Enforcing Tainted Contracts

Banks and other financial institutions operate in a highly regulated environment. Issues frequently arise where an institution has breached a regulatory requirement but seeks to enforce its contractual rights; for instance, where there is a regulatory breach in the formation of a loan contract and the institution seeks to recover the loan or enforce security for the loan. The legal issues which arise are complicated. In a recent decision (Quinn v IBRC [2015] IESC 29), the Irish Supreme Court indicated the general approach the courts should take.

The plaintiffs had provided security for loans which were said to have been illegal under financial assistance prohibitions and market abuse rules. In brief, they alleged that the defendant...