Top EU Court Tosses Lawyer’s Challenge to Cyprus Bailout

Cliffs on the coast of Cape Greco in Cyprus. (Photo via Dimitris Vetsikas/ Pixabay)

LUXEMBOURG (CN) — A Cypriot lawyer with ties to the Trump administration came up short in his final appeal before the EU’s high court Wednesday in a dispute over money lost during the last financial crisis. 

The European Court of Justice upheld a lower court ruling that Kypros Chrysostomides had not proven the 2013 bailout deal that forced the Bank of Cyprus to shut down was unlawful. But it overturned a part of the ruling which found the Eurogroup, an informal group of finance ministers in the eurozone, is a European Union institution. 

“The Eurogroup does not have any competence of its own in the EU legal order,” the Luxembourg-based court found. 

Cyprus has a large offshore banking industry and it went into a recession following the 2008 financial crisis. Several of the Mediterranean island nation’s banks, which also held a large amount of Greek-government debt, became insolvent.

In 2013, the International Monetary Fund, together with the Eurogroup, European Commission and European Central Bank, announced a 10 billion euro ($12 billion) bailout for Cyprus.

As part of the deal, bank customers with more than 100,000 euros ($120,000) had their accounts seized and a tax was instituted on all deposits. A number of individual and corporate depositors argued that this decision violated their right to property as guaranteed under the EU’s founding documents and left them without judicial recourse. 

In a pair of judgements from 2018, the European General Court, the EU’s lower court, held that Chrysostomides hadn’t shown the Eurogroup acted unlawfully. But the court did determine that the group, despite its unofficial nature, could be held liable as an institution of the EU. 

“The General Court, first of all, took into consideration … the objective of public interest pursued by the acts and conduct of the defendants consisting in ensuring the stability of the Cypriot financial system and of the euro area as a whole,” the 13-judge panel of the Court of Justice wrote, finding that “less restrictive measures to achieve the objective” did not exist.

However, in overturning the lower court’s ruling that the Eurogroup is an EU institution, the high court noted the only function of the informal group of eurozone financial ministers “is to discuss questions related to the specific responsibilities that the ministers share with regard to the single currency.”

The Eurogroup has been criticized for operating in a legal gray area and lacking transparency. The 2009 Lisbon Treaty, which amends the two treaties that underlie the 27-member political and economic union, required the eurozone finance ministers to meet informally and elect a president, nicknamed “Mr. Euro.”

Wednesday’s decision, which is final and cannot be appealed, is in line with an opinion from a magistrate for the high court earlier this year, who called the Eurogroup “purely political.”

“The Eurogroup being a body outside the institutional and legal framework of the European Union, the EU courts have no jurisdiction to hear actions for damages brought against it,” Advocate General Giovanni Pitruzzella wrote.

Chrysostomides made headlines in the U.S. during the trial of disgraced Republican lobbyist Paul Manafort on money laundering and conspiracy charges. Known as Dr. K to Manafort, Chrysostomides set up shell companies in Cyprus to help the former Trump campaign manager avoid paying taxes in the United States. 

%d bloggers like this: