An Arbitral Tribunal of the International Chamber of Commerce (ICC) in Paris has decided it has jurisdiction over the claims by the owners of the Federal Bank of the Middle East (FBME) against the Republic of Cyprus regarding the Lebanese-Cyprus Treaty governing the protection of investor rights, the bank said on Sunday.
In a written statement, FBME said the objections of Republic, which argued that the Tribunal lacked jurisdiction to hear the case, have been dismissed and that the arbitration would now proceed to its second phase.
It described the development as something that could prove to be “a significant turning point” in the dispute between FBME Ltd and the Republic of Cyprus.
Operations of the Tanzania-based bank’s local branch were taken over by the Central Bank of Cyprus last year after it was named a “financial institution of primary money-laundering concern” by the US Department of the Treasury (FinCEN).
FBME says there was no legal basis for the decision to put the branch into resolution.
The ultimate beneficial owners of FBME Bank Limited filed a request for arbitration on in October 2014.
The Republic of Cyprus submitted its answer to the arbitration request in January of this year, asserting that the Arbitral Tribunal did not have jurisdiction because the Cyprus branch and its owners were not covered by the Lebanese-Cyprus Treaty.
Located in Paris, the ICC is the world’s leading body for the resolution of international disputes by arbitration. The ICC has unrivalled authority in making rules that govern and regulate the conduct of business and treaties across borders and its decisions are binding.