The basis of the initiation of the arbitration proceedings had been made by two Polish investors against the Republic of Cyprus, who had applied to the Arbitration Court in Stockholm claiming that the haircut measures taken in relation to their bank account held with the Bank of Cyprus had been an unlawful expropriation of their property rights and was in violation of theBilateral Investment Protection Agreement between Poland and Cyprus. The Arbitration Court rejected the appeal of the two investors ordering them to pay the Republic of Cyprus 70% of the legal fees for the representation of the Republic. This judgment has not been published as there was a confidentiality commitment.
The above decision is a significant tool for Cyprus to use, in other similar hair cut cases which are pending before the International Arbitration Courts based in Paris and also a barrier to possible similar actions that may be filed by impaired depositors.
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