IRISH BANK Resolution Corporation, formerly Anglo Irish Bank, successfully defended an action in a New York court against the sale of US assets below $200 million on the basis that it has immunity being owned by a foreign state.
Two hedge funds based in the Cayman Islands, Fir Tree Capital Opportunity Master Fund and Fir Tree Value Master Fund, sued Anglo in the Southern District Court of New York over $200 million in subordinated bond bought in 2005. The funds claimed that the bank breached the bond agreements through a series of events including the sale of its deposits and the passing of legislation to inflict losses on bondholders.
US district court judge Paul Gardephe said that Anglo was “a foreign state” within the meaning of the Foreign Sovereign Immunity Act which protected the bank.
The judge deemed Fir Tree’s legal action “moot” and terminated the case, concluding that the hedge funds had not shown that Ireland had “waived sovereign immunity for purposes of this action or that any exception to sovereign immunity is applicable”.
He ruled that any commercial activities by Anglo outside the US had not triggered any obligation or duty on anyone’s part to do anything in the United States.
The judge said that the bank’s sale of its $9 billion US loan book didn’t constitute a breach of the terms of the subordinated bonds agreement and that the bank was not in breach of any obligations to make a payment in New York.
A “friendship treaty” between Ireland and the US dating back to 1950 was cited in the case but the judge said the hedge funds had not presented any legal authority to claim a benefit from any treaties.
Anglo has saved €3.3 billion by imposing losses on subordinated bondholders since the bank was nationalised in January 2009. The Government is injecting €29.3 billion into the bank to cover losses.
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