The European Court of Justice decides to say “no” to Cypriot claims of bail in 

The European Court of Justice has issued a press release to make public its decision that confirms the dismissal of the actions for annulment and dismisses on the merits the actions for compensation concerning the restructuring of the Cypriot banking sector.

According to the press release:

While setting aside the orders of the General Court relating to the actions for compensation, it nevertheless decides to dismiss those actions, finding that the Commission did not contribute to a breach of the right to property of the persons bringing the actions that is guaranteed by the Charter of Fundamental Rights of the European Union.

During the first few months of 2012, a number of banks established in Cyprus, including Cyprus Popular Bank (‘Laiki’) and Trapeza Kyprou Dimosia Etaireia (Bank of Cyprus, ‘BoC’), encountered financial difficulties. The Cypriot Government therefore made a request for financial assistance to the Eurogroup, a body composed of the finance ministers of the euro area Member States. The Eurogroup indicated that the financial assistance requested would be provided by the ESM (European Stability Mechanism) in the framework of a macroeconomic adjustment programme to be set out in the form of a memorandum of understanding. This memorandum was negotiated by the Commission together with the European Central Bank (ECB) and the International Monetary Fund (IMF), on the one hand, and by the Cypriot authorities, on the other. In a statement of 25 March 2013, the Eurogroup indicated that the negotiations had resulted in a draft memorandum of understanding on the restructuring of the banks BoC and Laiki. The Commission, on behalf of the ESM, and Cyprus then signed the memorandum and the ESM granted financial assistance to that country.

A number of Cypriot individuals and a company established in Cyprus had funds on deposit at BoC or Laiki. The application of the measures agreed with the Cypriot authorities resulted in a substantial reduction in the value of the deposits. The individuals and the company concerned thus brought actions before the General Court, in particular for an order requiring the Commission and the ECB to pay them compensation equivalent to the diminution in value of their deposits allegedly suffered on account of the adoption of the memorandum of understanding and for the annulment of the relevant paragraphs of that memorandum. Also, seven Cypriot individuals brought actions before the General Court for annulment of the Eurogroup statement of 25 March 2013 concerning the restructuring of the Cypriot banking sector.

By five orders of 16 October 2014, 1 the General Court dismissed the actions for annulment of the statement of 25 March 2013 as inadmissible. It held that the ESM could not be regarded as forming part of the institutions of the European Union and that the Eurogroup statement could not be imputed to the Commission or the ECB, nor was the statement capable of producing legal effects with respect to third parties. Also, by three orders of 10 November 2014, 2 the General Court dismissed the actions for annulment and for compensation that were connected with the adoption of the memorandum of understanding, holding that they were in part inadmissible and in part unfounded. The General Court pointed out that the Commission signed the memorandum merely on behalf of the ESM and that the activities pursued by the Commission and the ECB in the context of the ESM commit the ESM alone. It also held that the persons bringing the actions had failed to establish with certainty that the damage they claimed to have suffered had in fact been caused by inaction of the Commission. The individuals and the company then appealed to the Court of Justice seeking to have the orders of the General Court set aside.

In today’s judgments, the Court upholds the orders of 16 October 2014 concerning the actions for annulment of the Eurogroup statement of 25 March 2013. On the other hand, it sets aside the orders of 10 November 2014 concerning the actions for compensation, but decides, on the merits, not to uphold those actions.

1 T-327/13 Mallis and Malli v Commission and ECB, T-328/13 Tameio Pronoias Prosopikou Trapezis Kyprou v Commission and ECB, T-329/13 Chatzithoma v Commission and ECB, T-330/13 Chatziioannou v Commission and ECB and T-331/13 Nikolaou v Commission and ECB.

2 T-289/13 Ledra Advertising v Commission

Read the Full announcement: eu-court-decision-on-cypriot-claims-of-bail-in

Source: European Union

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