The Supreme Court has dismissed a constitutional challenge by 15 companies and Patrick McKillen to section 69 of the National Asset Management Agency Act 2009, ruling that the provision did not amount to an unjust attack on their property rights.
The judgment, delivered by Chief Justice Murray on 12 April 2011, addressed whether the definition of eligible bank assets and the criteria for NAMA to acquire them were so broad or vague that the appellants could not effectively challenge an acquisition decision.
The Court first decided that the issue was not moot. Although it had ruled in February 2011 that NAMA’s purported decision to acquire the appellants’ loan assets was a nullity, the loans remained eligible for possible acquisition under the Act. The respondents said NAMA retained the right to consider whether to acquire them. The Court found the appellants faced a real and immediate risk of being adversely affected and could maintain the challenge.
The appellants argued that the statutory definition, together with the Minister’s regulations, could bring in a wide range of loans connected to development land and related borrowers. They submitted that NAMA’s discretion lacked clear criteria, making it difficult to know why assets might be selected and to obtain effective judicial review. The respondents disputed that account, arguing that the asset categories were defined and that the Act limited NAMA’s discretion to its stated purposes and specified considerations.
The Court said the Act’s purposes included addressing threats to financial stability and restoring confidence in the banking sector. It held that the Oireachtas could adopt a broad definition of eligible assets for those purposes. Eligibility alone did not require acquisition: a participating bank had to be involved, and NAMA had to decide that acquisition was necessary or desirable for the purposes of the Act.
The Court also found that section 84 set sufficient limits on NAMA’s discretion. Its decision had to serve the Act’s purposes and take account of the listed considerations. Those limits, the Court said, were clear enough to allow borrowers to seek judicial review.
The judgment referred to separate judgments delivered that day on fair procedures. It said the appellants would be entitled to notice of a proposal to acquire related assets and an opportunity to make representations, which NAMA would have to consider. They could then seek judicial review if they believed a decision did not comply with section 84 as interpreted by the Court.
The Court concluded that section 69 was not an unjust attack on the appellants’ property rights, that the proportionality issue did not arise, and that the alleged lack of an effective remedy had not been established. It dismissed the appeal on this constitutional ground.