A number of measures have been introduced following the Eurogroup agreement of 25th March 2013. These measures involve the resolution of Laiki Bank and Bank of Cyprus and the imposition of restrictions on transactions. As a consequence a number of cases challenging these measures have been brought before the Cyprus courts. Some lawyers have chosen the legal avenue of bringing a civil claim while others have sought judicial review of the relevant decisions. This update relates to the progress of applications before the Supreme Court requesting judicial review of the relevant decisions.
By the 4th of April 2013 more than 80 applications had been submitted for judicial review. The plenary of the Supreme Court on the 5th of April 2013 convened a meeting with all lawyers involved in order to decide on how to properly and promptly deal with these applications. An expedited process was decided upon. It was decided that the Attorney General, who is the legal representative of the Republic, files objections to the applications within 10 days and that the hearing takes place from the 23rd to the 25th of March. Before the date of the hearing all lawyers involved would have to separate the applications into appropriate categories of applications to be dealt with collectively by the Supreme Court.
It must be noted that by the 23rd of April 2013, 4 judges of the Supreme Court had excluded themselves from the procedure, either for reasons of conflict of interest or due to issues of practicality. The last judge to exclude himself was the president of the plenary, Petros Artemis who on the 23rd of April 2013 declared that he would not be able to hear the applications as his retirement would come prior to the expected date on which the trial would end. As a result, 9 judges are currently hearing the relevant applications. Demetrios H. Hadjihambis is currently acting as President of the plenary of the Supreme Court in relation to the said applications.
On 23rd April 2013, it was established that a separation of cases into categories had not been accomplished, as per the Court’s instructions on 5th April 2013. The Court thus decided to hear each case separately, but at the same time allowing other lawyers who also have applications that challenge the same specific decision being heard by the Court, to argue in favour of their case. In practice this has resulted in a categorization of the applications according to the specific government order or directive that they are challenging.
Accordingly, the Court has commenced with hearing applications involving order 104/2013. The particular order provides for the resolution of Laiki Bank.
The Attorney General has raised a preliminary objection to these applications stating that the order in question constitutes an act of government (acte de gouvernement) and is thus not amenable to judicial review. The Attorney General stated that on 25th March 2013 a political agreement was reached with the Eurogoup with a view to preventing Cyprus’ bankruptcy. It was agreed inter alia that Laiki Bank be separated into a ‘good bank’ and a ‘bad bank’, and that all of the good bank’s assets be transferred to Bank of Cyprus along with Laiki’s Emergency Liquidity Assistance debt. It was also agreed that the €10 billion that would be lent to Cyprus would not be used for the rescue of Laiki Bank or Bank of Cyprus. The Eurogroup agreement, the Attorney General argued, is the result of the exercise of political power and all related acts that followed it are actes de gouvernement. In the alternative it was also argued that the relevant orders or acts were necessary for reaching future agreement on two international treaties involving the financing of the island. In other words, the Eurogroup agreement was an exercise of political power that would lead to two international treaties once the acts in question were implemented. As such he suggested that the order in question should be considered an acte de gouvernement.
The Court, of its own initiative, also raised the issue of whether order 104/2013 constitutes a measure with individual effect or a general measure. The Attorney General argued that, as far as the applicants are concerned, it is a general measure, albeit with consequences on a very large number of individuals.
Lawyers for the applicants responded with a variety of arguments relating to both points. The following are some of the main arguments that were put forward to the Court:
On 30th April 2013 the Attorney General delivered his response to the above arguments, essentially repeating the argument that the Eurogroup decision falls within the realm of politics and constitutes an acte de gouvernement. He clarified that though the Eurogroup agreement is not an international agreement, it is a political agreement on an international level. He argued that the Resolution Law, on which the decrees in question are based, constitutes the vehicle through which the Eurogroup agreement is implemented.
The Court has reserved its decision relating to the preliminary objections. The decision is expected within the next coming days. Michael Kyprianou & Co LLC will be closely following the relevant developments and will keep you updated on a regular basis.
