Credit Suisse AT1 bondholders engaged the firm to initiate an investor state treaty arbitration
Global firm HFW has challenged Switzerland in a US$5 billion class action over Credit Suisse’s collapse and the write down of CS AT1 bonds.
A group of Credit Suisse AT1 bondholders engaged the firm to formally initiate the investor state treaty arbitration. The arbitration will be heard at the Washington D.C.-headquartered International Centre for Settlement of Investment Disputes.
Bondholders claimed in the arbitration that Switzerland violated its international law obligations, especially in relation to treaty obligations owed under relevant investment treaties. HFW partner Shaun Leong, who is spearheading the team working on the arbitration, urged the participation of bondholders from China, Hong Kong, The United Arab Emirates, Japan, Korea, Kuwait, Oman, the Philippines, Qatar, and Saudi Arabia.
“We have already gathered a substantial group of some of the largest Credit Suisse AT1 bondholders in Singapore, with an approximate aggregate claim sum accounting for interest and coupon rates at over US$80 million,” Leong said in a statement. “The estimated aggregate bondholder exposure quantum would be in excess of US$5 billion.”
Financial regulators and central banks across the globe slammed the AT1 bond write down which went against the typical order of loss absorption hierarchy, according to HFW. The firm said that the criteria permitting the exercise of the write down provisions were not met based on available documentary evidence and expert opinions from the banking sector.
Switzerland also released a report around the close of 2024 that contained what HFW said were key admissions to which the bondholders intended to point in the arbitration.
“We can expect Switzerland to claim a three- year time bar. As the write down happened in April 2023, we are a few months away from April 2026 which is when we can expect Switzerland to argue that any claims that are not formally launched would have expired by then, even though we would argue that is inapplicable under international law,” Leong said. “HFW stands ready to help CS AT1 bondholders secure their arbitral claims in time prior to any such time bar claims.”
Leong is supported by HFW partners Paul Buitendag (Melbourne), Nick Longley (Melbourne), Julien Fouret (Paris), and Damian Honey (London). Buitendag has worked on funded class actions, while Longley, Fouret, and Honey specialize in international arbitration.
HFW said that interested bondholders could register their participation in the AT1 bond group action via the firm’s website. The firm will update registered participants on their claim.
The firm also confirmed that as a group representative investor state treaty arbitration, bondholders must be specifically listed as claimants; thus, those who are unlisted will not be parties to the arbitration and cannot claim any benefits from it.
