Two Cayman Island hedge funds have appealed a US court ruling that granted immunity to Anglo Irish Bank in a row related to a $200m (€155m) subordinated bond.
The bank, now known as Irish Bank Resolution Corporation (IBRC), was granted immunity in the case by a New York District Court judge in November because the institution is a sovereign entity.
Hedge funds Fir Tree Capital Opportunity Master Fund and Fir Tree Value Master Fund had sought to prevent Anglo from moving assets out of the US and also wanted their debts honoured.
The hedge funds acquired the $200m of bonds, which had been originally issued in 2005, in November 2010.
Fir Tree claimed that Anglo had breached several terms of the bonds it held by proceeding with moves to transfer deposits and Nama bonds to AIB, describing it as a "brazen violation" of those provisions.
The hedge funds also argued that Anglo was "rendering itself destitute", by its actions, including shifting assets to NAMA.
Anglo claimed that the Fir Tree case was "utterly meritless" and insisted the hedge funds were attempting to seek personal gain from the Irish banking crisis. The funds have continued to be paid interest on the bonds they hold.
The New York District Court had to closely examine the Foreign Sovereign Immunities Act on foot of an application by Fir Tree for a preliminary injunction.
Fir Tree argued that sovereign immunity had been waived under the so-called 1950 Friendship Treaty between Ireland and the United States. The court said that Fir Tree had no right to action under that treaty as the hedge funds were based in the Cayman Islands.
The court ultimately found that it lacked the jurisdiction because of the immunity of Anglo and dismissed the case. The judge said that Anglo's sale of a $9bn loan book hadn't constituted a breach of the terms of the bond agreement.
But Fir Tree has now appealed the ruling. The appeal has been deemed by the New York Appeals Court to be eligible for expedited proceedings. Fir Tree has until February 2 to lodge a brief with the court, while IBRC has 35 days after that to file its brief.