Filenews 23 May 2024
The World Bank's International Court of Arbitration has rejected an unprecedented massive claim by depositors and holders of Bank of Cyprus and Laiki securities against the Republic, amounting to USD 600 million. Decision of the Arbitral Tribunal of the International Centre for the Settlement of Investment Disputes in Arbitration Theodoros Adamakopoulos and others v. Republic of Cyprus.
On May 21, 2024, the Decision on Liability of the Court of Arbitration, established in accordance with the Arbitration Rules of the International Centre for the Settlement of Investment Disputes (ICSID) of the World Bank, was issued in the arbitration entitled Theodoros Adamakopoulos and others v. Republic of Cyprus (ICSID Case No. ARB/15/49).
The Arbitral Tribunal unanimously dismissed all claims of the claimants against the Republic, who were depositors and holders of securities of Bank of Cyprus and Laiki Bank in 2013 when the bank resolution measures were implemented, with the exception of a single claim of a single specific payable. The Arbitral Tribunal ordered the claimants to pay to the Republic approximately US$6 million in costs. It is noted that the total claim of the claimants against the Republic of Cyprus amounted to approximately USD 570 million (including interest), plus expenses of approximately USD 30 million.
The claimants consist of 968 natural persons and six companies and are Greek nationals, with the exception of one company incorporated in Luxembourg. The claimants resorted to arbitration on the basis of the bilateral investment agreements of the Republic of Cyprus with Greece and Luxembourg. Their position was that the Republic should be held liable for the losses suffered in connection with the resolution measures, claiming that the Republic caused the financial problems of the banks, did not adopt available alternative measures that would have prevented or significantly limited their losses and applied the resolution measures in a discriminatory manner and which constituted expropriation.
The Republic of Cyprus, in the context of the arbitration, refuted the claims of the claimants as unfounded, and welcomes the Decision of the Arbitral Tribunal, which, adopting the positions of the Republic, found that the resolution measures did not breach its obligations under the Investment Agreements and were not arbitrary, disproportionate, discriminatory and did not constitute expropriation.
In particular, the Arbitral Tribunal concluded that the March 2013 measures constituted a legitimate exercise of the regulatory power of the State, acting in the public interest. It confirmed the position taken by the Republic during the arbitration, including the explanations given by the Attorney General of the Republic, Mr. George L. Savvides, during the hearing on the merits, held between 25 January 2023 – 7 February 2023, that, in the absence of the resolution measures, a disorderly collapse of the banks and the economy as a whole would occur. The Arbitral Tribunal further confirmed that the decision to impose the resolution measures was taken after taking into account that there were no other options available, and acknowledged the responsible attitude of the officials and officials of the Central Bank, who were prepared for all possible eventualities, as well as that the Central Bank had previously considered and confirmed that shareholders, Securities holders and depositors would not be better off if banks were allowed to collapse and go into liquidation.
The Republic of Cyprus shall carry out a detailed study and evaluation of the Decision. Furthermore, the case of one claimant is examined, in respect of whom, due to his exceptional circumstances, a violation was found, not as to the legality of the reorganisation measures taken by the Republic, which were found to be entirely lawful by the Arbitral Tribunal, but as to its non-treatment in a similar manner to other exceptional cases at a later stage by the State.
The Republic of Cyprus was represented before the ICSID Arbitration Court by the international law firm Curtis, Mallet-Prevost, Colt & Mosle LLP and the Attorney General of the Republic together with a team of lawyers from the Legal Service and officers of the Central Bank and the Ministry of Finance.
The Attorney General of the Republic expresses his warm thanks to all those who worked on this case and contributed to its successful outcome, and in particular to the following:
Justin M. Jacinto, Mark H. O'Donoghue, Guillermo A. Ulke, Luciana Ricart, Ricardo Mier y Terán, William Hampson, Sena Tsikata, Odysseas E. Stergianopoulos, Jean M. Lambert and Kyriakos Gertzikis of Curtis, Mallet-Prevost, Colt & Mosle LLP,
Elena Zachariadou, Mary-Ann Stavrinidou, Despina Kyprianou and Maria Pilikou of the Law Office of the Republic,
Michalis Stylianou, Maria Kettirou and Andreas Mylonas of the Central Bank of Cyprus, and
George Pantelis, Avgi Lapathiotis and Dionysis Dionysiou of the Ministry of Finance.
