The High Court(1) has held that the National Asset Management Agency (NAMA), a statutory body which has acquired eligible bank assets from participating Irish banks of systemic importance, should have afforded a borrower (the Treasury) an opportunity to be heard prior to taking a decision to enforce.

Issue had been taken as to whether NAMA's decision to enforce in circumstances of insolvency of the borrower was a decision in the area of public law and, as such, amenable to judicial review.

NAMA contended, relying on English decisions,(2) that enforcement by public bodies of rights rooted in commercial contractual arrangements are not amenable to judicial review in the absence of fraud, corruption or bad faith.

However, Judge Finlay-Geoghegan held that NAMA's decision to enforce was a decision amenable to judicial review.

The High Court followed Supreme Court decisions(3) and held that NAMA, as a public body established by statute with duties and functions for the public interest, is subject to judicial review unless it comes within exceptions: "The decision maker must be performing a private duty and its right to make the decision must derive solely from contract or consent of the parties."

The court further held that there is an entitlement to be heard where, at minimum, the decision would have material practical effects on the exercise and enjoyment of the rights of the applicants.(4)

The court stated that:

"it defies commonsense in a commercial context to consider that Treasury is not adversely affected by the decision to enforce incorporating, as it does, the inevitable appointment of receivers. Even an insolvent company, if it has significant property and other business interests, including, as in this instance, developments, is able to exercise its rights to manage and control its business through its Board of Directors, albeit must also do so with due regard for the obligations which flow from insolvency. It ceases to be able to do so on the appointment of receivers."

However, the court rejected a 'floodgates' submission that every NAMA debtor has a right to be heard in advance of a decision to enforce. It stated that the right to be heard is fact specific. It had regard to the particular factual situation between NAMA and the Treasury by reason of the approval of the Treasury business plan and memorandum of understanding between them, which the court found NAMA had approved (without conferring legal entitlements to restructured facilities) as a first step towards a potential financial restructuring of the group. NAMA classified the Treasury as a 'debtor' in respect of which it would potentially facilitate the ongoing commercial activity. The Treasury had expended time, money and the effort of its executives in dealing with NAMA in the negotiation of the term sheets, which was the next step in the process towards the refinancing of the Treasury loans; it was while on this track that the Treasury had received funding from NAMA.

Inherent in NAMA's decision to enforce was that it was no longer in NAMA's interest to continue funding the group.

The court stated that it was:

"satisfied that NAMA, as part of its obligation to act fairly and reasonably, was under an obligation to give Treasury notice of its proposed decision and to afford it an opportunity to be heard and that on the facts, did not either give notice of the proposed decision nor give Treasury an opportunity to be heard."

The court held that NAMA had failed to consider certain relevant matters, including in particular investor interest known to the Treasury in the acquisition of the Treasury loans.

However, the court ultimately held that the Treasury was estopped from pursuing its claim because it had voluntarily entered into a 14-day standstill agreement with NAMA, in which the Treasury had agreed it would not object to the appointment of the receivers after the end of the standstill period (during which NAMA reviewed and rejected the investment proposals).

For further information on this topic please contact Frank O'Reilly at WhitneyMoore by telephone (+353 1 611 0000), fax (+353 1 611 0090) or email ([email protected]).


(1) Treasury Holdings v The National Asset Management Agency, 2012 IEHC 297, judgment of Judge Finlay-Geoghegan.

(2) Mercury Energy Ltd v Electricity Corporation of New Zealand Ltd, 1994 1WLR 521; and R v Birmingham International Airport, 2009 EWHC 1913.

(3) Beirne v Commissioner of An Garda Siochana, 1993 ILRM 1, Judge Finlay C; and O'Donnell v Tipperary (South Riding) County Council, 2005 2 IR 483.

(4) Citing Dellway Investments v NAMA, 2011 IESC 14, in particular Judge Fennelly.