The Commercial Court has heard details of a letter written by a Fine Gael Senator to the European Commission seeking clarification of the Commission's decision approving NAMA.

The court heard that Eugene Regan's letter appeared to have been written at the instigation of property developer Paddy McKillen and his companies.

Mr McKillen is challenging the transfer of his bank loans into NAMA.

He says his loans are performing loans and the transfer of the loans will have an adverse effect on his 35-year-old business.

Lawyers for NAMA said that the European Commission's decision approving NAMA as a form of permissible state aid for financial institutions was very clear.

Senior Counsel Maurice Collins said that Mr McKillen's lawyers were arguing that the European Commission's decision meant that only impaired borrowers could be taken into NAMA.

He said it was remarkable that this argument was being based not primarily on the decision but on private correspondence between Senator Regan and a European Commission official after the decision had been made.

Mr Collins said there was no explanation as to how Senator Regan's letter had come to be written or how it had found its way into the possession of Mr McKillen and his companies.

He said it now appeared that the letter had been written at least at the instigation of Mr McKillen and his companies.

Mr Collins said the correspondence between Senator Regan and the Commission had no legal status and was inadmissible and irrelevant.

He said no official of the Commission, no matter how senior, could speak for the Commission.

Mr Collins said it was an incredible proposition to say that the European Commission did not understand the NAMA legislation despite analysing it carefully.

The case is now expected to finish tomorrow. The State is expected to finish its submissions today.

Lawyers for Mr McKillen are expected to reply to those submissions tomorrow and the judges will then begin considering their decision.

'No flaw in original decision'

Meanwhile, lawyers for the State said there was no flaw in the original decision taken to acquire Paddy McKillen's loans, even though it was taken before NAMA was officially established on 21 December last year.

The court has heard that the decision was taken on 11 and 14 December by members of the National Treasury Management Agency, who subsequently became members of the board of NAMA.

Mr McKillen's lawyers argue that this decision was not properly confirmed and is null and void.

SC Maurice Collins said the decision was taken to acquire Mr McKillen's loans and many others so that NAMA would be able to hit the ground running, ready to process a body of work. This was because of the extreme urgency of NAMA's purpose.

But he was asked by the judges, if what was done was lawful.

Mr Collins said the decision was part of the preparatory work for NAMA and was subsequently adopted by the board of NAMA on 23 December.

He said the decision on 11 and 14 December did not have any effect on anyone.

The decision was part of an ongoing process, he said.

Was NAMA expected to have put all its preparatory work in the bin and start with a blank sheet of paper on 21 December, he asked?

Mr Justice Peter Kelly said it was not difficult to imagine the pressure that people were under, but the question was, was what was done lawful.

Mr Justice Nicholas Kearns said what was being said was that NAMA took off on the road to acquiring the loans before the starter had fired the pistol.

Mr Justice Frank Clarke asked why a formal decision had not been taken after 21 December.

He said the information could have been accumulated beforehand and the decision taken formally at the 23 December board meeting.