On June 6, 2003 the Chamber of Civil and Economic Cases of the Court of Appeals overruled the March 27, 2003 verdict of the Court of Economic Disputes declaring Credit-Service Bank bankrupt. The court sent the case back to the Court of Economic Disputes.

“That was a slap in the face for the chairman of the Central Bank, Tigran Sargisyan,” says Tigran Zalinyan, who represents two shareholders in Credit-Service Bank. According to the Law on the Bankruptcy of Banks and Financial Institutions, the process of declaring a bank bankrupt is initiated by the Central Bank. The board of the Central Bank adopts a decision, and on that ground appeals to the Court of Economic Disputes to declare the bank in question bankrupt. The Court of Economic Disputes either grants or rejects the appeal. It rejects an appeal only if procedural violations took place in the process of declaring the bank bankrupt. In the case of Credit-Service Bank, there were both procedural and material breaches and legal violations. According to the Law on the Bankruptcy of Banks and Financial Institutions, a verdict by the Court of Economic Disputes declaring a bank bankrupt is not subject to appeal and comes into force from the moment it is announced. The Court of Economic Disputes issued a decision declaring Credit-Service Bank bankrupt, but according to Article 130 of the Civil Code, the court should have issued a verdict, as it had examined the case in essence. Thus the legal act should have been in the form of a verdict. The same requirement is present in the Civil Code. In their petition to the Court of Appeals, the two main shareholders of the bank that had been declared bankrupt cited the following two grounds:

First, the Court of Economic Disputes stated that its verdict was not subject to appeal, and by doing so violated one of the principles of international law - that all courts should be accessible to citizens. Second, a new circumstance had come to light - Credit-Service Bank’s reorganization plan was considered a banking secret by the Central Bank. “This is the first court case inArmeniain which a verdict that was not subject to appeal and came into force from the moment it was issued has been overruled. I think that all the circumstances on which the Court of Appeals based its verdict will be grounds for the Court of Economic Disputes. And I hope that the Central Bank’s appeal will be rejected and the illegalities committed against Credit-Service bank will be undone,” Zalinyan said.

A. Mkrtumyan, the presiding judge at the June 6, 2003 session of the Chamber of Civil and Economic Cases of the Court of Appeals asked the Central’s Bank’s counsel to express his personal opinion, as a lawyer, on the Economic Disputes Court’s verdict. He replied that in his opinion, such a verdict is subject to appeal. The court of appeals decision can become a precedent for about ten other banks declared bankrupt in recent years to appeal to the Court of Appeals.

Of course, the verdict is probably no accident. Most likely it was a result of a conflict of interest at the top.