Paris Court of Appeal backs Cyprus government in Fbme case

Τhe Paris Court of Appeal has dismissed an application for the annulment of an International Arbitral Award, finding in favour of the Republic of Cyprus concerning Fbme Bank.

The case concerns the disagreement by the holders of Fbme Bank Ltd`s share capital to the decision by the Central Bank of Cyprus to place the bank’s branch in Cyprus under resolution.

In a press release, the attorney-general’s office said the Paris Court of Appeal issued on Tuesday a Decision dismissing the application for the annulment of the Final Award, dated January 15, 2019, of the International Arbitral Tribunal in the arbitration A.F.M.S. and F.M.S. v. Republic of Cyprus and awarded €80,000 in costs in favour of the Republic.

In 2014 the plaintiffs (A.F.M.S. and F.M.S), who indirectly hold the share capital of Fbme Bank Ltd., brought a claim against the Republic of Cyprus on the basis of the bilateral Agreement on the Reciprocal Promotion and Protection of Investments between Cyprus and Lebanon, in an International Arbitral Tribunal established in accordance with the rules of the International Chamber of Commerce in Paris, requesting compensation amounting to US$1.4 billion.

The claimants had asserted that the Central Bank of Cyprus had acted arbitrarily by placing the Cyprus branch of Fbme under resolution, in accordance with the Resolution of Credit and Other Institutions Law of 2013, due to reasons relating to the reaction of the markets to the classification of Fbme by the US’s FinCEN as a Bank “of primary money-laundering concern.”

The latest decision of the Paris Court of Appeal confirms, the attorney-general’s office said, that the Arbitral Tribunal had acted within its jurisdiction, dismissing all the grounds for the annulment of the Award raised by the applicants. Furthermore, the Court of Appeal decided that the reasoning of the Tribunal on the merits cannot be reviewed by the Court within the framework of a set-aside motion.