No violation of the right to property. Decision by the Court of Justice on Cyprus haircut case.

No violation of the right to property. Decision by the Court of Justice on Cyprus haircut case.

The Court of Justice delivered on the 20th of September 2016 its judgment in the case filed by a number of Cypriot depositors who sufferred a haircut in March 2013 due to the known events with banks in Cyprus.

The case was brought against the European Commission and the European Central Bank (ECB).

The substance of the argument of the applicants was that the actions/decisions of the European Commission and ECB led to measures that violated the applicants right to property as safeguarded by the Treaties.

The measures were the closure of Cyprus Popular Bank, the taking over, by Bank of Cyprus, of Cyprus Popular Bank’s insured deposits,  the conversion of 37.5% of Bank of Cyprus’s uninsured deposits into shares with full voting and dividend rights, and  the temporary freezing of another part of those uninsured deposits

The Court of Justice dismissed the case finding that the measures noted above “do not constitute a disproportionate and intolerable interference impairing the very substance of the appellants’ right to property”

On paragraph 74 the Court notes:

” 74 In view of the objective of ensuring the stability of the banking system in the euro area, and having regard to the imminent risk of financial losses to which depositors with the two banks concerned would have been exposed if the latter had failed, such measures do not constitute a disproportionate and intolerable interference impairing the very substance of the appellants’ right to property. Consequently, they cannot be regarded as unjustified restrictions on that right (see, by analogy, judgment of 10 July 2003, Booker Aquaculture and Hydro Seafood, C‑20/00 and C‑64/00, EU:C:2003:397, paragraphs 79 to 86).”

You can read the full judgment text here:

http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1474448227474&uri=CELEX:62015CJ0008