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Victims of ‘haircut’ in South lose Supreme Court appeal

8 June 2013

Petitioners who applied to the South Cyprus Supreme Court were disappointed to learn that their appeals have been rejected. The government had made a decision to impose a ‘haircut’ on uninsured bank deposits of over 100,000 euro as part of the terms of the EU bailout of 10 million euro.

Around  5,000 depositors appealed to the Supreme Court, requesting that the decision to apply the ‘haircut’ be revoked.

The Court ruled by majority vote that the ‘haircut’ does not constitute a public act but a private act and as such it can be examined in civil lawsuits against the banks and possibly the government.

“The nature of the relation between depositors in the Bank of Cyprus is the same as the one between depositors in the Cyprus Popular Bank. Neither have a lawful interest to lodge an appeal and the case lies in the context of private and not public law,” the Supreme Court said, noting it has no jurisdiction to examine the appeals.

The Court said that since the bank’s contractual obligations were affected, depositors could launch civil lawsuits against the bank in the district courts, while these proceedings may be extended against the South Cyprus government which issued the Decree that affected the banks’ capacity to repay its depositors.

“The legitimacy of any infringement could be examined within this context,” the Court said.

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