Landmark decision by a Cyprus court: Compensation for the "haircut" of deposits in 2013

An important decision was issued by the District Court of Limassol in Cyprus, which ruled in favor of the plaintiff, a Russian depositor of Laiki Bank, awarding damages of €780,832.90 for the "haircut" of deposits that took place in Cyprus in 2013, an amount which must be paid by the Central Bank and the Republic of Cyprus.

This decision is the first to recognize the responsibility of the Republic of Cyprus and its obligation to pay compensation for the impairment of bank deposits made in Cyprus in 2013, after a number of rejection decisions on lawsuits brought by depositors who saw the savings of a lifetime to disappear overnight.

The decision states in its conclusion: "The conclusion of the Court is that the impairment of the plaintiff's deposits was due to the negligent actions of the Central Bank (means the Republic of Cyprus) and the serious negligence of the CBC (means the Central Bank of Cyprus) and not for reasons relating to the rules of the market. The economic crisis that hit Cyprus in 2009 was not dealt with as it should have been by the government, as the institution responsible for the planning, development and protection of the economy, but also by the CBC as an institutional body - supervisor, which was the protector of the financial system and the proper functioning of the banks, as well as the control of the banking system in general, and the protection of depositors, between them and the plaintiff. Consequence of all this was the violation of the plaintiff’s right to property".

It is noted that the General Attorney of Cyprus has already announced that the Republic will appeal against the decision. (source: www.cylegalnews.com/photo freepik.com)

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George Kazoleas, Lawyer

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