The High Court has dismissed Dáil deputy Joan Collins’s challenge to the legal and constitutional basis for State promissory notes issued to Anglo Irish Bank and the Educational Building Society (EBS) in 2010.
The three-judge Divisional Court held that section 6 of the Credit Institutions (Financial Support) Act 2008 authorised the Minister for Finance to provide support from the Central Fund without a separate Dáil vote. It also rejected Collins’s argument that the law was unconstitutional because it did not set an advance upper limit on the sums that could be committed.
The notes formed part of State support for the banks during the financial crisis. The Anglo note was issued in December 2010 for €30.6 billion; the EBS note was for €250 million. The court found that the notes were valid when issued under the time limits then in force, even though payments under them could fall due after the then specified support date.
The Anglo note had been pledged by Anglo, later renamed the Irish Bank Resolution Corporation (IBRC), as collateral for emergency liquidity assistance from the Central Bank. After IBRC was liquidated in February 2013, the note was returned to the Minister and cancelled in exchange for long-term Government bonds. The court said that exchange did not make the challenge moot: whether the note had been lawfully issued remained relevant to the Minister’s authority to issue the bonds. It found the Minister had been liable to the Central Bank in respect of the note when IBRC was liquidated.
The court’s ruling also addressed the remaining EBS note. It said the note could not remain in place, and payments could not continue under it, after the then current deadline of 30 June 2018 unless the Minister extended that date by statutory order. That observation concerned the statutory time limit; it did not alter the court’s decision to reject the challenge to the notes’ original validity.
The judges found that the 2008 Act set standards limiting the Minister’s discretion, including requirements connected to threats to credit institutions and the stability of the financial system. In their view, the Constitution’s appropriation rules did not require a law to specify a fixed spending ceiling where the law set the purpose, funding source and standards governing the expenditure.
The court proceeded on the basis that Collins had standing after the defendants withdrew their objection. It did not decide the defendants’ delay argument, saying it was unnecessary in light of its conclusions. The claim was dismissed.