Judgment of the Paris Court of Appeal in the application for annulment of the Final Award dated 15 January 2019, in the arbitration A.F.M.S. and F.M.S. v. Republic of Cyprus
The Paris Court of Appeal issued on Tuesday, 22 March 2022, a Decision rejecting the request for annulment of the Final Award, dated 15 January 2019, of the International Court of Arbitration in the arbitration A.F.M.S. and F.M.S. v. Republic of Cyprus (Case no. 20588/ZF/AYZ), and awarded costs in favour of the Republic in the amount of EUR 80,000.
It is recalled that Mr. A.F.M.S. and Mr. F.M.S., who indirectly hold the share capital of FBME Bank Ltd, brought an action in 2014 against the Republic of Cyprus, under the bilateral Convention for the Reciprocal Promotion and Protection of Investments between Cyprus and Lebanon, before an International Arbitral Tribunal established under the Arbitration Rules of the Paris-based International Chamber of Commerce, claiming damages amounting to USD 1.4 billion.
The claimants alleged that the Central Bank of Cyprus had acted improperly by placing FBME's Cyprus branch in resolution under the provisions of the Resolution of Credit and Other Institutions Law of 2013 due to market reaction to FinCEN's classification of FBME as a bank "with the primary objective of money laundering". The Arbitral Tribunal, in its Decision dated 15 January 2019, by a majority vote, dismissed all claims against the Republic, and confirmed that the Central Bank of Cyprus acted as a prudent supervisor and that the Republic did not breach any of its obligations under the bilateral Convention.
Yesterday's Judgment of the Paris Court of Appeal confirms, inter alia, that the Arbitral Tribunal had acted within its jurisdiction, and rejects all the grounds for annulment of the Arbitral Tribunal Decision raised by the applicants. In addition, the Court of Appeal decided that it could not review the merits of the reasoning of the Arbitral Tribunal Decision in the context of the application for annulment. It stated that it could not be argued that the Arbitral Tribunal had failed to perform its task, nor that there was any violation of international public policy.
The Republic was represented before the Paris Court of Appeal by the law firm Viguié Schmidt & Associés, in close cooperation with the law firm Curtis, Mallet-Prevost, Colt & Mosle LLP (which had represented the Republic before the Arbitral Tribunal), on instructions from the Legal Service of the Republic, in consultation with the Central Bank of Cyprus and the Ministry of Finance.
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