by the Arbitration Association
RU

International Chamber of Commerce, Ayoub-farid Saab and Fadi Saab v. The Republic of Cyprus, 15 January 2019

June 17, 2019

Composition of the Tribunal:

Pierre Tercier(Switzerland)

Ibrahim Fadlallah(France-Lebanon) (appointed by Claimants)

VV Veeder QC(UK) (appointed by Cyprus)

Counsel to Cyprus:

Curtis Mallet-Prevost Colt & Mosle

Counsel to Ayoub-Farid Saab and Fadi Saab:

Quinn Emanuel Urquhart & Sullivan, Madkour Law Firm

On 15 January 2019, the International Court of Arbitration of the International Chamber of Commerce (ICC Tribunal) ruled in favor of Cyprus in the case brought by two Lebanese brothers under the 2001 Agreement on the Reciprocal Protection of Investments between the Republic of Lebanon and the Republic of Cyprus. The case concerned indirect expropriation through liquidation of the branches of the FBME Bank Ltd. (“Bank”) owned by Claimants, which is based in Tanzania but holds almost 90% of its assets in Cyprus[1].

In 2014, the Central Bank of Cyprus adopted the decree for the sale of operations of the branch of the Bank in Cyprus after the US Treasury’s Financial Crimes Enforcement Network (FinCEN) published a notice of finding the bank a financial institution of primary money laundering concern. A year later, the Central Bank fined the Bank for the failure to comply with the anti-laundering regulation and subsequently placed the Bank under administration. Then the FinCEN enacted the final rule and imposed special measures against the Bank in 2016.

In 2017, the Bank was placed under liquidation. Claimants’ numerous attempts to challenge the FinCEN‘s actions, inter alia, on the basis that FinCEN did not disclose in advance factual and legal circumstances of its allegations, failed.  

While filing the arbitration in the ICC Tribunal in 2014, Claimants asked for a compensation for the discontinuation of the operations of the Bank in sum of € 1.44 billion and for interim measures to prevent Cyprus authorities from liquidating local branch of the Bank. 

The ICC Tribunal rejected these claims in entirety concluding that “Cyprus acted as a responsible regulator in responding to the failure of FBME”.

Darya Zavershinskaya,
Higher School of Economics, LLM student in international trade, finance and economic integration, Moscow


[1]Sources:

1)     PAA356/2014 – Τhe sale of operations of the Branch of FBME Bank Ltd in Cyprus decree of 2014, https://www.centralbank.cy/en/resolution/resolution-actions/fbme-bank-ltd/τhe-sale-of-operations-of-the-branch-of-fbme-bank-ltd-in-cyprus-decree-of-2014.

2)     Notice of Finding That FBME Bank Ltd., Formerly Known as Federal Bank of the Middle East, Ltd., Is a Financial Institution of Primary Money Laundering Concern, 79 FR 42639, 2014-17171, July 22, 2014, https://www.federalregister.gov/documents/2014/07/22/2014-17171/notice-of-finding-that-fbme-bank-ltd-formerly-known-as-federal-bank-of-the-middle-east-ltd-is-a.

3)    Cosmo Sanderson, Cyprus defeats treaty claim by owners of sanctioned bank, January 30, 2019, Global Arbitration Review, https://globalarbitrationreview.com/article/1179818/cyprus-defeats-treaty-claim-by-owners-of-sanctioned-bank.