Carey Group Plc and Others v AIB Group (UK) Plc and another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BRIGGS,Mr Justice Briggs |
| Judgment Date | 16 March 2011 |
| Neutral Citation | [2011] EWHC 567 (Ch),[2011] EWHC 594 (Ch) |
| Docket Number | Case No: HC11C00306 |
| Court | Chancery Division |
| Date | 16 March 2011 |
[2011] EWHC 567 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Briggs
Case No: HC11C00306
Mr Hugo Page QC and Mr Tom Hickman (instructed by Merriman White, 14 Tooks Court, London EC4A 1LB) for the Claimants \Mr Sharif a Shivji (instructed by CMS Cameron McKenna LLP, Mitre House, 160 Aldersgate Street, London EC1A 4DD for the First Defendant
Mr Jonathan Crow QC and Mr Christopher Harrison (instructed by Hogan Lovells International LLP, Atlantic House, Holborn Viaduct, London EC1A 2FG) for the Second Defendant
Hearing date: 8 th March 2011
Approved Judgment
I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Briggs:
This is an application by the second defendant National Asset Management Agency ("NAMA") to strike out the Claim Form and Particulars of Claim in these proceedings, on the ground that no cause of action or other basis for the relief sought is disclosed. The application is supported by the first defendant AIB Group (UK) Plc ("AIB UK"), although it has issued no application of its own.
The claimants are a group of civil engineering and construction companies of which the first claimant Carey Group Plc is the parent. They are all banking customers of AIB UK, which is a bank incorporated in Northern Ireland and which also carries on business in England, Wales and Scotland. It is a wholly owned subsidiary of Allied Irish Banks Plc, which is incorporated and has its headquarters in the Republic of Ireland ("Ireland"), although it also carries on business in the UK, from a branch in London.
NAMA is an Irish statutory body, established pursuant to the National Asset Management Agency Act 2009 ("the Act"), as part of the Irish Parliament's efforts to stabilise and rebuild the Irish economy, and in particular its banking sector. The Act established a scheme for the acquisition by NAMA at a valuation of bank assets from participating institutions. AIB UK and its parent company ("AIB") are both participating institutions within the meaning of the Act.
NAMA proposes to acquire from AIB UK the bank asset constituted by its rights under secured lending facilities ("the Facility") granted to the claimants pursuant to a facility agreement ("the Facility Agreement") dated 12 th October 2010, pursuant to the acquisition mechanism set out in the Act.
By these proceedings the claimants seek injunctions to restrain NAMA from instituting and AIB UK from acting pursuant to that acquisition process, on the alternative grounds that:
i) The acquisition would involve a breach of the Facility Agreement by AIB UK; and,
ii) The implementation of the acquisition process set out in the Act against AIB UK would constitute an unlawful exercise within this jurisdiction of sovereign power by a foreign government agency pursuant to the public law of a foreign state, which the court should restrain on the application of any affected party.
The strike out application is based upon the corresponding assertions that:
i) Regardless how it is implemented in detail, the proposed acquisition by NAMA will not involve any breach of the Facility Agreement by AIB UK; and,
ii) While the court has no jurisdiction to entertain an action for the enforcement of the public law of a foreign state, nor will it restrain voluntary compliance with that law by a person within the jurisdiction on the application of an affected person, unless that person has a cause of action arising out of some actual or threatened infringement of his rights.
In addition to injunctions, the relief claimed in these proceedings includes five forms of declaration as to the alleged ineffectiveness or unlawfulness of the threatened implementation as against AIB UK of the acquisition procedure in the Act. While acknowledging that the grant of declaratory relief is discretionary, NAMA asserts in support of its strike out application that the Particulars of Claim disclose no basis upon which that discretion could properly be exercised in the claimants' favour.
NAMA acknowledges that there exist between the parties issues as to the interpretation of the Facility Agreement, but asserts that those issues can be summarily resolved without the need for a trial, and that there are no disputed questions of fact relevant either to the construction of the Facility Agreement or to the question whether, properly construed, any breach of it is threatened by the proposed acquisition.
