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Cyprus

ECJ upholds decision dismissing damages claims after 2013 haircut

The European Court of Justice

The European Court of Justice (ECJ) has decided to uphold the judgments of the General Court of the EU in so far as it dismissed the actions for damages brought by a number of individuals and companies on account of acts and conduct adopted by the EU institutions in connection with financial assistance granted to Cyprus that was conditional upon the restructuring of its banking sector

On the other hand, the ECJ found that the General Court erred in law in holding that the Eurogroup – an informal body comprising EU finance ministers – was “an EU body established by the Treaties, whose conduct would be capable of giving rise to non-contractual liability of the European Union.

According to the ECJ, the Eurogroup cannot be equated with a configuration of the Council and is characterised by its informality and does not have any competence of its own or the power to punish a failure to comply with the political agreements concluded within it.

It added that since the political agreements concluded within the Eurogroup are given concrete expression and are implemented by means, in particular, of acts and action of the EU institutions, inter alia of the Council and the ECB, individuals are not denied their right, enshrined in Article 47 of the Charter of Fundamental Rights of the European Union, to effective judicial protection, given that, as indeed happened in this instance, they may bring an action to establish non-contractual liability of the European Union against those institutions in respect of the acts or conduct that the latter adopt following such political agreements.

The ECJ  pointed out, in particular, that it was for the Commission, as guardian of the Treaties, to ensure that such political agreements are in conformity with EU law, and that any inaction on the part of the Commission in that regard is liable to result in non-contractual liability of the European Union being invoked.

The court also held that the General Court erred in law in finding that Cyprus had no margin of discretion under that provision, for the purpose of defining the specific rules for that conversion.

As to the cases considered by the Court that individuals and companies suffered a sufficiently serious breach of their right to property, it ruled that the right to property is not an absolute right and may be subject to limitations.

It also ruled that the measures referred to in the memorandum of understanding of April 26, 2013 cannot be regarded as constituting “a disproportionate and intolerable interference impairing the right to property of the individuals and companies concerned”.

In conclusion, the Court dismissed in their entirety the appeals brought by the companies and individuals concerned.

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