The Paris Court of Appeal has rejected an application to set aside an international arbitration award in favor of the Republic of Cyprus against FBME Bank, the Republic’s legal office said on Wednesday.
The case concerns the disagreement of the holders of the authorized capital of FBME Bank Ltd with the decision of the Central Bank of Cyprus to put the FBME branch in Cyprus under consideration.
A press release from the Law Office of the Republic of Cyprus states that on Tuesday the Paris Court of Appeal ruled to dismiss the application to set aside the final decision of the International Court of Arbitration dated January 15, 2019 in the AFMS arbitration. and FMS v Republic of Cyprus (case no. 20588/ZF//AYZ), and awarded 80,000 euros in respect of legal costs in favor of the Republic.
As a reminder, Mr. AFMS and Mr. FMS, who indirectly own the share capital of FBME Bank Ltd., filed a lawsuit against the Republic of Cyprus in 2014 on the basis of a bilateral Agreement on Mutual Promotion and Protection of Investments between Cyprus and Lebanon, in the International Court of Arbitration , created in accordance with the rules of the International Chamber of Commerce in Paris, with a claim for compensation in the amount of 1.4 billion US dollars, it notes.
Plaintiffs argued, he adds, that the Central Bank of Cyprus acted arbitrarily by placing FBME’s Cypriot branch under resolution under the 2013 Credit and Other Institutions Resolution Act, for reasons related to market reaction to FinCEN’s FBME classification as a bank “causing major money laundering concerns.“The Court of Arbitration by a decision dated January 15, 2019, by a majority of votes, rejected all claims against the Republic and confirmed that the Central Bank of Cyprus acted as a reasonable supervisory authority and that the Republic did not violate any of its obligations under the bilateral agreement,” the law office said.
Yesterday’s decision of the Paris Court of Appeal confirms, in particular, that the Court of Arbitration acted within its competence, and cancels all the grounds given by the applicants for setting aside the decision. In addition, the Court of Appeal held that the Tribunal’s arguments on the merits could not be reviewed by the Court in an application for setting aside.
It further stated that it could not be argued that the Tribunal had failed in its mission and that there could be no breach of international public order, the Law Office said in a statement.
The Republic was represented in the Paris Court of Appeal by the law firm of Viguié Schmidt & Associés, in close cooperation with the law firm of Curtis, Mallet-Prevost, Colt & Mosle LLP (which represented the Republic in the Court of Arbitration) in accordance with the instructions of the Law Office of the Republic in consultation with the Central Bank of Cyprus and Ministry of Finance.