Judgment handed down in NAMA swaps case

On 26 February 2020, Lord Justice Phillips (in the Commercial Court) handed down judgment in the case of Alfred Street Properties v National Asset Management Agency [2020] EWHC 297 (Comm), in which David Head QC acted for the Defendant (“NAMA”), a body established by the government of the Republic of Ireland as a response to the 2008 financial crisis as a successor to the rights and liabilities of certain Irish banking institutions.

The case concerned 5 extendable interest rate swaps (“the Swaps”) with a total notional amount of £50m, which the Claimant property developer had executed as part of a hedging package to support borrowing of some £110million. The Swaps contained options to extend for a period of 3 years. The Claimant contended that NAMA’s extension of the Swaps by telephone was not in compliance with relevant ISDA terms and was ineffective. It sought restitution of the sums it had paid to NAMA following the exercise of the options.

Following a 7 day trial, the Judge held that the relevant confirmations invoked the procedure for exercise of options under section 12.2 of the 2000 ISDA Definitions (and not the more general provisions for notice under section 12 of the 1992 ISDA Master Agreement) which permitted oral notice. The Judge went on to hold that, even if that had not been the case, the Claimant had, by its subsequent actions, waived any defect in notice and/or was prevented (by an estoppel by convention) from asserting any defect in notice. The Judge also held that, since NAMA had sold the relevant book of business in advance of the Claimant asserting any defect in notice, it had a valid change of position defence to the entirety of the Claimant’s restitutionary claim, describing the claim as “highly opportunistic and meritless”.

David Head QC was instructed by John Tillman and Oliver Humphries at Hogan Lovells.

A copy of the judgment is available here.