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. Please contact Stephen Pearson, Ferdinand Mason or Lucas Moore for further information. A full copy of the Court's decision can be found here.