Application was made on 14 th February 2011 to Peter Smith J for urgent relief for injunctions to restrain the defendants from proceeding with the proposed acquisition. Short term relief until 15 th February was granted by the judge, and extended at a hearing attended by the claimant and by AIB UK, but not by NAMA, until a speedy trial, to be listed as floating in the week commencing 28 th March 2011, for which the judge gave all necessary case management directions. The injunctions restraining implementation of the proposed acquisition were continued in the meantime.
NAMA seeks to justify the earlier hearing of its strike out application on the grounds first, that if successful it will obviate the time and expense which would otherwise be necessary for the preparation and conduct of a five day trial and secondly, that there is a commercial interest within the context of the Irish bank restructuring provided for by the Act in resolving the uncertainties as to its implementation within this jurisdiction thrown up by the claimants' proceedings, as soon as possible.
THE FACTS
There is for the most part no dispute as to the primary facts. The only significant factual dispute appears to relate to the inferences which may be drawn as to AIB UK's understanding of the effect (if any) upon it of the provisions of the Act, and as to its motivation for cooperating with the acquisition process which NAMA intends to implement in relation to the Facility.
The Act
It is common ground that, viewed from the perspective of the courts of England and Wales, the Act is part of the public law of a foreign state, namely Ireland. Its purposes are described in detail in section 2, and include:
(a) to address the serious threat to the economy and the stability of credit institutions in the State generally and the need for the maintenance and stabilisation of the financial system in the State, and
(b) to address the compelling need—
…
(ii) to resolve the problems created by the financial crisis in an expeditious and efficient manner and achieve a recovery in the economy,
…
(iv) to protect the interests of taxpayers,
(v) to facilitate restructuring of credit institutions of systemic importance to the economy,
…
(vii) to restore confidence in the banking sector and to underpin the effect of Government support measures in relation to that sector, …"
Part 4 of the Act provides what is essentially an opt-in process whereby credit institutions (as defined) may apply to be designated by the Minister as participating institutions, that is, participating in the scheme for the acquisition of eligible bank assets prescribed by the Act. It is common ground that AIB is a credit institution within the meaning of the Act. By section 62(1) an application by a credit institution is taken to include an application for participation by all its subsidiaries, unless their exclusion is requested pursuant to section 62(2). Similarly, designation by the Minister under section 67 of an applicant credit institution as a participating institution is deemed to include all its subsidiaries unless excluded by the Minister under section 67(6). Subsidiary is defined by reference to the Irish Companies Act 1963, which (as is common ground) does not limit that classification to companies incorporated in or carrying on business in Ireland.
Section 69 of the Act provides for the Minister to prescribe by regulation classes of bank asset as "eligible bank assets", that is, eligible for acquisition under the statutory scheme. They may include, by subsection (2), (and I infer have by regulation been prescribed so as to include):
"(a) Credit facilities issued, created or otherwise provided by a participating institution—
(i) for the purpose, whether direct or indirect and whether in whole or in part, of purchasing, exploiting or developing development land.
(ii) where the security connected with the credit facility is or includes development land,
…"
Development land is defined in section 4 as including land wherever situated.
By section 84 NAMA is given the discretion whether to acquire one or more eligible bank assets of a participating institution. Section 84(2) makes clear that the discretion exists in relation both to performing or non-performing eligible bank assets. The statutory scheme is, therefore, not restricted to the acquisition only of what is sometimes called toxic debt. Section 84(3) provides that NAMA may decide to acquire an eligible bank asset in the face of an objection by the participating institution. By section 87, NAMA's decision is implemented by its service upon the participating institution of an acquisition schedule describing both the asset and NAMA's determination of its acquisition value.
The effect of the service of an acquisition schedule is prescribed by sections 90 and 91, and differs radically according to whether the eligible bank asset identified in the acquisition schedule is or is not a "foreign bank...
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