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All of the plaintiffs' claims were found to be arbitrary and capricious, and were rejected by the Court which confirmed the necessity of taking reorganisation measures
It was necessary to take reorganisation measures, particularly the specific ones taken under the 'Resolution of Credit and Other Institutions Act, 2013', states, inter alia, a recent, multi-page decision of the Limassol District Court, dismissing a lawsuit filed by depositors of Cyprus Popular Bank Public Co Ltd. (Laiki Bank) for the impairment of deposits in 2013.
The depositors had taken action against the Republic of Cyprus, the Central Bank of Cyprus and Laiki Bank claiming, inter alia, damages, alleging loss of money as a result of the resolution measures taken in 2013. Due to the fact that Laiki Bank was placed in liquidation and no order for continuation of the proceedings before the Court was secured, the Court, on 20 July 2022, discontinued the action against Laiki Bank and the hearing continued against the Republic of Cyprus and the Central Bank of Cyprus.
In its judgment, the Court, having analysed the plaintiffs' claims, rejected them in their entirety, finding them to be arbitrary and unsubstantiated, while noting that, through the evidence before it, it is established that the Republic of Cyprus has been making efforts to rescue Laiki Bank since May 2012. In that regard, the Court also notes the finding that the Ministry of Finance, in cooperation with the Central Bank of Cyprus and with the preliminary agreement of the European Commission, issued Decrees for the underwriting of the preferential rights of Laiki Bank amounting to €1.8 billion, with the public participation amounting to 0.16% of the total amount and resulting in the remaining share capital being underwritten by the Republic of Cyprus.
With regard to the necessity of the reorganisation measures, the Court states in its judgment:
"On the basis of the Eurogroup agreement, the reorganisation measures for Laiki Bank were necessary since they were a precondition for the signing of the agreement between the Republic of Cyprus and its creditors and, without that agreement, the Republic of Cyprus would have been forced into bankruptcy. It was also a precondition for the signing of the agreement and the sale of Laiki Bank's operations in Greece. Therefore, 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 and with the consequences as set out above, and therefore on these facts the Law of Necessity could be invoked."
As to the Claimants' allegations of violation of their constitutionally guaranteed right to their property, the Limassol District Court held that they were not valid, adopting the reasoning of the judgment of the Plenary of the Supreme Court Myrto Christodoulou et al. -v- Republic, 553/13 et al.
In conclusion, the Court held that no actionable act or omission on the part of the Republic of Cyprus was proven, accepted the position that the reorganisation measures at issue were absolutely necessary and unavoidable, and made a finding that at the particular time, there was a need to take the particular measure.
The Court rejected all of the Claimants' claims, dismissed the action and awarded costs in favour of the Republic.
On behalf of the Advocate General of the Republic, the case was handled by Ms Theano Mavromoustaki, Senior Advocate of the Republic, and Ms Zachelina Erotokritou, Advocate of the Republic.
(MΛ)
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