In a widely reported decision that raises questions about the
viability of the European Union's policy of imposing bail-ins
as a condition of any future rescue package, the Amsterdam Court of
Appeal's Enterprise Chamber has refused to bless the Dutch
Minister of Finance's offer of zero compensation to
shareholders and subordinated debtholders of SNS. The SNS Group was
nationalised by Ministerial Decree on 1 February with certain
junior securities being expropriated at the same time. The decision
to expropriate sought to move the burden of more than €1
billion of the rescue package away from the Dutch taxpayer and on
to the private sector.
The decision may have ramifications beyond the Netherlands, with
many European states and banks likely to require emergency support
in the coming years. Questions may also be raised as to what this
might mean for the bail-in elements of the Cyprus rescue package.
Some claims are already pending in connection with the EU's
actions in Cyprus.
In a lengthy decision of 11 July, the Dutch Court ruled that the
Minister had provided insufficient justification to support his
offer of zero compensation and that such an offer was unlikely to
fulfill the full compensation standard required by both Dutch law
and international law. A valuation will now be performed by three
independent experts appointed by the Court.
The State of the Netherlands was also ordered to pay the
Respondents' experts' fees (which amount to many hundreds
of thousands of euros) as the Court felt that it was reasonable for
them to have commissioned such evidence in view of the lack of
support given for the Minister's application.
Jones Day acted for various bondholders in the Enterprise Chamber
proceeding. A full copy of the Court's decision can be found
here.
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