, even when taken out by borrowers receiving their income in that currency at the date of entering into the contract, involve a foreign exchange risk borne by the borrower. This risk can no longer be assessed “solely at the date of entering into the loan, without taking into account the risk to which the borrower was exposed throughout the entire duration of the contract“.
- All circumstances to be taken into account: To ensure effective consumer protection, regard must be had to “all the circumstances surrounding the conclusion of the contract, as well as their reasonably foreseeable evolution, until its expiry“.
- This specifically includes the status of cross-border worker of the borrower.
- As well as the purpose of the loan: a property located in a State whose legal currency differs from the currency of account of the loan (for example, a property in France financed by a CHF loan).
- Materialisation of the risk: the risk may materialise through a “significant depreciation of the legal currency in the State where the financed property is located and/or in which the borrower is domiciled and would come to receive their income during the course of the contract“. This therefore covers situations where the cross-border worker loses their employment in Switzerland and receives their income in euros (unemployment, career change, retirement), or if the exchange rate evolves unfavourably for the euro against the CHF.
Indeed, the particular nature of foreign exchange risk for cross-border borrowers was that it arose notably from the decorrelation between the valuation of the asset (the property in euros) and the liability (the debt in Swiss francs). This decorrelation, in the event of a significant variation in the euro/Swiss franc exchange rate, trapped borrowers in the contract, which had the consequence of exposing them durably to foreign exchange risk. It was impossible for them to terminate the loan early since the value of the property was far lower than the outstanding capital.
3. Strengthened Transparency and Disclosure Obligations for Banks
This reversal entails enhanced obligations for financial institutions:
- Clear and comprehensible information: The bank must provide the borrower with “sufficient and accurate” information to enable them to make their decision “prudently and with full knowledge of the inherent risks“.
- Concrete operation of the mechanism: The transparency requirement means that the bank must set out “in a transparent manner the concrete operation of the proposed contractual mechanism, over its entire duration“. The borrower must be able to “assess the potentially significant economic consequences of such a clause on their financial obligations“.
- Details on the impact of the risk: The information must “at a minimum address the impact on repayments of a significant depreciation of the legal currency in the Member State where the borrower is domiciled and of an increase in the foreign interest rate“.
- Explicit warning on foreign exchange risk: The borrower must be “clearly informed that, by entering into a loan agreement denominated in a foreign currency, they are exposed to a foreign exchange risk which may be economically difficult for them to bear in the event of a devaluation of the currency in which they receive their income“.
4. The Qualification Provided by the Decision Cass. 1st Civ., 9 Jul. 2025, No. 24-18.018: Provision of an Information Notice
In case 24-18.018, the Court of Cassation noted, on its own grounds and by adopting those of the Court of Appeal, that the borrower had been able to satisfy themselves of the scope of the disputed clause in light of the information provided to them. This information was contained in the loan offer and, most significantly, in two information notices relating to foreign currency loans that the borrower had initialled. These notices even included an information document drawn up pursuant to a recommendation of the prudential supervisory authority for banks.
The content of these notices is crucial for understanding the qualification provided by the judgment:
* They referred to the advantage of an attractive interest rate not linked to the French financial market.
* However, and this is the essential point, they drew the borrower’s attention to the fact that the interest rate was not the only factor in the cost of this type of loan.
* They explained that, depending on the evolution of the currency against the euro at the time of payments, any loss or gain was entirely borne by or to the benefit of the borrower.
* They emphasised the importance of keeping these factors in mind throughout the entire duration of the loan.
* They specified that foreign exchange risk should be assessed at the time of the financing application but also over the long term, as the borrower’s personal situation could change, particularly in the event of a loss of income in the foreign currency.
* Finally, they “perfectly” described (according to the Court of Appeal) the mechanism of repayment in foreign currency (use of available foreign currency or purchase of foreign currency, with the foreign exchange risk borne by the borrower in the latter case).
