Claimants who sought recourse at the International Arbitral Tribunal after incurring heavy losses during the 2013 Cypriot bank bail-in, have been ordered to provide a $5m security to compensate the Republic for any expenses it incurred if they lost the case.
The tribunal issued the order at the request of the Republic and at the same time it rejected a similar request by the claimants for an equivalent order, a statement by the Legal Service said on Wednesday.
The claimants in the case, Theodoros Adamakopoulos and others v. Republic of Cyprus, were 951 individuals and seven companies, all Greek nationals except for one company incorporated in Luxembourg.
The request for arbitration was received by the court on September 25, 2015.
They are holders of certain financial instruments and bank deposits in Laiki Bank and Bank of Cyprus, which had been seized in 2013 as part of the island’s bailout deal.
In 2012-2013, the two banks incurred losses from their exposure to the Greek economic crisis. In March 2013, faced with an economic emergency, Cyprus reached an agreement with the EU, the ECB and the IMF, collectively known as the Troika, for the adoption of an adjustment plan which led to the merger of Laiki Bank with the Bank of Cyprus and a bail-in of shareholders, bondholders and deposit holders of the Bank of Cyprus.
The claimants allege that the adoption of the so-called Plan B by the Cyprus government has resulted in a violation of its obligations towards their investments under a bilateral agreement with Greece for the reciprocal encouragement and protection of investments and a similar agreement between Cyprus and Belgium-Luxembourg.
The case was eventually admitted by the tribunal in February this year.
At the request of the Republic, the tribunal ordered the “claimants to provide security to the tune of $5m in the form of a deed of indemnity or other form of irrevocable guarantee to ensure that a future Arbitral Award requiring the claimants to compensate the Republic for the costs it incurs in the arbitration can be satisfied.”