GLOBAL law firm Clyde & Co is planning to launch a series of investment arbitration claims against the Swiss government, in yet another attempt to sue its regulator for the write-down of Credit Suisse Additional Tier 1 (AT1) bonds.
These claims will apply international law and investor protection provisions – setting them apart from other claims, which are being brought before Swiss courts and will be determined according to Swiss national law, Clyde & Co said on Monday (Mar 25).
The claims will use an international arbitration mechanism and will be decided on the basis of international investment agreements – including bilateral investment treaties or free trade agreements – which classify the action of writing down the bonds as expropriation, the firm said.
In March 2023, the Swiss government announced that US$17 billion of Credit Suisse perpetual bonds would be written off as part of UBS’ takeover of the bank.
This meant that bondholders, who were traditionally prioritised over shareholders, would not get anything back on their investments.
Meanwhile, Credit Suisse’s shareholders received one UBS share for every 22.48 Credit Suisse shares held.
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Credit Suisse AT1 bondholders “were treated outrageously as Credit Suisse collapsed and had their investments unlawfully expropriated”, said Loukas Mistelis, partner in Clyde & Co’s international arbitration group and acknowledged authority on international dispute resolution and investment treaty law.
Mistelis expects delocalised and depoliticised proceedings against Switzerland, on the basis of international investment agreements, are the most likely route to a favourable outcome for the bondholders.
The firm said it is in “advanced discussion” with third-party funders who have expressed their willingness to fund these cases.
The claims will be launched on behalf of Credit Suisse AT1 investors from a series of jurisdictions, including China, Hong Kong, Japan, South Korea, Singapore and the United Arab Emirates, it added.
