The District Court of Larnaca has rejected a lawsuit related to the 2013 deposit haircut in Cyprus.
The court’s decision was grounded in the argument that the failure to implement stabilisation measures back in 2013 would have plunged Cyprus into a severe economic crisis.
The court noted that the financial system would have faced destabilisation and collapse, resulting in catastrophic consequences for the country’s economy and society. Referring to the prevailing conditions in March 2013, the court concluded that there were compelling reasons related to public interest and restructuring measures.
Today’s ruling marks the dismissal of a lawsuit against the Republic specifically concerning the deposit haircuts at Laiki Bank in 2013. The legal action had been directed towards the Central Bank of Cyprus in its role as the Resolution Authority under the Law on the Resolution of Credit and Other Institutions 17(I)/2013. Notably, the plaintiffs withdrew the lawsuit against all defendants except the Republic of Cyprus and the Central Bank of Cyprus during the course of the proceedings.
The court’s decision underscored that neither the Republic of Cyprus nor the Central Bank of Cyprus could be held accountable for issues pertaining to supervision and the collapse of the banks. Consequently, the court rejected the claims put forth by the plaintiffs.
Additionally, the court determined that the Republic could not be held responsible for accepting and consenting to the haircut of Greek bonds held by Cypriot banks, including Laiki Bank. The court emphasised that, as revealed during the cross-examination by the Legal Service, the state could not intervene in the business decisions of the banks regarding the purchase of Greek bonds.
With the dismissal of both the claims and the lawsuit, the court awarded costs in favour of the Republic.
Handling the case on behalf of the Attorney General of the Republic were Elli Florentzou, Senior Legal Counsel of the Republic, and Zena Haralambous, Legal Counsel of the Republic A’.
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