The Court of Cassation thus considers that the bank had set out to the borrower, in a clear and transparent manner, the concrete operation of the proposed contractual mechanism and its consequences, over the entire duration of the contract.
The qualification is therefore as follows: even though the case law evolves to require that foreign exchange risk be taken into account over the entire life of the loan and the reasonably foreseeable developments in the borrower’s situation (for example, a change in the currency in which income is received or the depreciation of the currency of the financed property), a clause will not be declared unfair if the bank demonstrates that it has fulfilled its disclosure obligation in a particularly comprehensive and forward-looking manner. The information notices, as detailed in paragraph 17 of the judgment, are the concrete example of what the Court of Cassation appears to expect from financial institutions in order to consider that the transparency requirement is met.
In sum, this decision is not a blanket endorsement of foreign exchange risk clauses, but rather a practical manual of the transparency requirements that banks must scrupulously observe. It confirms that the burden of proof of this enhanced disclosure rests with the lender and that the quality and scope of pre-contractual documents are now subject to closer scrutiny than ever before.
5. Consequences for Unfair Terms and Legal Actions
This new judgment paves the way for more effective challenges to Swiss franc loans:
- Unfair nature of clauses: If the bank has not complied with these transparency and disclosure obligations in light of the new definition of foreign exchange risk, the contract clauses (in particular those relating to the currency of account and the terms of repayment) may be held to be unfair and, consequently, deemed unwritten. A clause declared unfair is “considered, in principle, as never having existed” and “cannot have any effect with regard to the consumer“.
- Limitation period for the action for annulment/restitution:
- The action to have a clause declared unfair is not subject to any limitation period.
- The action for restitution of sums unduly paid, consequent upon a finding that clauses are unfair, is subject to a five-year limitation period. However, the starting point of this period is now set at the “date of the court decision finding the clauses to be unfair“. This strengthens borrower protection, as they are no longer penalised by a limitation period running before they became aware of their rights.
- Connection with the duty to warn: The Court of Cassation specifies that the quashing of the decision on the unfair nature of the clauses entails, as a consequence, the quashing of the dismissal of the claims based on the bank’s breach of its duty to warn, by reason of a “necessary link of dependence” between these two aspects. This means that if the bank has failed in its obligation of transparency regarding foreign exchange risk, its duty to warn may also be engaged.
6. Immediate Application of the New Solution
The Court of Cassation has ruled that there is no reason to defer the effects in time of this new solution.
- The principle of transparency, on which this new interpretation is based, derives from European Directive 93/13/EEC, which had been transposed into domestic law well before the disputed loans were concluded (2005, 2006, 2007, 2010).
- Banks therefore cannot invoke “legitimate expectations and anticipations” based on prior case law, as consumer protection and the deterrence of unfair contract terms are fundamental objectives of the directive.
In conclusion, this judgment of 9 July 2025 is a major advance for cross-border borrowers. It finally fully recognises the latent foreign exchange risk in Swiss franc loans, even when income is initially in the same currency, and considerably strengthens the disclosure and transparency obligations of banks.
If you are a cross-border worker and have taken out a Swiss franc loan, it is strongly recommended that you have your contract reviewed by a banking law attorney such as Le Bot Avocat. This new case law could enable you to challenge the clauses of your loan and assert your rights to annul your loan and thereby retroactively eliminate the foreign exchange risk as well as the interest.
FAQ: Swiss Franc Loans for Cross-Border Workers – Your Rights Following the Reversal of Case Law (Cass. 1st Civ., 9 Jul. 2025, No. 24-19.647, Published in the Bulletin)
1. What is a Swiss franc loan for cross-border workers?
These are generally mortgage loans denominated and repayable in Swiss francs (CHF), granted by Swiss banks (such as Credit Agricole Next Bank (Switzerland)) or French banks (such as Caisse d’Epargne) to French residents (often cross-border workers) receiving their income in Swiss francs. These loans are often intended to finance the purchase of property located in France. Interest rates may be fixed and then indexed to the CHF Libor.
