27 Mar 2012

Ireland faces legal challenge on bank bailout

Activist seeks declaration that promissory notes illegal - Says 31 billion promissory note not approved by parliament

An Irish activist on Monday launched a legal challenge against a 31 billion euro ($41 billion) promissory note issued by the government to bail out two collapsed banks, saying the scheme was not approved by parliament.

The move comes amid talks between the Irish government and the European Central Bank on a possible refinancing of the notes, used to bail out now-defunct Anglo Irish Bank and Irish Nationwide Building Society.

A 3.1 billion euro repayment on the notes is due by the end of the week, and the government is exploring ways to delay the payment after a groundswell of opposition.
The first repayment was made last year.

David Hall, the founder of an organisation that gives legal advice to struggling mortgage holders, on Monday applied for a judicial review of the scheme in the Irish High Court, according to documents presented in court.

Hall argued that the government's decision to issue the 31 billion euros of promissory notes violated the constitution as it failed to secure parliamentary approval.

The papers ask the court for a declaration that the promissory notes "are of no effect and void."

Senior Counsel John Rogers, a former attorney general of Ireland, is representing Hall. The High Court will allow the government to respond to the application on Wednesday.