Greek City Times | 3 October 2020
Cyprus bail-in. A back door solution perhaps?
by Theodoros Patsellis
Everyone remembers the days of the financial crisis in Europe and the Greek tragedy leading to capital restrictions and the loss of properties and savings. Some of us were forced to remember the hard way. Especially those who had decided to invest or keep their funds in Cyprus, hoping to enjoy greater protection against a possible bail-in and other disaster. Much to their detriment, however, on March 25, 2013, the Cypriot bail-in became a reality and thousands of people saw their savings melt.
In an effort to rebounce, Greek investors who were affected by the bail-in have sought legal resort and now seem to stand a fair chance to have their case tried and possibly recuperate a portion of their losses in a Mass Arbitration to be held before the World Bank’s ICSID Tribunal (i.e. International Centre for Settlement of Investment Disputes). The legal basis for the claim is to be found in the Cyprus-Greece BIT (Bilateral Investment Treaty) signed between the two countries in 1992.
In particular, a coalition of Law firms led by Grant & Eisenhofer out of New York were successful in winning a historic ruling by the ICSID Tribunal on February 10, 2020, allowing the Mass Arbitration of Greek claims against the Republic of Cyprus following the Government’s 2013 Bank bail-in. The ICSID Tribunal ruled that it has jurisdiction over the international investment case that was brought in 2015, and that 956 Greek depositors and bondholders may proceed in their mass claim against the Republic of Cyprus.
In more detail, the ruling resolved that the claims of 956 investors arise under identical treaty provisions, are all based on Cyprus’s 2013 actions against its banks and affected all claimants in similar fashion. To this end, all claims were therefore found to be sufficiently homogenous to proceed by way of a mass claim in a single arbitration. This is the first mass claim to do since the Argentinian bond cases. The Tribunal will now assess Cyprus’s liability for discriminating against foreign investors and illegal expropriation without paying compensation. It should be noted that this ruling is a pre-ruling to examine the possibility of mass arbitration and is not addressing the issue of the bail-in in itself.
Our experience in promoting the interests of our own clients to possibly join the mass arbitration has shown that several key factors need to be met in order to qualify. Claimants need to first demonstrate that they were and still are Greeks at the relevant times for the assessment, i.e. back in 2013, as well as today. They also need to provide sufficient banking documentation demonstrating the type of investment held in Cyprus during those days (i.e. deposits, bonds, etc.) along with a final statement showing the amount of their loss attributable to the bail-in. Affected parties may still be eligible to join the mass arbitritration.
Theodoros Patsellis is a Partner with the Law firm “PRP-Law” based in Athens, Greece.