2. What was the legal position regarding these loans before the judgment of 9 July 2025?
Historically, the case law, in particular that of the Chambery Court of Appeal of 27 May 2021 (CA Chambery, 2nd Ch., 27 May 2021, No. 19/01334, upheld by the Court of Cassation, Cass. 1st Civ., 1 March 2023, No. 21-20.260, Published in the Bulletin), held that:
- The clauses relating to the loan amount in CHF and the terms of instalment payments were perfectly clear.
- Since the borrowers received their income in Swiss francs at the time of entering into the contracts, there was no foreign exchange risk to their detriment.
- These clauses were not considered unfair.
The Colmar Court of Appeal, in a judgment of 3 July 2024 (CA Colmar, Ch. 1 a, 3 Jul. 2024, No. 23/00138), had also applied this logic, finding that a borrower who had “always received income paid in Swiss francs“ (including after early retirement) could not “claim to have suffered, and to suffer, any foreign exchange risk“. It considered that the borrower had received “concrete, sufficient and accurate information” and rejected her claim regarding unfair terms.
3. What changed with the Court of Cassation judgment of 9 July 2025 (No. 24-19.647)?
This judgment overturns the decision of the Colmar Court of Appeal (CA Colmar, Ch. 1 a, 3 Jul. 2024, No. 23/00138), effecting an explicit reversal of case law.
- New definition of foreign exchange risk: The Court of Cassation now holds that loans granted in a foreign currency and repayable in the same currency involve a foreign exchange risk borne by the borrower, even if the borrower received their income in that currency at the time of entering into the contract. This risk cannot be assessed “solely at the date of entering into the loan, without taking into account the risk to which the borrower was exposed throughout the entire duration of the contract“.
- Circumstances to be taken into account: For effective consumer protection, the court must consider “all the circumstances surrounding the conclusion of the contract, as well as their reasonably foreseeable evolution, until its expiry“. This notably includes the status of cross-border worker of the borrower and the purpose of the loan (property located in a State whose legal currency differs from the currency of the loan).
- Materialisation of the risk: The risk may materialise through a “significant depreciation of the legal currency in the State where the financed property is located and/or in which the borrower is domiciled and would come to receive their income during the course of the contract“.
4. Does this decision mean that all foreign currency loans to cross-border workers are now considered unfair?
No. This decision does not automatically render foreign currency loans unfair. It strengthens banks’ transparency obligations. If the bank can prove that it provided all the necessary information, in a clear and comprehensible manner, on the concrete operation of the mechanism and its potential economic consequences over the entire duration of the contract, the clause will not be held unfair. The specific case that gave rise to the judgment of 9 July 2025 (No. 24-18.018), where a borrower working in Switzerland received their income in Swiss francs for a property in France, was dismissed because the Court of Appeal considered that the bank had rightly excluded the unfair nature of the clause by demonstrating that comprehensive information had been provided in the information notices.
4. What are the banks’ transparency and disclosure obligations following this reversal?
The financial institution must now provide the borrower with clear and comprehensible information so that they make their decision “prudently and with full knowledge of the inherent risks“. This requires:
- Setting out “in a transparent manner the concrete operation of the proposed contractual mechanism, over its entire duration“.
- Enabling the borrower to assess the potentially significant economic consequences on their financial obligations.
- Addressing at a minimum the impact on repayments of a significant depreciation of the currency having legal tender in the State where the borrower is domiciled and of an increase in the foreign interest rate.
- Clearly informing the borrower that they are exposed to a foreign exchange risk which may be economically difficult for them to bear in the event of a devaluation of the currency in which they receive their income.
