Ruling on IBRC stay to be given next week

The High Court will rule next week if the courts have the power to lift a stay in the new Irish Bank Resolution Corporation Act that has halted all existing legal actions against the bank.

About one-third of existing cases before the Commercial Court are against IBRC and the stay has caused uncertainty whether any steps at all may be taken in relation to them. Several judges have raised the issue since the Act came into force last month.

Lawyers for the family of bankrupt businessman Seán Quinn applied to the court last month to lift the stay on their proceedings against the bank, alleging they are not liable for €2.34 billion loans made to Quinn companies because they were unlawfully made by Anglo to prop up its falling share price.

The Quinn lawyers made it clear that if the stay was not lifted, they would challenge the constitutionality of the relevant provision in the Act.

The special liquidators of IBRC later indicated they agreed with the Quinns that the court had power to lift the stay but Mr Justice Peter Kelly ruled there would have to be a hearing to decide that.

Mr Justice Seán Ryan yesterday heard arguments on behalf of the special liquidators and the Quinns that the court had jurisdiction to lift the stay and said he would rule on March 15th.

In his submissions, Martin Hayden SC, for the Quinns, said it was a “unique” application. The two sides had “rarely” agreed on anything.

He argued that the Act should be construed as meaning the stay remained unless and until an affected party applied to the court to lift it, in which circumstances the court may lift it.

If the court could not do so, that would breach the entitlement of citizens to equal access to the courts, Mr Hayden added. Any such ousting of the jurisdiction of the courts would have had to be set out “in clear and unambiguous terms”, but that was not done.

The whole tenor of the Act was to “draw a line in the sand where everything stops dead” but the Act did not prevent parties taking steps after that, he said. A line had had to be drawn because of concerns such as “a flight of funds” if there was any notice of the special liquidation of IBRC last month, he said.

The entitlement to proceed with that litigation had to be considered against the backdrop of the Act and that context supported his argument the stay was never intended to be permanent.

For IBRC, Brian Murray SC said the use of the word “stay” in section 6.2a indicated an intention to suspend proceedings not terminate them. If it was intended the stay could never be lifted, that word would not have been used.

Section 6.2a provided for an immediate stay on all proceedings against IBRC while section 6.2b provided no further actions could be taken against IBRC without the consent of the court, he added.

Those two sections had to be construed harmoniously.