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Cyprus’ Supreme Court has rejected an appeal by a Polish woman who sought compensation from the Republic of Cyprus over losses she suffered during the 2013 banking crisis, bringing a long-running legal fight over deposit “haircuts” to a close.
The case stemmed from funds she had placed in a fixed-term deposit at Laiki Bank before March 2013. When Cyprus’ banking sector was restructured during the financial crisis, deposit holders faced heavy losses. Her investment, according to court records, was reduced from €454,579.52 to just €24,508.16.
She claimed the state should compensate her for the remaining loss of about €430,000, relying on a 1992 investment agreement between Cyprus and Poland, which protected investors from direct or indirect expropriation without fair compensation.
But the Supreme Court upheld the earlier dismissal of her case, ruling that EU law takes priority over bilateral investment treaties between member states.
The Court noted that after Cyprus and Poland joined the European Union, such agreements could no longer be applied in a way that conflicted with EU treaties. It also pointed to a later EU-wide agreement, signed in 2020, which effectively ended the validity of similar bilateral investment treaties between member states.
The judges agreed with the lower court that allowing compensation under the Cyprus–Poland agreement would have created unequal treatment between EU citizens affected by the 2013 bank restructuring.
Such an outcome, the Court said, would risk giving Polish investors more favorable treatment than depositors from other EU countries who suffered similar losses, something prohibited under EU rules on non-discrimination.
The Supreme Court also endorsed the view that the earlier ruling correctly found the bilateral treaty could not be used in this context, since it would conflict with Cyprus’ obligations as an EU member state.
As a result, the appeal was dismissed, and the Court ordered the applicant to pay €3,500 in legal costs to the Republic of Cyprus.
