Harneys’ Cyprus Banking Group is closely monitoring a
legal challenge to the bail-out legislation which is currently
before the Cyprus courts.
Following the agreement between the Eurogroup and the Republic of
Cyprus the two largest banks on the island, namely the Bank of
Cyprus and Cyprus Popular Bank (part of the Laiki Bank Group), are
under certain resolution measures which include the bail-in (often
referred to as the ‘haircut’ on accounts over Euro
100,000) and Laiki’s “good bank” assets being
folded into Bank of Cyprus. In addition restrictive measures on
capital transfers have been imposed.
The passing of laws and other relevant measures to enact the above
have caused many clients to consider a possible legal challenge
against the banks, the government, and/or EU bodies on the basis of
violation of fundamental rights under the constitution of Cyprus;
possible violation of the European Convention of Human Rights; or
even action against the management of the banks.
The courts have granted injunctions which have raised hopes for
claimants and interested parties, although the injunctions were
subsequently lifted. This shows that each injunction application
can be very fact specific. As the Court has now decided to hear the
challenges on an expedited basis it seems unlikely that the Court
will grant further injunctions. Each client should consider on a
case-by-case basis if it should now join other claimants in the
proceedings and what other options might be available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
