Purpose – The purpose of this paper is to report and comment on Northern Rock shareholders' challenge to basis of compensation in nationalisation considered in the High Court and Court of Appeal.Design/methodology/approach – The paper outlines the facts surrounding the case and comments on the decisions.Findings – The High Court, in a carefully reasoned judgement which reviewed relevant UK and European Court of Human Rights case law, rejected all the claimants' arguments for judicial review and the claimants appealed to the Court of Appeal.Originality/value – Both the High Court and the Court of Appeal judgment provide a rare glimpse of the legal process examining the “lender of last resort” function of a central bank – a key technique of macro‐economic policy, the very delicacy and subtlety of which appear to defy ready legal definition.