Curtis Obtains Victory for Cyprus in Landmark Mass Claim Treaty Arbitration

Washington, DC, May 28, 2024 – Curtis has successfully represented the Republic of Cyprus (Cyprus) in a high-profile investment treaty arbitration relating to the failure and resolution of the country’s two largest banks, Bank of Cyprus and Cyprus Popular Bank (Laiki), in 2013.

On May 21, 2024, the arbitral tribunal in Theodoros Adamakopoulos and others v. Republic of Cyprus (ICSID Case No. ARB/15/49) issued a Decision on Liability that dismissed all of the claims of the claimants, with the exception of a unique claim of a single claimant, and ordered the claimants to pay Cyprus approximately US$6 million in costs.

The arbitration was a “mass claim” ICSID proceeding brought by a group of 968 natural persons and six companies under Cyprus’ bilateral investment treaties with Greece and Luxembourg. The claimants were depositors and bondholders of Bank of Cyprus and Laiki when resolution measures were applied to the banks in 2013 pursuant to the terms of the economic assistance programme agreed by Cyprus with the International Monetary Fund, European Commission, and European Central Bank.

The claimants sought approximately US$600 million, including interest and costs. They claimed that Cyprus should be held liable for their losses because it allegedly caused the banks’ financial problems, failed to adopt available alternative measures that would have avoided or largely limited their losses, and applied the resolution measures in an expropriatory, disproportionate and discriminatory manner. The Tribunal rejected those allegations and found that the resolution measures were a legitimate exercise of regulatory authority that complied with Cyprus’ international obligations.

“This is a very important victory for Cyprus,” said Curtis partner Justin Jacinto. “The claimants aggressively challenged every aspect of the response of the Government and Central Bank of Cyprus to the financial crisis and failure of the banks. The Tribunal’s unanimous decision recognizes that the resolution measures were a reasonable regulatory response that protected the public interest and avoided a much worse result.”

This is the fourth investment treaty arbitration against Cyprus that Curtis has successfully defended. The first win was in a EUR1.3 billion ICC arbitration brought by the owners of FBME Bank Ltd., which failed after it was designated an institution of primary money-laundering concern by the U.S. government (Ayoub-Farid Saab and Fadi Saab v. Cyprus, ICC Case No. 20588/ZF). The second win was in an SCC arbitration brought by two Polish investors who held deposits with Bank of Cyprus that were affected by the resolution measures (Tomasz Częścik and Robert Aleksandrowicz v. The Republic of Cyprus, SCC Case No. V2014/169). The third win was in an ICSID arbitration brought by a Belarusian investor who held deposits with Laiki that were affected by the resolution measures Alexander Nelin v. Republic of Cyprus, ICSID Case No. ARB/18/41).

The Curtis team representing Cyprus was led by partner Justin Jacinto and included partners Peter Wolrich, Luciana Ricart, Ricardo Mier y Terán, and William Hampson, senior counsel Mark O’Donoghue, and associates Sena Tsikata, Odysseas Stergianapoulos, and Jean Lambert.

This news has been reported in the:

Investment Arbitration Reporter

Global Arbitration Review

Law360