In previous editions of the newsletter, we provided an update on the challenge to NAMA made by property investor Paddy McKillen. The Supreme Court had ruled that a decision of NAMA to acquire McKillen’s loans was not valid, but it had deferred its judgment as to whether the Act itself was constitutional.

The Supreme Court has now upheld the constitutionality of the NAMA Act(4). Mr McKillen had argued that the definition of ‘eligible bank assets’ in the Act was so broad as to constitute an unjust attack on his property rights. However, the Supreme Court found that the discretion given to NAMA under the Act was sufficiently restricted by reference to clearly set out criteria. While principles of fairness entitle investors to be kept informed by NAMA, and to make representations in relation to any decision to acquire their assets, the Supreme Court ruled that the NAMA Act must be construed in accordance with such principles of constitutional justice. Thus, a requirement that NAMA grant to property investors an opportunity to make representations before it acquires their assets, must be read into the Act. The Supreme Court held however that it is for NAMA to decide the manner in which they should be heard, and that there is no automatic entitlement to an oral hearing.

While NAMA had previously considered the possibility of re-acquiring McKillen’s loans by way of proper process, it has now announced that it has decided not to acquire the loans. In addition, the Supreme Court has awarded McKillen the costs of the proceedings, which are estimated to be in the region of €7 million. This decision therefore brings to a close Mr McKillen’s challenge to NAMA.