Exchange‑rate clause: when is it unfair?

An exchange‑rate clause is unfair when it is not drafted in plain and intelligible language, and it creates a significant imbalance to the borrower’s detriment Source [1]. The court checks this on the information given at signing. A clause found to be unfair is deemed unwritten Source [2].

What the exchange‑rate clause does.

A loan denominated in Swiss francs and repayable in euros has two currencies. The currency of account is the one in which the debt is calculated, and the currency of payment the one of the instalments. The clause linking the two places the exchange‑rate risk on the borrower.

For the Court of Justice of the European Union, these clauses concern the main subject matter of the contract when they set one of its essential elements Source [3]. It said so on 10 June 2021 (C-776/19 to C-782/19).

When the franc rises, each instalment costs more euros, and so does the outstanding capital. According to the European Central Bank’s reference rates, 100,000 francs were worth €59,513.18 on 12 October 2007, and €106,033.29 on 14 September 2026 Source [4].

The definition of an unfair term.

The French Consumer Code defines the unfair term. In a contract between a professional and a consumer, it is a term that creates, to the consumer’s detriment, “a significant imbalance between the rights and obligations of the parties to the contract” (article L. 212-1) Source [1].

Unfairness is assessed at the time the contract is concluded, in light of all the circumstances surrounding it Source [1]. A term that defines the main subject matter of the contract is only reviewed if it is not drafted in plain and intelligible language Source [1].

An unfair term is deemed unwritten. The contract continues to apply without it “if it can subsist without these terms” (article L. 241-1) Source [2].

The requirement of clarity.

The Court of Justice of the European Union has set out what clarity requires for a foreign currency loan. The borrower must be able to know that the currency may rise or fall, and to assess the economic consequences of the clause for their obligations (20 September 2017, C-186/16) Source [5].

On 10 June 2021, it added that the bank must provide sufficient and accurate information Source [3]. That information must enable an average consumer to understand how the mechanism actually works and to assess its risk over the whole term of the contract. The burden of proving that a term is clear cannot rest on the consumer Source [3].

On 21 September 2023, the Court held that this duty to inform applies even to a borrower who is an employee of the bank and knows the field (C-139/22) Source [6].

The Cour de cassation applies this standard. On 30 March 2022, it held that an exchange‑rate clause without numerical simulations of unfavourable scenarios is not drafted in plain and intelligible language Source [7].

The significant imbalance.

When the clause is not drafted in plain and intelligible language, the court examines the imbalance it creates Source [1]. For the Court of Justice of the European Union, a clause that places an unlimited exchange‑rate risk on the borrower can create a significant imbalance Source [3]. This is the case where the bank could not reasonably expect a borrower informed in a transparent way to accept a disproportionate exchange‑rate risk following individual negotiation Source [3].

Borrowers paid in Swiss francs.

On 9 July 2025, the Cour de cassation ruled on borrowers paid in Swiss francs (no. 24-19.647) Source [8]. Their exchange‑rate risk is assessed over the whole term of the loan, as the property financed is in France. This is recent case law, liable to change. The 2023 position, which ruled out any risk for these borrowers, has been abandoned.

On the same day, the Court dismissed another borrower’s appeal (no. 24-18.018) Source [8]. The loan dated from 2014. The offer and two signed notices informed the borrower, including the document provided for by the recommendation of the French Prudential Supervision and Resolution Authority of 6 April 2012. The clause was upheld. Our article on cross‑border workers covers their situation.

What a clause set aside leads to.

When the contract subsists without the clause, the loan is recalculated as if it had been taken out in euros, from the outset (Cour de cassation, 12 July 2023) Source [9]. When it cannot subsist, it is annulled, and an annulled contract “is deemed never to have existed” (article 1178 of the French Civil Code) Source [10].

These two outcomes do not give the same amount. Our guide to estimating the gain from annulment sets out the calculation.

The documents that decide a claim.

The outcome depends on what the borrower actually received. The lawyer examines the offer and its appendices, the signed notices, the simulations and the dates. In case no. 24-18.018, signed information upheld the clause. Without an explanation of the effects of a rise in the franc, the clause can be set aside.

ACTIVE AVOCATS, a firm of the COGEP AVOCATS group, carries out this review in the following steps:

1. The law firm reads the exchange‑rate clause and identifies the currency of account and the currency of payment.
2. It looks for the simulations and worked examples handed over before signing.
3. It checks the signed notices and appended documents, and their dates.
4. It compares the whole against the criteria set by the courts.

Our list of documents to gather covers each document. The programme’s eligibility test starts with a few questions about your loan, and ACTIVE AVOCATS then reads your offer and checks its dates.

Frequently asked questions.

Are all exchange‑rate clauses unfair?

No. The court assesses each clause in light of the information given to the borrower. On 9 July 2025, the Cour de cassation upheld the clause of a bank that had clearly informed its client Source [8]. This is recent case law, liable to change.

Who must prove that the clause was clear?

The bank. For the Court of Justice of the European Union, the burden of proving that a term is plain and intelligible cannot rest on the consumer Source [3].

My loan is indexed to the franc and repayable in euros: am I affected?

The programme covers mortgages denominated in or indexed to Swiss francs, taken out between 2002 and 2015 for a property located in France. The law firm checks the date on your loan offer.

What happens to my loan if the clause is found unfair?

It is deemed unwritten Source [2]. The contract continues without it if it can subsist, and the loan is then recalculated in euros from the outset Source [9]. Otherwise, the contract is annulled. Our guide to the borrower’s remedies covers the whole process.