Unplayable lag spikes and freezing when in a party

Whoever creates the instance in your party will do so on their gateway, so if you are playing from one gateway and another party member is playing on another gateway and creates an instance there, you may experience some latency issues in your connection to that instance server.

Do you experience this issue with every party as of today? Or has it only been that one party? You may want to try playing Path of Exile with a friend on the same gateway as you and check if you still experience this issue.