Clyde and Co preps arbitration claims against Switzerland for Credit Suisse bondholders

The legal fallout of UBS’ rapid acquisition of Credit Suisse last year has continued, as a London-based law firm is prepping to launch arbitration claims against Switzerland.

Last March, $17bn (£13.4bn) of Credit Suisse’s additional tier-one (AT1) bonds were wiped out as part of its emergency sale to UBS. This caused litigation giants Quinn Emanuel and boutique law firm Pallas Partners to launch legal action on behalf of these bondholders.

Now, one year on, Clyde and Co is set to get in on the action. It has laid out plans to hold the Swiss state “accountable for breaching its international investment agreements” after it wrote the bonds down to zero.

Unlike other claims on the decision to write down the bonds, these claims by Clyde and Co will use an international arbitration mechanism and will be decided on the basis of international investment agreements.

Arbitration is a common way to resolve a dispute. Unlike litigation, arbitration is private and kept confidential. In this system, an independent and neutral arbitrator is appointed and decides on the case. The most important choice for an international arbitration is deciding which country will have the ‘seat’, which is also known as the place of the arbitration.

Clyde and Co has said that it has prepared a legal opinion on the viability of investment treaty claims in international arbitration proceedings, which is supported by an expert financial report by Charles River Associates.

The law firm said it is now planning to launch a series of investment arbitration claims on behalf of Credit Suisse AT1 investors from a series of jurisdictions, including China, Hong Kong, Japan, Korea, Singapore and the United Arab Emirates.

Clyde and Co said it is in “advanced discussion” with third party funders, that have expressed “their willingness to fund these cases”.

Commenting on the details, Loukas Mistelis, partner in Clyde and Co’s international arbitration group said: “It is clear to us that de-localised and depoliticised proceedings against Switzerland on the basis of international investment agreements are the most likely route to a favourable outcome for AT1 bondholders, who were treated outrageously as Credit Suisse collapsed and had their investments unlawfully expropriated.”

“We now intend in the coming months to bring a series of international arbitration claims against Switzerland on behalf of groups of affected investors in a range of countries, in particular in Asia and the Middle East.”