Expropriation and judgment of the State Council
At 1 February 2013 the Dutch Minister of Finance has expropriated all shares and subordinated bonds issued by SNS Reaal NV and SNS Bank NV, a Dutch financial services group. Investors had the right to appeal against this decision up to 11 February 2013 with the Administrative bench division of the Dutch State Council (‘Afdeling bestuursrechtspraak Raad van State’). At 25 February, 2013, the State Council has announced its judgment, upholding the expropriation of the shares and bonds.
Lawful act of government and compensation
According to the judgment of the State Council the expropriation is regarded as a lawful act. Investors are entitled to compensation, which will be determined by the Enterprise Chamber of the Amsterdam Court of Appeal at the request of the Minister of Finance. The Minister has proposed to offer € 0 (zero) compensation to the expropriated shareholders and bond holders.
Role of the Dutch Central Bank (DNB) not yet investigated
The role of the Dutch Central Bank (DNB) has not yet been investigated by a judge. However, DNB has played a crucial role. The main reason for the expropriation is a decision by DNB dated 27 January 2013 in which DNB orders SNB Bank to acquire an addition € 1.84 billion in share capital within 4 business days. A mission impossible. DNB announced that it would withdraw SNS Bank’s banking license which would result in SNS Bank’s bankruptcy. The Minister of Finance used this DNB decision as the main ground for expropriation. In fact, DNB has triggered the expropriation itself and has requested the Minister to take a decision to this effect. It is very likely the Minister would not have expropriated at 1 February 2013 without DNB’s decision and request.
Legal action against DNB
Wendelgelst N.V. has therefore filed objections (‘bezwaarschrift’) against DNB’s decision. In our opinion, DNB’s decision is unlawful on various grounds. We also believe that investors who have been expropriated, can be regarded as interested parties in connection with DNB’s decision because the expropriation has been a clearly foreseeable and even intended consequence of this decision. Thus, investors should be permitted to file objections and, if necessary, appeal against this decision. By lack thereof the Dutch State would not provide the investors with effective legal remedies. Since the State Council did not assess DNB’s decision, another court should do so in its place. First, DNB will have the opportunity to alter its decision on the basis of the objections filed. If DNB would fail to do so, an appeal can be filed with the competent administrative court. If a judge would consider the DNB decision to be unlawful, this could lead to additional compensation for the investors involved. Also, a separate claim for damages against DNB may be possible.
Violation of the ECHR: no effective remedies
The State Council procedure did not provide investors with an effective remedy. Time slots have been unreasonably brief, relevant documents have not or not timely been provided to the applicants and some applicants have not even been invited to the hearing. There was no sufficient time to address the court at the hearing. There has not been any real fact finding. None of the requests to hear important witnesses or experts have been granted. The key player, DNB, has not even been questioned by the court.
Ultimately, the State of The Netherlands is responsible for this ineffective trial. We believe that the Dutch State has violated various provisions of the European Convention on Human Rights. This Convention offers citizens certain procedural safeguards if their interests are being harmed by the acts or omissions of public authorities or officials. Expropriating being among such acts and not providing effective remedies being among such omissions.
Complaint with the European Court of Human Rights
Wendelgelst N.V. intends to file a complaint against the Dutch State with the European Court of Human Rights on behalf of a group of investors. In order to be admissible, an investor must be able to show that he has exhausted all national remedies, in this case: an appeal with the State Council. It is also recommended to file objections with DNB against its 27 January 2013 decision. If the European Court would rule that the Dutch State has not provided sufficient remedies, this could lead to an additional compensation for the investors involved in the complaint. If you consider filing a complaint, you can apply for admission to the group action of our Firm.