In a strong outcome for the Bank of Portugal ("BdP") that will come as a relief to resolution authorities throughout the EU, the Supreme Court has upheld a ruling by the Court of Appeal that a debt claim brought by investors against Novo Banco ("NB"), a “bridge institution” established by BdP in 2014, must be pursued in the Portuguese courts.
The appeal relates to two decisions taken by BdP in August and December 2014, once it had become clear that Banco Espírito Santo (“BES”), one of Portugal’s largest commercial banks, was in serious financial difficulties. Before the Supreme Court, BdP led the argument that, as a matter of Portuguese law, its August decision cannot be considered independently of its December decision and together they have the effect that a debt (referred to as the “Oak Liability”) was never
transferred to NB, such that the English courts have no jurisdiction to determine any claim relating to it. The Supreme Court unanimously agreed that the proper place for any action by the claimants to take place in relation to the Oak Liability is the administrative courts in Portugal.
Lord Sumption, delivering the judgment of the Supreme Court, dismissed the appeal brought by Goldman Sachs and a group of international investors referred to as the “New Zealand Claimants”. Like the Court of Appeal before it, the Supreme Court accepted BdP’s argument that, as a matter of English law, implementing the Reorganisation Directive, the August decision (as a reorganisation measure) must be given the effect that it has in Portugal as the home state.
Please click download PDF to view the full article.Download PDF