District Court Ignores FBME Arbitration Filing

19 December 2014

The Central Bank of Cyprus yesterday, 18 December 2014, issued a statement containing arbitrary and inaccurate statements regarding a District Court decision made on 17 December.

Though the Nicosia District Court rejected the interim application filed by the shareholders of FBME Bank to prevent the sale of the Bank’s Cyprus branch, it makes no difference as the arbitration hearing at the International Chamber of Commerce in Paris will proceed as expected. Additionally, FBME shareholders will on Monday, 22 December file an appeal against the District Court decision to the Supreme Court and will continue to pursue other legal avenues.

Any actions in the meantime taken by the Resolution Authority for the expropriation of the Cyprus branch of FBME Bank will be strongly opposed with all legal means available. Any persons who become involved in such a process, including those who enter negotiations with the Resolution Authority of the Central Bank of Cyprus, will be regarded by FBME Bank and its owners as jointly liable.

In no way does the District Court’s decision represent a loss or even a setback. All that happened was that the District Court decided that it couldn’t allow the FBME interim application to put a halt to the sale while arbitration is underway in Paris.

It is important to make clear that the Cyprus District Court cannot have ruled on whether the owners of FBME, Ayoub-Farid M Saab and Fadi M Saab, are ‘investors’ under the Lebanon-Cyprus Treaty given that this question falls into the exclusive jurisdiction of the Arbitral Tribunal at the ICC in Paris. The shareholding structure of FBME Bank is known to the Central Bank of Cyprus, which has been host supervisor of the Bank for 32 years.

The facts remain that the Respondents (the Republic of Cyprus) have appointed their arbitrators for the ICC arbitration who, together with the arbitrator appointed by the Claimants are in the process of appointing the President of the Tribunal. In the next few weeks, the Arbitral Tribunal will be formed as the judicial body that has the exclusive jurisdiction of determining the status of the ‘investors’.

The shareholders of FBME Bank express their continued confidence that the arbitration tribunal at the ICC will treat the matter with the upmost professionalism, independence and respect to the rule of international law.

The claims made by the Central Bank of Cyprus in its statement of 18 December are untrue and unsubstantiated. It appears to have been part of the continued hostility towards FBME Bank.

It will be recalled that since the start of this matter on 21 July 2014, neither the Central Bank of Cyprus nor its Administrator has at any time consulted with FBME Bank, its owners or its home regulator, the Bank of Tanzania, on the proposed sale of the Cyprus branch.