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Supreme Court of Cyprus – Update on legal actions against Bank of Cyprus & Laiki Bank “haircut”

Supreme Court of Cyprus – Update on legal actions against Bank of Cyprus & Laiki Bank,“haircut”

The Cyprus’ Supreme Court on April 23, 2013 began reviewing appeals filed against the March 29, 2013 Eurogroup’s decision to wind down Laiki bank and impose massive losses on all deposits in excess of €100.000 at both Laiki and the BoC (Bank of Cyprus). The appeals were submitted by local and foreign depositors who face losing the totality of their uninsured deposits at Laiki Bank and up to 60 percent of their funds above €100,000 at the BoC.

The legal representatives of the depositors appealed against the provisions of the verdict 104/2013 of the Central Bank with regard to Laiki, on the grounds that the decision is violating the fundamental right to property and that is contrary to the constitution of Cyprus and the European Declaration of Human Rights. Litigants to the case are the Bank of Cyprus, the Central Bank, the Republic of Cyprus, Mr. Panicos Demetriades as the Governor of the Central Bank, Mr. Michael Sarris as the former Finance Minister and Mr. Dinos Christofides as the special administrator of the Bank of Cyprus.

At this point the Supreme Court initiated the hearing of 53 applications. The deadline for filing appeals to the authorities against the Eurogroup’s decision is until June 08, 2013. The number of applications is anticipated to rise dramatically by this date. The Supreme Court’s decision is expected to be final in all cases and therefore not subject to further appeal. Hence, a number of law firms are ready to take the case to the European Court of Human Rights, if requested by their clients.

The Republic

The hearing began with the pleading of the Attorney General Mr. Petros Clerides, defending the Republic of Cyprus, on the preliminary objection filed on behalf of the Republic. He asserted that the decrees of the Central Bank regarding the restructuring of the two banking institutions follow the political decision of the Eurogroup and constitute a condition for the fulfillment of the loan agreement and the Memorandum of Understanding. Therefore, they are outside the authority of the Supreme Court, as they are the result of a governmental decision adhering to an international agreement to avoid the disorderly bankruptcy of Cyprus. Thus, the haircut on deposits comprises a Governmental Act that cannot be challenged as an Administrative Act affecting the plaintiffs individually.

Regarding a petition by the applicants’ lawyers to postpone the hearing so they could access data that do not have at their disposal, Attorney General warned that the disbursement of the first tranche of the loan package depends on the continuation of the process. He also noted that this is the most serious case that stood before the Supreme Court, since the establishment of the Republic.

Meanwhile, Mr. Clerides said that all documentation pertaining to the case will be disposed, apart from those that the Central Bank has classified as confidential, following directions from the European Central Bank, preventing even the Legal Service from accessing them.


In response to the statement of the Attorney General that the decrees regarding the restructuring of the two banks constitute a Governmental Act, the plaintiffs’ lawyers raised specific legal issues. They asserted that the particular claim is incorrect and that it is in a stark contrast to the real facts, as it clearly comprises an Administrative Act which generates specific legal effects on the applicants, such as adverse economic effects, affecting, limiting and suppressing their fundamental rights.

Moreover, they wondered how is it possible to suggest that the State can violate, eliminate and restrain constitutional fundamental rights while the affected individuals have absolutely no right to judicial protection. To further support their case, they stressed the fact that the Eurogroup is not a legal body of the EU and therefore the agreements reached through it are not legally-binding.

In response to Mr. Clerides statement that the disbursement of the first tranche of the loan depends on the continuation of the case before the Supreme Court, the applicant’s lawyers urged the court not to decide with political criteria (according to when the Memorandum of Understanding is going to be signed), but rather to apply the Cypriot law and the jurisprudence of the Supreme Court.

Stop the illegal expropriation of your money

Michael Chambers & Co team has already filed a number of appeals against Laiki Bank and Others for depositors claiming the recovery of their assets expropriated via the illegal tax on deposits which breaches the right to property. Our expert team is able to advice on the procedure on every step of the way and to provide constant updates on the hearing proceedings. Please contact our litigation team to claim the issuance of an interim injunction to block the haircut of your deposits, until the decree for recovery of damages and compensation for your loss is decided.