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Decision of the Arbitral Tribunal of the International Centre for Settlement of Investment Disputes in the arbitration Theodoros Adamakopoulos and others v. Republic of Cyprus
On 21 May 2024, the Decision on Liability of the Arbitral Tribunal was issued, which was constituted under the Arbitration Rules of the World Bank's International Centre for Settlement of Investment Disputes (ICSID) in the arbitration entitled TheodorosAdamakopoulosandothersv. RepublicofCyprus (ICSID Case No. ARB/15/49).
The Arbitral Tribunal unanimously dismissed all claims of the claimants against the Republic, who were depositors and security holders of Bank of Cyprus and Laiki Bank in 2013 when the banks' resolution measures were implemented, with the exception of a single claim of only one particular claimant. The Arbitral Tribunal ordered the claimants to pay the Republic approximately USD 6 million in costs. It is noted that the total claim of the claimants against the Republic of Cyprus amounted to approximately USD 570 million (including interest), plus costs of approximately USD 30 million.
The claimants consist of 968 individuals and six companies and are Greek nationals, with the exception of one company incorporated in Luxembourg. The claimants have resorted to arbitration on the basis of the bilateral investment treaties of the Republic of Cyprus with Greece and Luxembourg. Their position was that the Republic should be held liable for the losses they suffered in connection with the resolution measures, claiming that the Republic caused the banks' financial problems, failed to adopt available alternative measures that would have prevented or substantially reduced their losses and applied the resolution measures in a discriminatory manner that constituted expropriation.
The Republic of Cyprus, in the context of the arbitration, rebutted the Claimants' claims as unfounded, and welcomes the Arbitral Tribunal's decision, which, adopting the Republic's positions, found that the resolution measures did not breach its obligations under the Investment Agreements and were not arbitrary, disproportionate, discriminatory and did not constitute expropriation.
In particular, the Arbitral Tribunal concluded that the March 2013 measures were a legitimate exercise of the State's regulatory power, acting in the public interest. It confirmed the position maintained by the Republic during the arbitration, including the explanations given by the Attorney General of the Republic, Mr George L. Savvidis, at the hearing on the merits, held between 25 January 2023 and 7 February 2023, that if the resolution measures were not taken, it would cause a disorderly collapse of the banks and the economy as a whole. The Arbitral Tribunal further confirmed that the decision to impose the resolution measures was taken after considering that there were no other options available, and acknowledged the responsible attitude of the Central Bank's officers and officials, who were prepared for all possible contingencies, and that the Central Bank had previously considered and confirmed that shareholders, security holders and depositors would not be better off if the banks were allowed to fail and were put into liquidation.
The Republic of Cyprus is undertaking a detailed study and assessment of the Decision. Further, the case of one claimant, in relation to whom, due to his exceptional circumstances, a breach was found, not as to the legality of the resolution measures taken by the Republic, which were found to be lawful in all respects by the Arbitral Tribunal, but as to the failure of the State to deal with him in a similar manner to other exceptional cases at a later stage.
The Republic of Cyprus before the ICSID Arbitral Tribunal was represented by the international law firm Curtis, Mallet-Prevost, Colt & Mosle LLP and the Attorney General of the Republic together with a team of lawyers from the Legal Service and officials of the Central Bank and the Ministry of Finance.
The Attorney General of the Republic expresses his sincere thanks to all those who worked on this case and contributed to its successful outcome, in particular the following.
Justin M. Jacinto, Mark H. O'Donoghue, Guillermo A. Ulke, Luciana Ricart, Ricardo Mier y Terán, William Hampson, Sena Tsikata, Odysseas E. Stergianopoulos, Jean M. Lambert and Kyriakos Gertzikis of Curtis, Mallet-Prevost, Colt & Mosle LLP,
Elena Zachariadou, Mary-Ann Stavrinidou, Despina Kyprianou and Maria Pelikou of the Legal Service of the Republic,
Michael Stylianou, Maria Kettirou and Andreas Mylonas of the Central Bank of Cyprus, and
George Pantelis, Avgi Lapathiotis and Dionysis Dionysiou of the Ministry of Finance.
(MΛ)
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