ANGLO IRISH Bank has claimed international markets will be plunged into “drastic uncertainty” and “havoc” if the Irish courts uphold claims by Seán Quinn’s family that €2.3 billion loans by the bank to Quinn group companies are unenforceable because they were allegedly made for the illegal objective of supporting Anglo’s share price.
There is no express provision under EU and Irish law for such transactions to be declared unenforceable and the Irish courts should not imply a private right of action to avoid loan transactions affected by market manipulation, Paul Gallagher SC, for Anglo (now Irish Bank Resolution Corporation) said.
The law against market manipulation was not aimed at the financial instrument or loan at issue but rather at penalising those people who sought to manipulate the market, he submitted.
Any move by the Irish courts to invalidate the loans would lead to uncertainty in the markets, havoc in international property transactions and deprive the bank of the right to recover €2.3 billion of its property, the bank contends. It was not open to Ireland, on the basis of public policy, to create an additional sanction incompatible with EU policy.
Mr Gallagher, with Brian Murray SC, for Anglo, made final arguments for the bank yesterday before Mr Justice Peter Charleton who has to decide a key preliminary issue of law in proceedings by Patricia Quinn and her five adult children aimed at avoiding liability for the €2.34 billion loans.
The judge must decide whether the family has the necessary legal standing to allege breaches of the Market Abuse Regulations 2005 and section 60 of the Companies Act 1963 in support of claims that guarantees and share pledges provided by them, on foot of which the bank seeks to recover the loans and has appointed a receiver, are unenforceable due to alleged illegality.
The family claim the loans are unenforceable because they were allegedly knowingly made by the bank to unlawfully fund contract for difference (CFD) positions in Anglo to support its falling share price.
The bank insists the family members are liable under various undated guarantees and share pledges provided by them on dates from 2003 to 2009. It also argues some €500 million loans are unrelated to the alleged CFD loans.
The bank appointed Kieran Wallace in April 2011 as receiver over shareholdings of the family following default on loans. Paul Gardiner SC, for Mr Wallace, argued yesterday the family had advanced no case to suggest the completed loan transactions, on foot of which the receiver was appointed, could be unwound.
In his submissions, Mr Murray argued the Oireachtas had provided in section 60 of the Companies Act (restraining a company providing assistance to buy its shares) that only a company can seek to have declared voidable a transaction made in breach of that section.
