EU court says Polish WIBOR mortgage rate not inherently abusive

WARSAW, Feb 12 (Reuters) - A mortgage contract clause containing a reference to the Warsaw Interbank Offered Rate (WIBOR) does not, in principle, work to the detriment of the consumer, the European Union's top court said on Thursday, in a boost for Polish banks.

The banks had faced questions on whether elements of loans indexed to WIBOR could have been abusive, an additional challenge as they dealt with the consequences of turmoil related to foreign currency mortgage loans.

Some clients argue the way WIBOR was set - based on banks' declarations, not actual transactions - resulted in higher mortgage payments for them, and asked courts to rule on the issue.

The EU's Court of Justice was asked by a Polish court hearing the case of a mortgage loan client of Polish bank PKO BP whether the court could question loans referenced to the WIBOR rate and if so, whether such a contract could continue to be in force with the WIBOR clause removed.

In its ruling, the court said that "WIBOR is the subject of a comprehensive legal framework at EU level, compliance with which is ensured by the competent national authorities."

Therefore, the court said, "a contractual term including a benchmark such as WIBOR does not, in principle and on its own, create a significant imbalance between the parties to the detriment of the consumer."

An advisor to the court had said earlier that while a consumer has the right to question a loan contract, any assessment could not refer to "the WIBOR rate itself or the method for determining it".

Polish banking association ZBP welcomed the ruling, saying in a statement: "The Court did not agree with the allegations questioning the credibility and market-based nature of WIBOR."

The Polish government is planning to replace the WIBOR interbank rate on which most mortgages are based by a more transparent instrument.