Arbitral panel denies €647 million claim related to the collapse of Banco Popular

The Permanent Court of Arbitration declared on its 13 March final award that Banco Popular Español SA (BP) investors failed to prove that Spain violated its investment treaty with Mexico.

The tribunal made this decision regarding the sale of BP to Banco Santander in 2017 for €1. The claimants, Antonio del Valle Ruiz and others, raised concerns about Spanish public entities withdrawing billions of euros from BP, which caused a liquidity lack for the bank. They also considered that the statements made by Spain regarding the bank did not provide enough relief to investors, which violated the treaty.

However, the arbitral panel concluded that Spain was not bound to stop the deposit withdrawals. Although the arbitrators agreed that the statements made were unclear, they did not violate any treaties. Furthermore, the tribunal declared that the country did not act unfairly or arbitrarily when it organised the sale of a bank believed “failing or likely to fail” by EU authorities. The tribunal also concluded that the sale of BP to Banco Santander was required to maintain the bank’s critical operations, prevent the risk of affecting other financial institutions and businesses, and protect the financial system’s stability. ç

Finally, the tribunal ordered the claimants to pay Spain approximately €8 million for costs and fees. Investors in the bank dealt a severe blow with this recent arbitration award dismissing their compensation claims.

This decision aligns with the judgement of the General Court of the European Union that declined any compensation currently appealed.

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