Swaps. Public transport companies are going to appeal the decision of the English court – the Express

The meters of Lisbon and Porto, the Rail and public Transportation, the Port will appeal the decision this Tuesday the English court that reaffirmed the validity of the contracts ‘swap’ with Banco Santander Totta.

according To a statement from the Ministry of Finance, “Public Companies (Metropolitano de Lisboa, Carris, Metro do Porto and STCP) shall use all legal means at its disposal to appeal the decision handed down today by the English Court of appeal (Court of Appeals), regarding the applicability of Portuguese law to the contracts ‘swap’ agreements concluded between these and Banco Santander Totta, having already expressed such intention”.

“it Will appeal the decision, within the term legally provided for (up to the 10th day of January 2017), to the English Court of last instance (the Supreme Court),” says the press note.
The high Court (the High Court of London has rejected today an appeal of the four companies of Portuguese state, by maintaining the decision of the first instance which determined the validity of the contracts ‘swap’ with the Banco Santander Totta (BST).

however, the public transport companies retain their conviction that the English Court of last instance give reason to the arguments concerning the applicability of Portuguese law to the contracts in question.

“Without prejudice to the staunch defence of their rights, Public Enterprises remain available, as they always have been throughout the process, to find a solution negotiating alternative that will allow to put an end to the litigation in progress,” says the communiqué issued by the Ministry of Finance.

The conflict between the BST and the transport companies dates back to the beginning of 2013, at which time the public transport companies of passengers considered invalid the contracts ‘swap’ agreements with the bank, suspending the payments.

A ‘swap’ is a contract of risk coverage that consists in fixing an interest rate of a loan with the obligation of a party to pay the difference between the fixed rate and that rate varies according to the reference rates of interest.

Initially, these contracts have generated positive results for the public companies, but, due to the reduction of interest rates in the wake of the global financial crisis and to the penalties provided for in the contracts, the companies were obliged to pay to the bank interest rates of around 30% to 92%.

according To an estimate made in October 2015, the losses on these ‘swaps’ amounted to a total of euro 1,326 million euros, to which acresciam around 300 million allowances (quarterly flows), whose payments were suspended.

these values are to be summed over several tens of million euros of interest on late payment of benefits and costs with their own lawyers, in addition to the court costs.

The expenses must be allocated by the Carris and Metro de Lisboa, Metro do Porto and STCP in percentage proportional according to their exposure to the contracts.