UK investors in Bankia SA, Spain's fourth largest bank, may benefit from a decision of the Tribunal Supremo de España ordering the bank to compensate two investors in its Initial Public Offering (IPO) in 2011.

The Court ordered the bank to return the sums invested by the two individuals on the basis that they were misled into participating in the IPO. The decision is of potential relevance to all who participated in the offering or invested in Bankia thereafter. The company was floated on Madrid's stock exchange, the Bolsa, on 20 July 2011, and famously had to be bailed out by the Spanish government less than 12 months later.

In its 3 February 2016 ruling, the Supreme Court said that there had been "serious inaccuracies" (inexactitudes graves) in the IPO prospectus. The Claimants were awarded the return of their entire investment, as the Court held that their 19 July 2011 subscription in the IPO should be annulled on the basis that they did not consent to the purchase order or, alternatively, because error and fraud (dolo) invalidated their consent.

The judgment is widely seen as a test decision. Whilst many investors have commenced similar proceedings, this is the first case to reach the Supreme Court. The precedent serves as a very strong basis for other investors to bring similar claims as, being a decision of Spain's highest Court, there is no realistic prospect of the judgment being reversed.

Bankia appears to be expecting further claims as it has set aside €1.84 billion to meet them despite the fact that, as of 27 January, it was only aware of claims totalling €819 million.

Those with the clearest claims are those who, like the Claimants in this case, invested at the time of the IPO and retained their shareholding until 25 May 2012 when Bankia restated its accounts. However, those who invested shortly after the IPO or who participated in it but sold their holding before the share value bottomed-out may also have viable claims.

Investors who wish to bring a claim may file an individual civil action before the Spanish Court of First Instance.

This piece was co-authored by Manuel Saez of Barcelona firm, Casals Abogados.