6. Are “information notices” important?
Yes, they are crucial. In the case that gave rise to the judgment No. 24-18.018, the Court of Cassation confirmed that the bank had correctly informed the borrower, notably through two information notices relating to foreign currency loans that the borrower had initialled. These notices explained that, although an attractive interest rate might be offered, the rate is not the only factor in the cost of the loan. They specified that any loss or gain related to the evolution of the currency is entirely borne by or to the benefit of the borrower, and that it was essential to keep this in mind throughout the entire duration of the loan. They emphasised that the foreign exchange risk must be assessed “over the long term” because the borrower’s personal situation may change, particularly in the event of a loss of income in the foreign currency. The mechanism of repayment in foreign currency (use of available foreign currency or purchase of foreign currency with the foreign exchange risk borne by the borrower) must also be perfectly described.
6. What happens if the bank has not complied with these obligations?
If the bank has not complied with these transparency and disclosure requirements, the contract clauses (in particular those relating to the currency of account and the terms of repayment) may be held to be unfair and, consequently, deemed unwritten. A clause declared unfair is “considered, in principle, as never having existed” and “cannot have any effect with regard to the consumer“.
7. What are the limitation rules for challenging my loan?
The Court of Cassation has clarified the starting points of limitation periods:
- Action to have a clause declared unfair: It is NOT subject to any limitation period. You can therefore always request that a clause be held unfair.
- Action for restitution of sums unduly paid (following a finding that clauses are unfair): It is subject to a five-year limitation period, but the starting point of this period is set at the “date of the court decision finding the clauses to be unfair“. This is a major advance for borrowers, as the limitation period no longer begins to run before the unfair nature has been judicially recognised.
- Action for liability for breach of the duty to warn: The quashing on the unfair nature of the clauses entails, as a consequence, the quashing of the dismissal of the claims based on the bank’s breach of its duty to warn, by reason of a “necessary link of dependence” between these two aspects. The starting point of the limitation period for this action is the date of the first payment default, enabling the borrower to apprehend the existence and potential consequences of such a breach.
8. Does this new case law apply to my existing loan?
Yes, the Court of Cassation has decided not to defer the temporal effects of this new solution.
- The principle of transparency, on which this new interpretation is based, derives from European Directive 93/13/EEC, which had been transposed into domestic law well before the disputed loans were concluded (taken out between 2005 and 2010 in the case that led to the reversal).
- Banks therefore cannot invoke “legitimate expectations and anticipations” based on prior case law, as consumer protection and the deterrence of unfair contract terms are fundamental objectives of the directive.
9. What should I do if I am a cross-border worker with a Swiss franc loan?
This reversal of case law offers new and significant defence opportunities for cross-border borrowers.
- It is strongly recommended that you consult a banking law attorney to have your loan agreement reviewed.
- Consult Maitre Mikael Le Bot to assess whether the clauses of your loan comply with the new transparency and disclosure requirements of the bank in light of the foreign exchange risk, even if your income was initially in CHF.
- In the event of a breach, actions may be pursued to have the clauses declared unfair and potentially obtain the annulment of your loan agreement and the restitution of sums unduly paid, which amounts to retroactively eliminating the foreign exchange risk as well as the interest on your loan.
10. Concretely, what can I obtain?
Annulment leads to a return to the situation existing before the conclusion of the contract.
Indeed, the Court of Cassation has confirmed that “the borrower must return to the bank the euro equivalent, at the exchange rate on the date the funds were made available, of the sum lent and that the bank must return to the borrower all sums received in performance of the loan, namely the euro equivalent of each sum at the exchange rate applicable at the time of each payment” (Cass. 1st Civ., 12 Jul. 2023, No. 22-17.030, Published in the Bulletin).
Ultimately, it is as if the contract were reversed.
The bank returns to you the monthly instalments that you paid… and you return to the bank the capital that it made available to you.
The difference between the total of these two sums will give the final balance between the parties.
This is a particularly advantageous remedy for the borrower since both the foreign exchange risk AND the interest are annulled.
