16 November 2017
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Success in Bank Indonesia / trustees Indover Bank

Following the demise of its Dutch subsidiary Indover Bank in the credit crisis of 2008, Bank Indonesia (the Indonesian Central Bank) was sued by the bankruptcy trustees in the Netherlands. They asserted that in 1998 Bank Indonesia had issued a guarantee to Indover Bank to maintain its solvency as long as it would remain its subsidiary, and that the bankruptcy creditors of Indover were therefore entitled to expect full payment. These claims for the entire deficit in the bankruptcy, the trustees maintained, were offset with the claim of Bank Indonesia against Indover. The latter claim was also attached by the trustees as security for their counterclaims.

The Amsterdam District Court dismissed the trustees’ claims in 2014, while validating the EUR 43 million claim of Bank Indonesia against Indover Bank. It concluded that Bank Indonesia had offered substantial financial support to Indover Bank between 1998 and 2008, in accordance with its commitments, but that a guarantee was never provided and that there were no grounds to hold Bank Indonesia liable to Indover or its creditors for the deficit in the bankruptcy.

On 14 November 2017 the Amsterdam Court of Appeal rejected all grounds for appeal filed by the trustees. It sided with Bank Indonesia on all facts and legal issues. It also held that the attachment was void. In line with two recent Supreme Court decisions, the Court of Appeal considered that article 21 UN Treaty on Jurisdictional Immunities of States and their Property (although not yet ratified) formed a codification of customary international law already in force in the Netherlands. Pursuant to article 21 (1)c of this UN Treaty, the property of central banks is categorically immune from execution and other attachments.

BarentsKrans (Martijn van Maanen, Nick Surber and Roeland de Mol) acted for Bank Indonesia in both instances, in cooperation with White & Case Brussels.