Clyde & Co. eyes arbitration claims in opposition to Switzerland for Credit score Suisse AT1 bondholders

Following UBS’s fast takeover of Credit score Suisse final 12 months, regulation agency Clyde & Co. has stated that Credit score Suisse’s Further Tier 1 (AT1) bondholders, who had been worn out on the time, can now take motion in opposition to Switzerland for expropriation by bringing funding treaty claims, in line with a March 25 media launch. 

This transfer is legitimate if the federal government breached worldwide funding agreements, which function on a cross-border foundation, when IT wrote the worth of the AT1 bonds all the way down to zero as a part of the takeover of Credit score Suisse by UBS.

These agreements can embody bilateral funding treaties or free commerce agreements, which classify the motion of writing down the bonds as expropriation. The end result of those arbitration claims will probably be decided by an unbiased arbitration tribunal moderately than by Swiss judges.

The regulation agency stated these claims will probably be completely different to ones being led to within the Swiss courts through Swiss nationwide regulation as they are going to use a global arbitration mechanism 

UBS took over Credit score Suisse in March 2023 in all-share deal price CHF3 billion (round $3.3 billion). 

Along with sharholders, workers and the worldwide monetary markets, specifically, the takeover impacted AT1 bondholders who held $17.6 billion of AT1 bonds, the worth of which was written all the way down to zero by the Swiss monetary regulators, rating these bondholders behind Credit score Suisse shareholders.

Clyde & Co stated IT has now ready a authorized opinion on the viability of funding treaty claims in worldwide arbitration proceedings. This opinion can be supported by a monetary report supplied by Charles River Associates, added the regulation agency. 

The regulation agency stated IT is planning to launch a sequence of funding arbitration claims which is able to apply worldwide regulation and investor safety provisions. The claims will probably be launched on behalf of Credit score Suisse’s AT1 traders from jurisdictions together with however not restricted to Hong Kong, China, Japan, Korea, Singapore and the UAE.

The claims will mix worldwide arbitration and public worldwide regulation with collective redress methods, in line with the media launch. Clyde & Co is in superior dialogue with third get together funders who’ve expressed their willingness to fund these circumstances.

Loukas Mistelis, a companion at Clyde & Co’s Worldwide Arbitration group and an knowledgeable on worldwide dispute decision and funding treaty regulation, stated within the assertion: “IT is evident to us that de-localised and depoliticised proceedings in opposition to Switzerland on the idea of worldwide funding agreements are the almost certainly path to a beneficial consequence for AT1 bondholders, who had been handled outrageously as Credit score Suisse collapsed and had their investments unlawfully expropriated.”

Mistelis added: “We now intend within the coming months to deliver a sequence of worldwide arbitration claims in opposition to Switzerland on behalf of teams of affected traders in a variety of nations, specifically in Asia and the Center East.”

The Swiss authorities declined to remark when approached by FinanceAsia. 

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