From Sarah Carey at the Irish Times – None of this is cast in stone, and the law can prove it:
There’s no point arguing about the loans from the EU or the IMF if we still get stung on the bank debt.
The Government says we must pay because of pari passu. It refers to a legal convention that if a company goes down, all creditors must be treated equally. In a bank’s case it would mean that bondholders and depositors (that’s you and me) would rank equally. It means that if we diddled the bondholders then the depositors get done too. It means your savings are gone.
Or does it? I’ve been reading up. A perfectly respectable paper in a perfectly respectable publication – the New York Law Journal – discusses this point. Based on recent case law and quoting other authoritative sources, it concludes that this pari passu business is not cast in stone at all.
It says when it comes to payments, you can rank creditors. If default is only a matter of time and if bondholders will sue, then let’s nail pari passu . But no one’s even questioned the issue so far. It’s in Latin, so everyone appears to be wilting in front of it. Unforgiveable.
Then there’s the guarantee which created the mess. Why can’t the next Dáil overturn the guarantee on the basis that the previous government completely misled the Dáil – by accident or design – on the solvency of the banks? Fortunately, there is a precedent.
De Valera said the State no longer considered itself liable for the land annuities Ireland paid to Great Britain because that agreement had been made by a previous parliament to which a new Dáil was not bound. In fairness, that claim did kick off the Economic War which didn’t turn out too well.
Nevertheless, if it was good enough for De Valera, is it good enough for us?
And even if it’s not, what legislation, law, constitution or international treaty was ever irrevocable? The notion seems preposterous.
Other wars were fought on land, in the air and on the beaches. This one will be fought in the courts. Any volunteers?