December 1, 2010 / 6:44 PM / 9 years ago

Sinn Fein considers legal challenge to Irish bailout

* Sinn Fein waiting for memo before deciding on legal action

* Legal analysts say there is an arguable case

* Parliament would likely vote in favour of the bailout

By Carmel Crimmins

DUBLIN, Dec 1 (Reuters) - Irish nationalist opposition party Sinn Fein is considering legal action to make Prime Minister Brian Cowen put his 85 billion euro aid deal with the EU and IMF to a parliamentary vote, a spokesman said on Wednesday.

With a parliamentary majority of just two and his coalition government hanging by a thread, Cowen is keen to avoid a vote on the bailout and has said the state does not need the approval of the lower chamber to borrow funds from overseas.

But Sinn Fein, which has used the courts before to force the government’s hand, has said it believes there is a constitutional requirement for parliamentary approval because the bailout is an international agreement involving a charge on public funds.

“We have sought legal advice but we need to see the memorandum of understanding before we can take a definite legal view,” a spokesman for Sinn Fein said, before the Memorandum of Understanding detailing the conditions of the loans was published later on Wednesday.

Legal experts said Sinn Fein may have a case as 17.5 billion euros of the 85 billion package will be provided by Ireland itself, including 12.5 billion euros from the national pension fund.

“There is an arguable case. It does appear to amount to an international agreement which appears to give rise to a charge on the public funds,” said Shivaun Quinlivan, a lecturer in constitutional law at NUI Galway.

“It is arguable that by requiring us to use the Pension Reserve Fund that this amounts to a charge on the public funds, and therefore requires Dail (parliament) approval, and a failure to get Dail approval means we are not bound by the agreement.”

“The counter argument is that this amounts to no more than repaying a debt created by the banks. It can therefore be argued that this is not therefore a charge on the public purse.”

If Sinn Fein do file a challenge it will be heard by the High Court, which could make a ruling within a couple of weeks, given that it is a case of national interest.

A successful Sinn Fein court challenge last month forced Cowen to hold a by-election for a vacant parliament seat which resulted in a Sinn Fein victory giving the party five seats in parliament and cutting Cowen’s majority to just two.

A parliamentary vote on the bailout, which is designed to shore up Ireland’s financial sector and provides the state with 50 billion euros in funding, would likely pass but the uncertainty would spook investors and it would put the main political parties in a tight spot.

The centre-right Fine Gael party and the centre-left Labour party have sharply criticised Cowen for going cap in hand to the IMF and the EU, accusing him of handing over the state’s hard-won sovereignty.

But if they voted against the bailout it could tip Ireland, which is frozen out of international debt markets, into financial collapse.

If the opposition parties voted in favour of the bailout or abstained to ensure it passed it would be another boost for Sinn Fein, whose anti-banker rhetoric is striking a chord with voters south of the border.

“The last trip to the courts for the by-election began as a political publicity strategy and it also turned out to be a successful legal strategy for Sinn Fein,” said Noel Whelan, a barrister and political commentator.”

You can’t rule anything out. I can see every reason why they would do it.”

Editing by Noah Barkin, Ron Askew

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