Courts may allow existing legal actions against IBRC to proceed

A High Court decision today means the courts have the power to allow existing actions against Irish Bank Resolution Corporation, including that by the family of bankrupt businessman Sean Quinn , to proceed.

Confusion had arisen as to whether the courts had jurisdiction to lift the "immediate stay" in the new IBRC Act halting all proceedings against the bank. The Act, enacted last month, provides for no stay on proceedings BY the bank against others.

About one third of existing cases before the Commercial Court are against IBRC and the stay caused uncertainty whether any steps at all may be taken in relation to them with several judges raising the issue since the Act came into force.

In his decision today, Mr Justice Sean Ryan said it was "impossible to conceive" the Oireachtas had, via the stay in Section 6.2.a of the Act, terminated the Quinns' case "in an instant" and deprived them of the right to apply to court.

Any such interpretation would involve "extensive and substantial interference with Constitutional rights in modes that are discriminatory and unjustified and unnecessary in the circumstances", he said.

There was an "undoubtedly puzzling" distinction between the "immediate stay" in Section 6.2.a and the wording of Section 6.2.b, which states "..no further actions or proceedings can be issued against IBRC without the consent of the court", he noted.

Having analysed the provision, he concluded it was "manifest" that "a fair, proper and constitutional interpretation" lead to the "inevitable conclusion" the stay on the Quinn case was intended to be subject to being lifted on application to the court.

To say every "existing" proceeding, but not any future action against the bank, whatever its circumstances or consequences was forever prevented from proceeding and without access to the court would be "an astonishing consequence" of the "mere eleven words" of 6.2.a, he said.

The decision means the action by Mrs Patricia Quinn and her children can proceed once the criminal proceedings against former Anglo Irish Bank chairmam Sean Fitzpatrick and two senior Anglo executives are concluded. The Quinns allege they have no liability for €2.34bn loans advanced by Anglo to Quinn companies on grounds those loans were unlawfully made to prop up the bank's share price.

Pre-trial applications can proceed in the interim and the Quinns are expected to apply shortly for permission to join the Department of Finance and Central Bank, as regulator, as co-defendants with IBRC to their case.

When lawyers for the Quinns applied last month for the stay to be lifted, the issue whether the court could do so was referred to Mr Justice Ryan for clarification. Lawyers for the Quinns and for IBRC both argued the court could lift the stay and it was never intended to be permanent.

In his judgment today, the judge found the literal wording of Section 6.2.a - "there shall be an immediate stay on all proceedings against IBRC" - meant it was uncertain whether the stay was temporary or permanent.

However, he also found, there was nothing in that section to indicate the court's jurisdiction was excluded. If it was intended the stay was to be permanent, that would come "with heavy baggage", including interference with property rights, access to the courts, separation of powers, invidious discrimination and other issues.

In his view, "no sensible draftsman or legislator" would simply provide for such deprivation of rights without providing any justifying context or circumstances or without establishing a basis of distinction between existing and future litigants.