The Supreme Court ruled that borrowers whose rights could be affected by a proposed National Asset Management Agency (NAMA) acquisition must be informed and given an opportunity to make representations before a decision is made.
The judgment, delivered by Chief Justice Murray on 12 April 2011, arose from an appeal by 15 companies and Patrick McKillen against NAMA, Ireland and the Attorney General. The Court had already invalidated a purported NAMA decision to acquire eligible bank assets connected to the appellants’ loans. It also dismissed their claim that the statutory scheme breached European Union State aid law.
The Court went on to decide two remaining issues. It dismissed the appellants’ challenge to section 69 of the National Asset Management Agency Act 2009, finding that the criteria governing NAMA’s discretion were sufficiently defined and did not give it the arbitrary or “untrammelled” power alleged.
On fair procedures, the Court concluded that the Act should be interpreted to require NAMA to receive and consider representations from borrowers who could be directly affected by an acquisition decision under section 84. The Court said such decisions could affect borrowers’ property and contractual interests, including their ability to manage properties and deal with lending banks.
The judgment described the appellants’ portfolio as comprising 62 properties across Ireland, the United Kingdom, France and the United States. The High Court had found that 96% of the properties were let and that interest due on the loans had been paid up to the date of its judgment. Those circumstances were relevant to the potential impact of an acquisition, but the Supreme Court stressed that deciding whether to acquire assets remained a matter for NAMA.
The Court declared that the appellants were entitled to be informed of any intention to consider acquiring eligible bank assets related to their credit facilities with participating banks, so they could make appropriate representations. The ruling concerned the procedure NAMA must follow; it did not prevent NAMA from deciding to acquire the assets after considering those representations.
Chief Justice Murray said a written process would likely be sufficient if the issue arose, with all parties entitled to expect reasonable expedition. The judgment’s declaration was stated subject to submissions on the final form of the Court’s order.