Nicosia, Cyprus. The Supreme Court has dismissed an appeal by a Polish woman seeking compensation from Cyprus for losses suffered during the 2013 banking crisis, it was made known on Thursday.
Deposit losses linked to 2013 restructuring
The case concerned funds held in a term deposit account at Laiki Bank before March 2013. Following restructuring measures, the deposit was reduced from €454,579.52 to €24,508.16, a loss of around €430,000.
Claim based on 1992 Cyprus-Poland investment agreement
The appellant argued that Cyprus was liable under a 1992 investment agreement with Poland, which she said protected investors from deprivation and required fair compensation.
Bailout programme and depositor measures
Under the bailout programme between Cyprus and its international lenders in March 2013, large depositors contributed to the recapitalisation of the Bank of Cyprus, which was heavily exposed to debt-crippled Greece. Depositors at the Bank of Cyprus had 47.5 per cent of uninsured deposits above €100,000 converted into shares. At Laiki Bank, uninsured deposits were wiped out, the lender was wound down, and its operations were folded into the Bank of Cyprus.
EU law cited in rejection of compensation claim
The court had previously ruled that the bilateral agreement could not apply after Cyprus joined the European Union, as doing so would contradict EU law and the principle of equal treatment. It found that compensation based on nationality would lead to discrimination prohibited by EU treaties.
The Supreme Court upheld that reasoning, stating bilateral agreements cannot be applied when they conflict with EU law after accession. It confirmed that EU legal principles govern relations between member states and their citizens.
How do you view the Supreme Court’s reliance on EU law in rejecting compensation based on a bilateral investment agreement?
