16 September 2015
In its Award signed on 10 September 2015, an Arbitral Tribunal of the International Chamber of Commerce (ICC) in Paris decided it has jurisdiction over the claims by the owners of FBME Limited (the Claimants) against the Republic of Cyprus (the Respondents) regarding the Lebanese-Cyprus Treaty governing the protection of investor rights.
Therefore the objections of the Respondents arguing that the Tribunal lacks jurisdiction to hear the case have been dismissed and the arbitration will proceed to its second phase. In making the Award, the Arbitral Tribunal has deferred decisions on the granting of costs to this phase of arbitration, which covers the merits of the Claimants’ case, and includes an assessment of damages and compensation.
This website will run further information on this topic and other developments stemming from the arbitration.
The ultimate beneficial owners of FBME Bank Limited filed a request for arbitration on 28 October 2014 citing the 2003 ‘Agreement on the Reciprocal Promotion and Protection of Investment between the Republic of Lebanon and the Republic of Cyprus’. Article 6 of this Treaty prohibits any nationalisation or expropriation of the assets of the citizens of either country, while Article 12 provides for arbitration among other remedies, to resolve disputes.
They took this action following the commandeering of the FBME branch in Cyprus by the Central Bank of Cyprus in July 2014, the imposition of inappropriate Resolution measures and the attempt to sell the branch against their wishes, as owners.
The Republic of Cyprus submitted its answer to the arbitration request in January of this year, asserting that the Arbitral Tribunal does not have jurisdiction because the Cyprus branch and its owners are not covered by the Treaty. The Arbitral Tribunal has now dismissed this argument and has ruled that the bilateral Treaty does apply.
Located in Paris, the ICC is the world’s leading body for the resolution of international disputes by arbitration. The ICC has three main activities: rule setting, dispute resolution, and policy advocacy. Because its member companies and associations are themselves engaged in international business the ICC has unrivalled authority in making rules that govern and regulate the conduct of business and treaties across borders.
In the foreword to its booklet on Arbitration Rules, the ICC states: “Arbitration under the ICC Arbitration Rules is a formal procedure leading to a binding decision from a neutral arbitral tribunal, susceptible to enforcement pursuant to both domestic arbitration laws and international treaties such as the 1958 New York Convention.”