Summary

FBME Bank Ltd v Central Bank of Cyprus and Reorganization Committee, Administrative Court, Case No. 1658/2015

It has been filed on December 22, 2015 by FBME Bank Ltd ('FBME') against the Central Bank of Cyprus ('CBC') and the Reorganization Committee ('RC'). Object of this action is CBC's decision to revoke the operation license ('the Decision') of the branch of FBME Bank Ltd in Cyprus ('the Branch'). Two interim orders that have been issued, are publicly available: the one dated February 25, 2016 on the application of third parties to intervene; and the one dated May 19, 2016 on the application for interim measures. Litigation is still pending.

(February 25, 2016) The third parties requesting to intervene were Airport Management Company Ltd, a company incorporated in the Isle of Man, and Alamo Ltd, a company incorporated in Mauritius (according to other orders it was incorporated in Malta), both maintaining bank accounts with the Branch of over Euro 100 mln. They requested to intervene as interested parties and, in the affirmative, to have full access to the pleadings, whereas they maintained that until then, they were unable to state whether they would interfere in favor or against the Branch. The Court rejected their application on February 25, 2016, due to lack of legal interest, as they had neither an interest in the preservation of the administrative act nor had they benefited from the same act. The Court found that they merely had a simple interest in the interpretation of the law. [document]

(May 19, 2016) The application on interim measures suspending the power of the Decision was based on the allegations that: (a) the authorities in the US were in a procedure of re-examining the position towards FBME; (b) that the revocation of the license was merely a pretext and was based on false accounts presented by employees, who were under duress by the defendants; (c) the revocation of the license would cause irreparable damage to the plaintiff; and (d) fragrant illegality against national banking laws, administrative laws, the Constitution of Cyprus and the Cyprus - Lebanon BIT (2001).

Defendants raised two objections: (a) the request was filed without due authorization by the statutory manager appointed by Tanzania; and (b) plaintiffs could not dispute the legality of the committee, the assistance of whom they sought following FinCEN's announcement, and therefore both applauding and condemning the same situation. The first objection was dismissed as the implementation of resolution measures does not strip off a company's officials from all their authorities, who maintain the power to take court measures in order to safeguard the company's operation and assets. The second objection was equally rejected, as it could not be discussed at this preliminary stage. The application for interim measures was also dismissed, as the alleged damage had not been established with facts and figures, especially in view of case law dictating that monetary damage could not support an interim order on the ground of irreparable damage. Neither was the ground of fragrant illegality established, as on the face of the record the Decision was lawful and the dispute on the applicable law had to be discussed at the merits. [document]

Note: Document(s) and English introduction(s) kindly provided by Natalia Charalampidou.