The Supreme Court has dismissed an appeal by TD Joan Collins challenging the State’s authority to issue promissory notes worth more than €30 billion to Anglo Irish Bank and the Educational Building Society in 2010.
The six-judge Court held that issuing the notes was within the powers given to the Minister for Finance by the Credit Institutions (Financial Support) Act 2008. It also rejected Collins’s argument that the Act was unconstitutional because it placed no financial cap on the Minister’s support for credit institutions.
The notes were issued when Anglo Irish Bank and the Irish Nationwide Building Society, later combined as the Irish Bank Resolution Corporation, needed capital to meet regulatory requirements. The State issued €30.6 billion in notes to Anglo/INBS and a €250 million note to EBS. The notes required annual repayments, with the Anglo/INBS payments scheduled to continue until 2031 and the EBS payments until 2025.
Collins argued that the notes were outside the Minister’s statutory powers because repayments extended beyond the permitted period for providing financial support. The Court concluded that the support was provided when each note was issued, in June and December 2010, rather than through each later repayment. It relied on unchallenged evidence that the notes gave the recipient institutions capital value when issued. On that basis, their issuance fell within the statutory period.
The Court separately considered the constitutional challenge. It said the Constitution requires public expenditure to be authorised by law and requires a Government recommendation for legislation authorising expenditure. The 2008 Act had been accompanied by the required Government message. Although the Act imposed no financial cap, the Court found that the Minister’s powers were constrained by the crisis-related purpose of the Act, consultation requirements, time limits, duties to review support and report to the Oireachtas, and parliamentary approval requirements for support schemes. In the exceptional circumstances addressed by the Act, the absence of a cap did not make it unconstitutional. The Court said its decision should not be treated as a general template for unlimited ministerial power.
The Court did not decide what the consequences would be if a promissory note were found invalid, or whether that would affect the validity of government securities issued to the Central Bank in 2013 in exchange for the cancelled Anglo/IBRC notes. It said those questions should be decided in a case where they arise and require determination. The appeal was dismissed; the judgment does not order any repayment or make a finding about the wisdom of the State’s financial decisions.