28 November 2014
Arbitration papers in the case filed at the International Chamber of Commerce (ICC) by the owners of FBME Limited, the holding company of FBME Bank, reveal that the damages claim against the Republic of Cyprus is currently estimated at half a billion US dollars … “but well may exceed this sum by the time the arbitration is completed”. The ICC is empowered to decide on the final damages claim. A copy of the summary of the arbitration papers is available here.
FBME Limited has invoked the international agreement between Cyprus and Lebanon that entered into force on 19 March 2003, which protects investor rights in each other’s country. This treaty was ignored by the Central Bank of Cyprus when it issued a Resolution against the Cyprus branch of FBME Bank on 21 July 2014, which expropriated the branch and led to an attempt to force a sale against the wishes of the owners. Ever since, the owners of the Bank have engaged in a public, legal struggle against the actions of the Cyprus Central Bank and its Administrator sent in to run the branch by diktat.
The arbitration papers detail what harm has been caused by the Central Bank’s hasty, ill conceived and potentially sinister actions. The papers also set out the continuing damage caused to the bank and its depositors by the actions of the Administrator, Mr Dinos Christofides. This has included the effective closure of the branch from 22 July to 2 September, its restrictions on transactions since early September and his attempt to … “siphon the liquidities of the Branch to the benefit of the CBC (Central Bank of Cyprus)”. He has also … “refused to take any steps necessary to allow FBME Bank to resume certain activities in non-US$ currencies,” and has also …”actively sought to obstruct the ability of the Bank to do so itself”. The papers also point at the freezing of accounts within FBME’s Cyprus branch by the Administrator without having given reason.
As responsible owners and managers, the shareholders say they are taking the Republic of Cyprus to arbitration first and foremost to protect the Bank’s employees and depositors, but also Cypriot taxpayers …”who would ultimately have to foot the bill for the damages awarded to the shareholders following the irresponsible and illegal actions by the CBC”.
The ICC accepted the filing for arbitration by the shareholders of FBME Bank on 28 October. The ICC is located in Paris and is the world’s leading body for the resolution of international disputes by arbitration.
In the foreword to its booklet on Arbitration Rules, the ICC writes: “Arbitration under the ICC Arbitration Rules is a formal procedure leading to a binding decision from a neutral arbitral tribunal, susceptible to enforcement pursuant to both domestic arbitration laws and international treaties such as the 1958 New York Convention”.