21 February 2015
On 20 February 2015, the Arbitral Tribunal at the ICC in Paris issued its first outcome from its deliberations, known as Procedural Order No. 1. The wording of the Order is as follows:
“The Arbitral Tribunal firmly invites the Respondent to refrain from proceeding to the sale or the resolution of FBME Bank and from transferring its funds to the Central Bank of Cyprus before the Arbitral Tribunal has decided on Claimants’ Request for Interim Measure.”
The Claimants are the beneficial owners of FBME Bank and the Republic of Cyprus is the Respondent. The Order is significant in terms of putting a halt for the time being to further actions that may still be taken by the Central Bank of Cyprus as the Resolution Authority, and the appointed Special Administrator, against the FBME Bank branch in Cyprus while the Arbitral Tribunal studies the case.
It is worth reminding ourselves of the background to the arbitration process. On 21 July 2014 the Resolution Committee, authorised by the Resolution Authority, announced its intention to sell the FBME Bank branch in Cyprus. Pursuant to the ‘Agreement on the Reciprocal Protection of Investments’ between the Republic of Cyprus and the Republic of Lebanon, dated 9 April 2001, the owners of FBME Bank made a request for arbitration to the International Chamber of Commerce (ICC) in Paris. This was filed on 28 October 2014. The owners asked the Tribunal to settle the dispute before irretrievable damage is caused to the FBME Bank branch in Cyprus by the Central Bank of Cyprus, the Resolution Authority and the appointed Special Administrator. The owners are seeking compensation for damages of at least US$500 million.
The three-man Arbitral Tribunal is comprised by Professor Pierre Tercier (president), and co-arbitrators Professor Ibrahim Fadlallah and Mr V V Veeder QC.
The ICC is the largest, most representative business organisation in the world. It has three main activities: rule setting, dispute resolution, and policy advocacy. Because its member companies and associations are themselves engaged in international business, ICC has unrivalled authority in making rules that govern and regulate the conduct of business and treaties across borders.