Many with significant balances in certain Cyprus banks are going to suffer substantial losses as a result of the terms of the Cyprus bailout and the restructuring of the Bank of Cyprus and Laiki Bank. Account holders will naturally want to consider whether they have any legal redress in Cyprus or elsewhere to protect their funds or, failing that, to seek compensation. Bondholders and shareholders in the banks will for similar reasons also be closely scrutinising the restructuring.

Whilst caution about identifying the best legal options is appropriate (pending greater detail emerging both as to the proposed restructuring and as to the facts which led to the current crisis), those affected need to be considering their options now. Possible legal avenues might include claims in relation to:

• any actionable failures by the Cypriot authorities in their supervision and oversight of the Cypriot banking sector. The merits of such claims will become clearer as further information emerges as to when the authorities were, or when they should have been, aware of the problems that have now emerged;
• possible breaches of duty by the management of the banks which again may turn heavily on what they knew, or ought to have known, and when;
• possible breaches of Cypriot legislation, whether by the banks or the authorities, including any breaches of their banking and insolvency laws and constitutional protections;
• possible breaches of Cyprus’ international obligations, whether through bi-lateral treaties, EU or other convention rights (including for breaches of the European Convention on Human Rights) including as a result of any unlawful appropriation of assets or unlawful discrimination in the implementation of the restructuring plans; and
• whether any actionable misrepresentations were made by either the banks or regulatory authorities when encouraging opening of accounts.

These possible routes forward show that, depending on the cause of action, there may well be more than one possible defendant and more than one available jurisdiction in which a claim could be brought. Careful consideration will need to be given not only to the merits of each possible claim but to the likely speed and efficacy with which a particular tribunal would resolve the dispute, the procedural advantages and disadvantages of pursuing litigation before that tribunal and the availability of interim measures to support the claim.

Indeed, any claims that litigants choose to pursue might well involve the need to co-ordinate carefully action in multiple jurisdictions depending on the various potential defendants, location of any wrongdoing and available legal remedies.