Withdrawal of privately held shares of the BIS: Final decision of the Hague Arbitral Tribunal

Today, the Hague Arbitral Tribunal made public its final decision regarding the mandatory withdrawal of all 72,648 shares of the Bank for International Settlements (BIS) formerly held by private shareholders.

On 8 January 2001, the Extraordinary General Meeting of the BIS had decided to restrict the right to hold shares in the BIS exclusively to central banks and approved the mandatory repurchase of all BIS shares held by private shareholders against payment of compensation of CHF 16,000 per share. Three former shareholders had challenged the repurchase by initiating proceedings before the Hague Arbitral Tribunal.

The Tribunal had issued on 22 November 2002 a partial award on the lawfulness of the recall of the privately held shares and the applicable standards for valuation of those shares, ruling that the former private shareholders were entitled to receive a pro rata share of 70% of the Bank's net asset value. However, the Tribunal had still to determine the precise amount due per share in addition to the CHF 16,000 compensation initially paid by the Bank.

In its final award, now published at www.pca-cpa.org, the Tribunal has fixed the additional amount payable to the claimants at CHF 7,977.56 per share. The Tribunal has also determined that 5% simple interest is to be paid on this amount for the period 8 January 2001 to 19 September 2003, ie CHF 1,075.34 per share. Thus, the total additional amount will be CHF 9,052.90 per withdrawn share inscribed in the Bank's shares register on 8 January 2001.

The decision of the Tribunal is final and not subject to appeal. The Tribunal held that, by virtue of its exclusive jurisdiction over this matter, its decision represents the authoritative interpretation of the Statutes of the Bank as regards the validity of the mandatory withdrawal and the valuation of the withdrawn shares.

As the Bank has already announced, it will apply this decision consistently to all former private shareholders in final settlement of all claims and will contact them directly in writing in the coming days with details regarding the payment.