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Decision of the Paris Court of Appeal on the application for the annulment of the Final Award, dated 15 January 2019, in the arbitration A.F.M.S. and F.M.S. v. Republic of Cyprus

The Paris Court of Appeal issued on Tuesday, 22 March 2022, a Decision dismissing the application for the annulment of the Final Award, dated 15 January 2019, of the International Arbitral Tribunal in the arbitration A.F.M.S. and F.M.S. v. Republic of Cyprus (Case no. 20588/ZF//AYZ), and awarded 80.000 euros in costs in favour of the Republic.

It is recalled that Mr. A.F.M.S. and Mr. F.M.S., who indirectly hold the share capital of FBME Bank Ltd., brought, in 2014, a claim against the Republic of Cyprus on the basis of the bilateral Agreement on the Reciprocal Promotion and Protection of Investments between Cyprus and Lebanon, in an International Arbitral Tribunal established in accordance with the rules of the International Chamber of Commerce in Paris, requesting compensation amounting to 1.4 billion US Dollars.

The claimants had asserted that the Central Bank of Cyprus had acted arbitrarily by placing the Cyprus branch of FBME under resolution, in accordance with the Resolution of Credit and Other Institutions Law of 2013, due to reasons relating to the reaction of the markets to the classification of FBME by FinCEN as a Bank “of primary money-laundering concern”. The Arbitral Tribunal, by the Award dated 15 January 2019, by majority, dismissed all the claims against the Republic and confirmed that the Central Bank of Cyprus acted as a prudent supervisory authority, and that the Republic did not violate any of its obligations under the bilateral Agreement.

Yesterday’s Decision of the Paris Court of Appeal confirms, inter alia, that the Arbitral Tribunal had acted within its jurisdiction, and dismisses all the grounds for the annulment of the Award raised by the applicants. Furthermore, the Court of Appeal decided that the reasoning of the Tribunal on the merits cannot be reviewed by the Court within the framework of a set-aside motion. It further stated that it cannot be argued that the Tribunal failed to comply with its mission, and that there cannot be any breach of the international public order.

The Republic was represented before the Paris Court of Appeal by the law firm Viguié Schmidt & Associés, in close collaboration with the law firm Curtis, Mallet-Prevost, Colt & Mosle LLP (which represented the Republic before the Arbitral Tribunal), under the instructions of the Law Office of the Republic, in coordination with the Central Bank of Cyprus and the Ministry of Finance.

(ML)