Investment bank Goldman Sachs has lost a key battle in its bid to recoup hundreds of millions of euros “lost in Portugal” as a result of the BES collapse in 2014.
The powerful multinational had been hoping to get its case argued through the British courts, due to contractual terms on one of the investments.
But Supreme Court judge Lord Sumption yesterday explained why this will not be possible.
The blow means Goldman Sachs will now have to argue the retroactive bond dump that caused ructions in December 2015 (click here) through the Portuguese courts – which “could take years” sources have complained.
And the implications of Lord Sumption’s judgement will almost certainly have left others hoping to claw-back funds on the basis of a Goldman Sachs win ‘thinking again’.
Lord Sumption actually rubbed salt in the wounds by saying that pre-2001, Goldman Sachs would indeed have had a case.
Since then, however, EU law “has provided for the reconstruction of failing banks to be dealt with in a single process under the law of the bank’s home member state and for the legal consequences to be recognised in all other member states regardless of any other relevant law”.
Thus the retroactive ‘dump’ that hit all major financial headlines, in which Goldman almost one billion euros and others, including the New Zealand Superannuation Fund dropped over €620 million – cannot be challenged under anything but Portuguese Law.
Said a partner in one of the law firm’s representing ‘defendants’ Novo Banco and the Bank of Portugal, “the Supreme Court’s judgement has ramifications for other cases across Europe, and highlights the obvious danger (indeed potential chaos) of different courts interpreting the same decision of a single resolution authority in different ways”.
A clip of Lord Sumption’s judgement, laid out in easy-to-understand layman’s terms, can be seen on Youtube (click here).
It will have cheered the governor of the Bank of Portugal Carlos Costa who has been repeatedly criticised for his stance in refusing to capitulate to ‘large overseas investors’ stung by the consequences of the BES collapse.