20 August 2014
On behalf of the Shareholders of FBME Limited a request for arbitration has been filed with the Arbitral Tribunal of the International Chamber of Commerce. This is in reference to the unilateral decision of the Central Bank of Cyprus to sell FBME Bank’s Cyprus branch, which the owners regard as a hostile takeover.
The arbitration invokes the Lebanese-Cyprus Convention on the reciprocal promotion and protection of investment, dated 5 June 2002 (law number 399). Article 6 of this Convention prohibits any nationalisation or expropriation of the assets of the citizens of either country. Article 12 states clearly that in any dispute the parties will endeavor to settle amicably, which has opened this route to the Paris-based International Chamber of Commerce, one of the world’s foremost professional bodies for arbitration.
The shareholders seek a resolution of the actions of the Central Bank of Cyprus and its Special Administrator in line with internationally recognised bi-lateral treaties.
Measures for the sale of the Cyprus branch of FBME Bank clearly come as an obvious and unjustified infringement of this Convention, especially in the absence of any litigation or conviction against the Bank.
These measures were issued under the Special Resolution Decree of the Central Bank of Cyprus which was designed for insolvent banks or those facing serious liquidity problems, not a healthy financial institution such as FBME Bank, where the financial position is sound and fully in line with capital adequacy and solvency requirements of the European Central Bank.