The District Court of Nicosia on June 9th, 2023 issued a very important judgment which relates to the obligation of banks to execute promptly instructions received by customers for the transfer of funds.
The claimants in this case were represented by lawyers of our firm Christos Galanos and Yiannis Zavros.
The facts of the case
The claimants are residents of Greece and in 2013 held a joint bank account at the Bank of Cyprus with a balance in the region of EURO 1 million.
On March 15th, 2013 they instructed the bank, after completing all the necessary forms, to transfer essentially the whole of their deposit to a branch of the Bank of Cyprus in Greece.
The bank failed to execute the transfer on the same day that it had received the instructions whilst on the days that followed there took place the ‘cataclysmic’ (term used by the court itself) events leading to the haircut of bank deposits held at the Bank of Cyprus.
In particular, the Minister of Finance declared the days that followed as ‘Bank holidays’ whilst on March 25th, 2023 the agreement between the Republic of Cyprus, Eurogroup and the International Monetary Fund was entered into. A material term of which was the bail in of the Bank of Cyprus with own funds.
As a result, the claimants lost a large part of their deposits and filed a claim in the court seeking compensation from the Bank of Cyprus, the Central bank of Cyprus and the Republic of Cyprus.
The court’s judgment
In his judgment the President of the District Court of Nicosia Mr. Aggelos David referred to the obligation that a bank has towards its customers to act with reasonable care and skill.
In the particular case the judge found that on the basis of the evidence that had been adduced the bank had not faced any objective difficulty to execute the instructions of the claimants to transfer the funds on the same day that it had received these instructions. The judge found the evidence adduced by the claimants in relation to the time and way that they had given the relevant instructions to the bank to be reliable and truthful. In particular the judge stated:
‘Bearing in mind all the above … it is the court’s conclusion that the defendant bank in this particular case displayed delay in acting as per the instructions of its customers … thus failing in its duty to display the necessary care and diligence towards them. Nothing has been presented to the court to justify this delay and the failure to duly execute the instructions of the claimants …’
The Court as a result issued a judgment in favour of the claimants for the amount of EURO 282,000 plus interest being the amount the claimants had lost because of the haircut imposed on their bank account deposits.
