Interest swap and special care duty of bank
In recent years there has been a growing number of court cases involving interest swaps. In 2014, two new decisions were handed down concerning the question of what the scope of the duty of care of banks is in relation to ‘professional’ clients with which they have contracted interest swaps (ECLI:NL:RBOBR:2014:1415 (in Dutch) and ECLI:NL:GHSHE:2014:1052 (in Dutch))
The striking increase in such actions is due partly to the high number of interest swap contracts that the banks concluded with small and medium-sized enterprises (SMEs) in recent years. Many of these contracts have a negative value as interest rates continue to fall. The latter means that if a contract is cancelled prematurely, the bank may have the right to a substantial cancellation fee as a result of the lower interest rates.
A standard has been developed in the jurisprudence that banks should observe a special duty of care in respect of their private clients. This duty of care is intended to protect vulnerable parties against their own rashness or lack of insight. In both cases the courts found that the special duty of care not only exists in relation to private individuals, but should also be taken into account in respect of companies (such as SMEs). On the grounds of its special care duty , the bank has an obligation to issue warnings about the risks of early cancellation of interest swap contracts. On violation of the special duty of care, the bank is in principle liable for the damage that its client suffers as a result.
The assumption that the special duty of care also applies in respect of entrepreneurs further broadens its scope. This decision offers hope for other entrepreneurs who have suffered damage as a result of early cancellations of interest swap contracts that they may be able to recover these from their banks, but the question remains of whether these decisions will be upheld by the Supreme Court. Furthermore, there are doubts as to whether entrepreneurs who have the experience with credit agreements and fixed and variable interest rates are able to invoke the special duty of care.