Interest rate forecast for an interest rate swap

Did your bank provide you with full information about its interest rate forecast when you entered into an interest rate swap?

In the past, many companies entered into interest rate swaps on the advice of their bank. The bank gave advice, the business owner relied on that advice and signed the agreement. But what if the bank’s internal interest rate forecast was completely different from what it told you? On 22 May 2026, the Supreme Court handed down an important ruling on precisely this situation.

Why this topic matters to your business

For many years, interest rate swaps were sold on a large scale to SME business owners and other non-professional investors to hedge against interest rate risks on variable-rate loans. Yet the consequences for many business owners have proved painful: swaps that developed a significant negative value, years of higher costs than expected, and a feeling that the bank had not been entirely transparent.

The legal debate over the banking sector’s duty to provide information regarding interest rate derivatives has been ongoing for years. With this judgement, the Supreme Court adds a new dimension: when is a bank obliged to share its own interest rate forecast with you? And when does the withholding or misrepresentation of those expectations constitute grounds for annulment on the basis of mistake or liability for breach of the duty of care?

The case

Two hospitality entrepreneurs had been banking with Deutsche Bank for decades. In November 2005, they entered into two interest rate swaps to hedge the interest rate risk on loans totalling just over 33 million euros. At the end of January 2008, they terminated those swaps on the bank’s advice, after which Deutsche Bank paid them a positive market value totalling 915,000 euros in February 2008.

A few months later, in June 2008, Deutsche Bank again advised the entrepreneurs to enter into an interest rate swap because interest rates were expected to rise. On 27 June 2008, the entrepreneurs entered into two new interest rate swaps with a ten-year term and fixed interest rates of 4.92 per cent and 4.89 per cent respectively.

It later transpired that Deutsche Bank had already anticipated a fall in interest rates internally. An internal interest rate outlook document from its Economic Research Department dated 2 June 2008 indicated an expected fall in the three-month Euribor from 4.7 per cent in the first quarter to 3.8 per cent in the final quarter of 2009. Deutsche Bank did not share that document with the business owners. In January 2020, the business owners had their interest rate swap set aside out of court on the grounds of mistake and held Deutsche Bank liable for the damages.

The judgment, Supreme Court, 22 May 2026, ECLI:NL:HR:2026:793

The Amsterdam District Court and the Amsterdam Court of Appeal had dismissed the entrepreneurs’ claims. The Court of Appeal ruled that interest rate forecasts are, by their very nature, of relative value and that, in the absence of additional circumstances, a bank is not obliged to share its interest rate expectations. The Supreme Court quashed that judgment on several grounds.

Firstly, the Court of Appeal had completely disregarded the entrepreneurs’ argument that Deutsche Bank had informed them verbally that interest rates would rise and that it would therefore be advisable to enter into a new swap. This constitutes a plea of mistake arising from incorrect information provided to the other party within the meaning of Article 6:228(1), preamble and under (a), of the Dutch Civil Code. The Court of Appeal had not explicitly taken that argument into account in its assessment. This constitutes a failure to state reasons.

Secondly, the Supreme Court confirms the general rule: a bank offering an interest rate derivative is, in principle, not obliged to disclose its internal interest rate forecast. The scope of the duty to disclose depends on the circumstances of the case. That duty is generally fulfilled if the bank has made it sufficiently clear in the product information what the essential characteristics and risks of the derivative are, including the risk that the derivative may develop a significant negative value in the event of early termination.

However, the Supreme Court subsequently ruled that the Court of Appeal had failed to provide sufficient grounds for why the particular circumstances of this case did not give rise to a duty to disclose. After all, the business owners had consistently argued that Deutsche Bank had first advised them to terminate the current swap and realise that positive value, only to advise them four months later to enter into a new swap. If that sequence of advice was based on an expectation of a rise in interest rates, whilst Deutsche Bank internally expected a fall, it is difficult to see, without further explanation, why the bank would not have been obliged in those circumstances to disclose its actual interest rate forecast.

Thirdly, the Supreme Court explicitly distinguishes between the duty to disclose in the event of error (Section 6:228 of the Dutch Civil Code) and the duty to warn arising from the duty of care. The latter extends further. A bank which is a professional provider of high-risk financial products must protect a counterparty without specific expertise against the dangers of their own recklessness or lack of insight. The Court of Appeal had not assessed that duty of care independently and had wrongly confined itself to referring to its ruling on the duty to disclose. That is legally incorrect.

Finally, the Court of Appeal wrongly disregarded the entrepreneurs’ offer of evidence. The entrepreneurs had specifically offered to prove that Deutsche Bank had informed them that interest rates would rise and that, without that advice, they would not have entered into the swap. The Court of Appeal should not have disregarded that offer of evidence.

The Supreme Court has referred the case back to the Court of Appeal in The Hague for further consideration.

What does this ruling mean for your business?

The ruling makes it clear that the debate on liability regarding interest rate swaps is not yet over, not even for swaps that have since expired or been terminated.

Three insights are directly relevant in practice.

The main rule has been confirmed but is subject to exceptions. A bank is not obliged to share its interest rate outlook as a matter of course. However, if the specific circumstances give cause to do so, the situation is different. Relevant factors include: the advisory relationship, the sequence of advice, the content of verbal communications, the client’s level of expertise, and whether the bank internally held an expectation that differed from its advice.

Error and the duty of care are independent grounds. Anyone who bases their claim solely on the failure to disclose the interest rate outlook (Section 6:228(1)(b) of the Dutch Civil Code) is in a weaker position than a claimant who also demonstrates that a treasury adviser made an incorrect oral statement regarding the expected interest rate trend (Section 6:228(1)(a) of the Dutch Civil Code). At the same time, the duty of care extends further than the duty to disclose in cases of error. Both grounds merit separate consideration in the submission.

Statement of reasons and offer of evidence are crucial in the proceedings. The Supreme Court quashed the judgment partly because the Court of Appeal disregarded a specific, substantiated offer of evidence. Anyone considering or conducting legal proceedings must formulate their arguments and offers of evidence as specifically and factually as possible.

What can you do?

Have you entered into an interest rate swap in the past on the advice of your bank, and do you feel that the bank did not inform you fully or accurately about its own interest rate expectations? If so, it is worth investigating what was said verbally at the time and what the bank’s internal intentions were.

Reconstruct the communications that took place prior to entering into the swap. Are there any meeting minutes, emails or other documentation that reveal the nature of the advice? Were there any internal interest rate forecasts available at the bank that differed from what you were told? What was the nature of the advisory relationship, and how expert did the bank consider you to be?

Also bear in mind limitation periods. The business owners in this case filed their out-of-court action for annulment in January 2020, well over twelve years after the swap was concluded in 2008. However, depending on the time of discovery and the nature of the claim, these time limits may have already expired. A timely assessment is therefore essential.

Would you like more information?

TK would be happy to discuss with you whether your situation provides grounds for legal proceedings or an out-of-court approach. We will examine the factual basis for any potential error, the scope of the bank’s duty of care in your specific case, and the tactics regarding the presentation of evidence and the formulation of your case. Please contact Michiel or one of the other professionals from the Corporate & Commercial Litigation team.