![\"The](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2026\/03\/fb8f860b-02d0-4e89-8567-4965672cbfb3.jpg\")
<\/p>\nIn deciding the case is of significant public importance, a panel of three Supreme Court judges noted the interest variation clause had a \u201cserious impact on borrowing and on the margins of commercial customers\u201d.<\/p>\n
Given this is a \u201cstandard\u201d term, the judges said, it remains important to construe whether there are limits to what a bank can do based on the wording of a contract or whether a \u201ccarte blanche\u201d is agreed between customer and lender.<\/p>\n
<\/p>\n
The High Court in Dublin. Photo: Collins<\/p>\n
Today’s News in 90 Seconds – Tuesday, March 24<\/p>\n
The issues arise in a case brought by four business partners who together borrowed \u20ac15m in 2009 to develop an industrial premises in Rathcoole, Co Dublin.<\/p>\n
They have since fully repaid the loan and all interest calculated by the bank. They claim they would have paid \u20ac738,000 less if the interest rate calculation had not been altered in alleged breach of contract.<\/p>\n
The loan offer advanced was subject to a clause permitting the bank to change the interest rate and its method for calculating interest \u201cfrom time to time at the bank\u2019s absolute discretion, whether to take account of a change in prevailing market conventions in Ireland or otherwise\u201d.<\/p>\n
In October 2011, Bank of Ireland invoked this clause, informing the four that it was changing its interest calculation method from one that tracks the Euro Interbank Offered Rate (Eurobor) \u2013 which is the average interest rate at which European banks lend to each other \u2013 to one based on the bank\u2019s cost of funds.<\/p>\n
The bank told them it had since 2007 experienced a \u201csignificant increase in its funding costs, driven by prevailing market conditions which were outside of our control\u201d.<\/p>\n
It said it was paying a premium over publicly quoted interest reference rates to fund lending so would be changing its calculation<\/p>\n
The borrowers strongly contested that the lender was allowed to change the reference rate from the industry standard Euribor to what they claim was a \u201cbespoke\u201d bank reference created \u201cto serve its own interests\u201d.<\/p>\n
Dismissing the plaintiffs\u2019 case and appeal, the High Court and Court of Appeal found the bank was entitled to change its method of calculation. The High Court found the bank had \u201cabsolute discretion\u201d to alter the method if giving the borrowers one months\u2019 notice.<\/p>\n
The borrowers claim the courts were wrong in their interpretation of the loan contract, which they say affects some 8,000 customers. They claim it could not have been contemplated by rational businesspeople that such a \u201cdramatic alteration\u201d to interest rates could occur.<\/p>\n
The bank says the case is not generally important and the contract allows for this large variation in interest rate calculation.<\/p>\n
Supreme Court judges Peter Charleton, Iseult O\u2019Malley and Gerard Hogan said the clause affected \u201cmany more customers\u201d than the plaintiffs. The threshold for an appeal to the highest court was met.<\/p>\n
A date for the appeal has yet to be set.<\/p>\n","protected":false},"excerpt":{"rendered":"In deciding the case is of significant public importance, a panel of three Supreme Court judges noted the…\n","protected":false},"author":2,"featured_media":362795,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[61,60,898,43],"class_list":{"0":"post-362794","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ireland","8":"tag-ie","9":"tag-ireland","10":"tag-latest-news-ticker","11":"tag-news"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/362794","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=362794"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/362794\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/362795"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=362794"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=362794"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=362794"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}