Sharechat Logo

UK Supreme Court rejects NZ Super Fund's joint debt recovery claim

Thursday 5th July 2018

Text too small?

The New Zealand Superannuation Fund's manager said the UK Supreme Court has rejected its attempts to pursue a debt recovery claim, made with others, against Portugal's Novo Banco in the UK, in part because the liability claim is not recognised in Portugal. 

The case relates to a $199 million loan New Zealand’s national pension fund made to Banco Espirito Santo of Portugal by buying bonds in a Goldman Sachs entity, called Oak Finance and written under UK law. Shortly after, BES collapsed amid fraud allegations.

Following a bailout by the Bank of Portugal, BES’s assets and loans were split into a good bank, Novo Banco, and a bad bank.

Separate proceedings have been filed in Portugal against the Bank of Portugal, challenging the validity of its decision not to transfer the Oak Finance loan from BES to Novo Banco.

"In the first place, it is not for an English court to decide what would amount to an appeal from an administrative act of the Portuguese Central Bank," the Supreme Court said in its ruling.

The Supreme Court added that the European Union Bank Recovery and Resolution Directive — BRRD, a legal framework for rescuing failing banks in some EU member states — "would be undermined if the acts of a designated national Resolution Authority were open to challenge in every other member state simply because they were open to challenge in the home state.”

NZ Super Fund’s manager, “along with the other investors, continues to have ongoing legal action against the Bank of Portugal through the Portuguese courts,” it said in the statement, adding that further comments on this matter will be limited because the process is ongoing.

The Supreme Court decision might set an important precedent.

"This is the first case where the English courts were asked to consider how decisions made by another member state's resolution authority under the BRRD should be interpreted," Stuart McNeill, a partner at Pinsent Masons representing Novo Banco in the case, said in a statement.

"The directive is intended to provide a pan-European approach to rescuing banks and other financial institutions in difficulty, requiring member states to respect the decisions of the resolution authorities, many of which are central banks," McNeill noted. "The Supreme Court’s judgment has ramifications for other cases across Europe, and highlights the obvious danger (indeed potential chaos) of different courts interpreting the same decision of a single resolution authority in different ways.”

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares fall to 5-week low as trade tensions spook investors; A2 drops
NZ dollar benefiting from weaker greenback as markets fret about global growth
PM mum on Kiwibuild head Stephen Barclay's status
Mataura Valley begins infant formula trials
CEO pay and non-GAAP reporting are linked, study shows
ACC levy cuts worth $50M a year to business, says Ardern
Unfair business practices on borrowed time
New director of Vital Healthcare’s manager unfazed by fire-at-will clause
QMS pulls out A$35M from NZ unit in MediaWorks merger
Take care to avoid

IRG See IRG research reports