On 22 December, the Supreme Court finished hearing an appeal by Patrick McKillen in relation to his unsuccessful High Court challenge of the transfer of his loans to the National Asset Management Agency (NAMA). The appeal by Mr McKillen, held in front of a seven judge Supreme Court, aimed to prevent NAMA from acquiring €2.1 billion in loans made to himself and his companies.

Mr. McKillen’s appeal addressed five primary issues, each already raised in his High Court case, and outlined below.

• Fair Procedures – Mr. McKillen was entitled to be heard before any decision was made by NAMA to acquire the loans.  This point was argued on the basis that the loan acquisition interferes with constitutionally protected rights, such as the right to property and the right to earn a livelihood.
• Constitutionality – if Mr. McKillen’s argument was correct that he was entitled to fair procedures but there was no implied entitlement to fair procedures in the NAMA legislation, then such legislative provisions were unconstitutional. Further, if there was no entitlement for Mr. McKillen to be heard and the NAMA legislation allowed loans to be acquired from impaired borrowers, the provisions of the NAMA Act 2009 defining “eligible bank assets” were unconstitutional.
• The NAMA Decision – NAMA failed to take into account relevant considerations when acquiring the loans.
• The Timing Issue – legal flaws arose from the fact that the decision that NAMA would acquire the loans occurred prior to the agency officially coming into existence.
• State Aid – the decision by the European Commission to allow Ireland to grant State aid under the NAMA legislation created an obligation for NAMA only to acquire loans from impaired borrowers. Mr. McKillen argued that he was not an impaired borrower.

Mr. McKillen’s counsel emphasised the “significant and real” reputational  damage of the acquisition, arising from NAMA being described as a “bad bank”  and regarded as a loan workout vehicle in respected publications such as the Wall Street Journal and the Financial Times. The Attorney General, defending the appeal, argued that the reputational impact was minimal.

A closing submission of Mr. McKillen was that constitutional rights should not be extinguished, no matter how severe the financial crisis. In his closing arguments, the Attorney General had noted that the right to fair procedures was a Constitutional right but that, like every right, it was subject to restraint in the interests of the common good.

Addressing concerns about a “floodgates” approach – i.e., that any right of Mr. McKillen to be heard by NAMA prior to a decision to acquire his loans would have to be extended to other borrowers – Mr. McKillen’s counsel noted that his client was in a “unique” position, as no other challenge had been taken to a NAMA acquisition.

The judgment of the Supreme Court has been reserved and is expected early this month.