The measures taken were necessary to prevent the collapse of the entire financial sector with disastrous consequences for the economy of Cyprus and the destabilization of the entire financial sector
The President of the Limassol District Court, in a decision dated 31 January 2022, dismissed an action brought against the Republic of Cyprus, the Central Bank and the Bank of Cyprus, in which, inter alia, the plaintiff alleged that the measures and decisions taken under the Resolution of Credit and Other Institutions Law of 2013 violated its constitutional rights, awarding costs in favour of the Defendants.
In its judgment, the Court noted that under the Eurogroup agreement the means of recapitalising the Bank of Cyprus were limited, the resolution measures taken were necessary since they were a precondition for the signing of the Memorandum of Understanding between the Republic of Cyprus and its Lenders and without that agreement the Republic of Cyprus would have been driven into bankruptcy. Consequently, the Court concludes, the measures taken were necessary to prevent the collapse of the entire financial sector with disastrous consequences for the economy of the country and the destabilisation of the entire financial sector.
In conclusion, the Court held, inter alia, that reasons of public interest justified, in March 2013, the adoption of the contested orders by the Resolution Authority. The issuance of the Orders, the Court held, was absolutely necessary in light of the prevailing circumstances.
The case was handled on behalf of the Attorney General of the Republic by Ms Theano Mavromoustaki, Senior Counsel of the Republic, and Ms Zachelina Erotokritou, Counsel of the Republic.
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