CYPRUS: The Grand Chamber of the European Court of Justice to decide on the haircut of Cyprus
In due course a number of appeals will be heard before the Grand Chamber of the European Court of Justice which have been filed by the depositors of the Bank of Cyprus against the European Commission and the European Central Bank in relation to the money they lost in the March 2013 haircut. On the 17th of November 2014 the General Court of the European Union decided that the European Central Bank and the European Commission had not caused the losses suffered by depositors with the Bank of Cyprus and the Cyprus Popular but instead held that the bail-in had been passed unilaterally by Cyprus and that the damage caused to depositors was attributable to Cyprus.
The main lines of arguments by the Appellants’ are amongst others the following:
(a) That the haircut was unlawful because there was no law in force in the European Union or in Cyprus authorising such a haircut at the time and
(b) That the law making in such circumstances is a perversion of the rule of law for the reason that Cyprus was persuaded by the European Commission and the European Central Bank to pass laws under duress of circumstances that were not authorized by EU law at the time.
On the other hand, the main argument of the European Commission and the European Central Bank is that their actions are beyond the reach of EU Law because the European Stabilization Mechanism is a separate entity from the EU under International Law.
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