FBME Bank Ltd v Central Bank of Cyprus and Reorganization Committee, Administrative Court, Case No. 1024/2014
It was filed on July 25, 2014 against CBC's order on reorganization measures (the 'Order') for the branch of FBME Bank Ltd in Cyprus ('the Branch') by FBME Bank Ltd ('FBME') against the Central Bank of Cyprus ('CBC') and the Reorganization Committee ('RC'). This administrative action requests the annulment of the Order. Three decisions that were issued are publicly available: the interim order on preventive measures of August 8, 2014; the interim order on document production of December 18, 2015; and the interim order on document production of November 29, 2016. It is unclear, whether these proceedings are still pending or a final judgment has been issued.
(August 8, 2014) This interim order concerned the request for suspension of the Order's power and/ or execution and/ or application. CBC raised the objection that the petition was baseless, as it was filed without the approval of the Special Manager. The Court dismissed this objection as taking reorganization measures and appointing a special manager does not lead to firing a company's or a bank's officers, who preserve part of their authority and may initiate court proceedings to the benefit of the company or bank, as the case may be. Then the Court examined the grounds for granting an interim order, those being flagrant illegality and irreparable damage. Regarding the first one, it found that on the face of the record the RC had been legitimately constituted, took into consideration the necessary reports and had the authority to issue the Order.
Especially with reference to the alleged violation of Article 6 of the Cyprus-Lebanon BIT (2001), it noted that FBME was not a legal person protected thereunder, whereas its shareholders were not parties in the present proceedings. The maintained violation of the Constitution was equally unconvincing as it was put forward in a general manner. Thus, no illegality, let alone flagrant illegality was demonstrated. Turning to irreparable damage, the Court underscored that damage should be explained in a specific and clear manner and established with proper evidence.
The furnished documentation had not achieved this standard.
Moreover, according to case law, when damage can be monetized, it is not irreparable. Therefore, the Court rejected the requested suspension. [document]
(December 18, 2015) This interim order concerned document production and in particular all relevant documents in CBC's and RC's possession, under their control or in their care that were related to the present application. It also requested to summon the director of the Reorganization Committee of CBC. Plaintiffs alleged that when they reviewed the administrative file, the auditors' AML report, as well as correspondence between CBC and FinCEN was missing. Defendants noted that they had not produced documentation to the plaintiffs, as they had not deemed it relevant. Defendants raised objections, including the generality of the requested documents. The Court underscored the obligation of the Administration to produce all documentation to the Court, when litigation is pending, whereas Administration has no authority to decide on the necessity of the documents. It further noted that the Court may not order the production of documents that the Administration had not considered, when issuing the Order. It added that for the Court to grant the request, it shall have to decide in favor of the relativity of the requested documentation to the case. Highlighting that document production was requested in a general manner and therefore depriving the Court of judging on their relativity to the disputed issues, the Court rejected the application. Especially with regard to the auditors' AML report, the Court noted that it was concluded after the Order was issued, and its relativity to the disputed issues had not been clarified. Moreover, it was sent to the FBME's administrator in Tanzania and the CEO of FBME, Mr Saab, had produced comments on its findings. Therefore, the Court rejected the requested document production. [document]
(November 29, 2016) This interim order concerned the production of: the auditors' AML report conducted with FinCEN on the premises of FBME between June 17, 2014 and July 4, 2014; minutes of the RC for the period starting from July 21, 2014; the revised liquidity report on FBME; and correspondence of the respondents with FBME, FinCEN, the correspondent banks, the statutory administrator in Tanzania for the period starting from July 18, 2014. Defendants reiterated that all documentation relevant to the case was in the file that had been produced to the Court, maintaining that FBME was on a fishing expedition for other pending cases. The Court rejected the production of the minutes of RC and the liquidity report, as they had been requested in a general manner. On the contrary it ordered the production of the two other set of documentations, that being the auditors' AML report and the correspondence, as they had been put forward in a specified manner and demonstrated their relation to the disputed facts and issues.
Order on selling the banking business of the branch of FBME Bank in Cyprus, issued by the Reorganization Committee of the Central Bank of Cyprus published in the Official Gazette of Cyprus on July 21, 2014. [document]
Note: Document(s) and English introduction(s) kindly provided by Natalia Charalampidou.