Newsroom
France’s highest court has brought an end to the $1.4 billion legal battle over the resolution of FBME Bank, ruling that the Central Bank of Cyprus (CBC) acted prudently and did not breach any obligations under a bilateral investment treaty between Cyprus and Lebanon.
In July 2014, the CBC placed FBME under resolution following the U.S. Treasury Department’s designation of the bank as a financial institution “primarily involved in money laundering.”
According to the Legal Service of Cyprus, the French Court of Cassation upheld the 2019 arbitration decision in the case A.F.M.S. and F.M.S. v. Republic of Cyprus (ICC Case no. 20588/ZF/AYZ), ruling that the CBC’s actions were justified. The court confirmed that Cyprus did not violate any terms of the bilateral treaty.
The ruling marks the end of the $1.4 billion claim by FBME shareholders against Cyprus, according to the Legal Service. With the French court’s decision, the claimants no longer have any legal recourse to annul the arbitration award.
The court reaffirmed the March 2022 decision of the Paris Court of Appeal, which had rejected the claimants' request to annul the January 2019 arbitration ruling that dismissed their claims. The Paris court had determined that the arbitration tribunal acted within its authority and upheld international public policy in rejecting the claimants' arguments.
The case stems from FBME shareholders filing for international arbitration in 2014, claiming Cyprus acted arbitrarily by placing FBME’s Cypriot branch under resolution. This followed the fallout from the U.S. Financial Crimes Enforcement Network’s (FinCEN) classification of the bank as being heavily involved in money laundering.
The arbitration tribunal ruled in 2019 that the CBC had acted as a responsible supervisory authority, dismissing all claims against Cyprus.
Cyprus was represented in the case by the law firm Rousseau & Tapie, in collaboration with Gide Loyrette Nouel and Viguié Schmidt & Associés, as well as Curtis, Mallet-Prevost, Colt & Mosle LLP. The representation was coordinated by the Legal Service of Cyprus in conjunction with the CBC and the Ministry of Finance.
[Information sourced from CNA]
