Judicial Review Update

Kaupthing Bank hf seek a declaration from the court that the Kaupthing Singer & Friedlander Ltd Transfer of Certain Rights and Liabilities Order 2008 (“the Transfer Order”) is illegal in that the primary legislation being the Banking (Special Provisions) Act 2008 (“the Act”) does not provide for the making of the Transfer Order as a matter of construction of the Act. The Act itself is the founding legislation for a number of nationalisations/interventions including Northern Rock, Bradford & Bingley and KSF.

In the main the argument surrounds the purpose of the making of the Transfer Order. That purpose cannot be the protection of the depositors but must be for the purposes set out in the Act itself, i.e. to counter a specific threat posed to the stability of the financial system of the United Kingdom. It is not suggested to the court that the Transfer Order should be quashed but simply that the court should make a declaration as to its legality. If it were to be found to be illegal then that could give rise to a claim in damages from those that are affected by the Transfer Order.

For confidential reasons the depositors of KSF Isle of Man have not sought to commence judicial review proceedings but had they done so, this would be a ground for any application to the court. Our understanding is that no challenge has been launched by any other officer including the Provisional Liquidator of KSF Isle of Man and the Administrator of KSF (UK).

Consideration will now be given as to whether the depositors action group should intervene in the judicial review by way of support.

The judicial review can only proceed with the permission of the court. This is being sought. It is likely to be a short time before any decision is made on that application. In relation to Northern Rock, the Government conceded that permission should be given for judicial review of that case. It remains to be seen what attitude the Government will take to this particular application. If permission is given then the judicial review will proceed. These are matters of construction only and therefore it should come to trial quickly. In Northern Rock, proceedings were commenced in May 2008 and the full trial takes place on 13 January 2009. The judicial review for KSF (if it gets past the permission stage) should be within a similar timeframe.

Article Data

  • Category: Other
  • Created On: November 17, 2009
  • Last Updated: April 23, 2014