With hundreds of cases now in the Cypriot courts, and indeed with new cases being issued , and with debtors now going on the offensive against the banks, rather than waiting for the banks to come after them, the response of the Cypriot judiciary to the problems which created the bailout will become a matter of credibility for them.
The role of the judiciary of course revolves around Judicial functions such as administration of the courts and the creation and administration of justice. However the judiciary in most countries is also responsible for the guardianship of the constitution, which enables a country to develop, and protection of fundamental rights. It is important for credibility reasons for the judiciary to be seen to act impartially. However sometimes that is fettered by the interference of government, or political or business alliances.
The UK is not immune to this – the appointment of the Judiciary can come about because of political and business reasons.
For the Cypriot Courts dealing with creditors claims after the bail out becomes a matter of credibility. Do the Cypriot courts back- as broadly they have done so far- the now discredited and defunct banks, or will the Cyprus judiciary rise to the occasion and turn its back on the banks, thereby becoming the “guardians” of the people?
The overwhelming message from Europe’s power brokers, unwelcome as it has been (particularly for the innocent depositors of Cyprus who will lose some of their deposits and the Cypriot people who have barely recovered from the repercussions of the 1974 Turkish invasion), is that Cyprus’s current woes have been created by its bankers and by those who failed to supervise them by allowing lax and inappropriate lending procedures.
It remains to be seen whether the courts of Cyprus and those in power there will acknowledge this message, or whether they will risk their credibility, and that of the institution of government, by backing the same people and organisations who have already damaged Cyprus. Doing the former may restore confidence in the island economy (particularly if it challenges Angela Merkels assertion that its business model is finished). Doing the latter can only endanger Cyprus’s path to recovery.