On May 21, 2024, the Decision on Liability was issued by the Arbitral Tribunal, which was constituted in accordance with the Arbitration Rules of the International Center for the Settlement of Investment Disputes (ICSID) of the World Bank (World Bank) in the arbitration entitled TheodorosAdamakopoulosandothersv. Republic of Cyprus (ICSID Case No. ARB/15/49).
The Arbitral Tribunal unanimously rejected all the claims of the claimants against the Republic, who were depositors and holders of securities of the Bank of Cyprus and Laiki Bank in 2013 when the bank resolution measures were implemented, with the exception of a single claim by a single specific claimant. The Arbitral Tribunal ordered the claimants to pay the Republic approximately US$6 million in costs. It is noted that the creditors' total claim against the Republic of Cyprus amounted to approximately US$570 million (including interest), plus costs of approximately US$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 appealed 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 responsible for the losses suffered in connection with the resolution measures, claiming that the Republic caused the banks' financial problems by failing to adopt available alternative measures that would have prevented or greatly reduced the losses them and implemented the resolution measures in a discriminatory manner that amounted to 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 violate its obligations under the Investment Agreements and did not were arbitrary, disproportionate, discriminatory and did not constitute expropriation.
In particular, the Arbitral Tribunal concluded that the measures of March 2013 constituted a legitimate exercise of the regulatory power of the State, which was acting in the public interest. It confirmed the position supported by the Republic during the arbitration, including the explanations given by the Attorney General of the Republic Mr. George L. Savvidis during the hearing on the merits, held between January 25, 2023 – February 7, 2023, that, in the event that if the resolution measures were not taken, it would cause a disorderly collapse of the banks and the economy as a whole. The Arbitral Tribunal further confirmed that the decision to impose the resolution measures was taken after first considering that there were no other options available, and recognized the responsible attitude of the officials and functionaries of the Central Bank, who were prepared for all possible eventualities , and also that the Central Bank had previously considered and confirmed that shareholders, security holders and depositors would be no better off if the banks were allowed to fail and go into liquidation.
The Republic of Cyprus is conducting a detailed study and evaluation of the Decision. Furthermore, the case of one claimant is examined, in relation to which, due to his exceptional circumstances, a violation was found, not in terms of the legality of the consolidation measures taken by the Republic, which were deemed legal in all respects by the Arbitration Court, but in terms of not handling it in a similar way to other exceptional cases at a later stage by the State.
The Republic of Cyprus before the ICSID Arbitral Tribunal was represented 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 officials 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 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 Legal Service of the Republic,
Mihal Stylianou, Maria Kettirou and Andrea Mylonas of the Central Bank of Cyprus, and
Giorgos Pantelis, Avgi Lapathiotis and Dionysis Dionysiou of the Ministry of Finance.
