For failure to execute an order to transfer money abroad
The District Court of Nicosia issued last week a very important decision regarding the obligation of banks to promptly execute their customers' instructions for money transfers.
According to the facts of the case, the plaintiffs were residents of Greece and maintained at the beginning of 2013 a joint deposit account at the Bank of Cyprus with a balance of approximately Euro 1 million. On 3/15/2012, the plaintiffs correctly and having completed all the necessary forms gave instructions to the bank that essentially the whole of their deposit account be transferred to a branch of the Bank of Cyprus in Greece.
The bank failed to carry out the said instructions on the same day it received them, while in the immediately following days the 'cataclysmic' events, as described by the court, led to the 'haircut' (reduction) of bank deposits of the Bank of Cyprus. In particular, the Minister of Finance with relevant announcements declared the following days as “Special Bank Holidays” while on 25/3/2013 the well-known agreement between the Republic of Cyprus, the Eurogroup and the International Monetary Fund was concluded. An essential condition of which was, among other things, the consolidation with the Bank of Cyprus' own funds.
As a result of the above, the plaintiffs lost a large part of their money and filed a lawsuit seeking compensation both from the Bank of Cyprus as well as from the Central Bank and the Republic of Cyprus.
In his decision, the President of the District Court of Nicosia, Mr. Angelos David, referred to the bank's legal obligation towards its customers, which is to demonstrate reasonable care and skill. In this particular case, the judge found that according to the testimony that had been presented, there was no objective difficulty for the bank to execute on the same day the order it had received for the transfer of the money. He also found reliable the testimony provided by the plaintiffs regarding the time and manner in which they had given the relevant instruction to the bank. The court specifically stated:
''Having all the above in mind, taken as a whole and objectively considered, it is the Court's conclusion that the defendant 1 bank, in this particular case, by omitting and mitigating to
em>to act as instructed by its plaintiff-clients, while it appears that it had the ability to do so, breached its obligation to exercise due care and diligence towards them. Nothing has been brought to the attention of the Court capable of justifying the negligence on its part and the non-execution of the disputed order of the plaintiffs within a substantial time”.
Therefore the court awarded to plaintiffs an amount of EURO 282,000 plus legal interest from the date of registration of the lawsuit which is the amount they lost due to the impairment suffered by their bank account.
The plaintiffs were represented in court by lawyers Christos Galanos and Yiannis Zavros of the law firm Michael Kyprianou and Co LLC.
See the decision here.
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