As noted in our previous update, several clients have considered legal challenges to the new laws based on the resolution measures agreed by the Eurogroup and the Republic of Cyprus. These resolution measures on Bank of Cyprus and Cyprus Popular Bank (part of the Laiki Bank Group) include the bail-in (often referred to as the ‘haircut’ on accounts over Euro 100,000) and Laiki’s “good bank” assets being folded into Bank of Cyprus.
Potential legal challenges include those against the banks, the government, and/or EU bodies on the basis of violation of fundamental rights under the constitution of Cyprus; possible violation of the European Convention of Human Rights; or even action against the management of the banks.
So far more than 50 parties, both local and foreign, have filed recourse proceedings in the Cyprus Supreme Court.
The court started to review these appeals in late April. However, it is still considering the argument made by the Attorney General that there is no jurisdiction for the court to consider a "governmental act". In summary, the Attorney General stated that in the same way a party could not be in a position to bring a claim if Cyprus decided to leave the Euro, a party cannot bring the recourse proceedings.
The delay in the proceedings is unfortunate as there is a potential cut off date of 8 June 2013 for parties to file for recourse. Therefore, time is short for further litigation of this nature.
For further details of the claims and advice please contact Pavlos Aristodemou.