Cyprus: Worldwide Freezing Orders, Injunctions And Interim Relief In Cyprus Courts

Last Updated: 4 June 2015
Article by Anastasios Antoniou and Aquilina Demetriadi

Cyprus is a financial hub from which a number of companies, trusts, investment funds and assets established in Cyprus and various other jurisdictions around the world are managed and controlled, through regulated fiduciary and administrative services providers. The Cyprus courts exercise their powers in a wide and rigorous manner in relation to asset worldwide protection, freezing, discovery and tracing, in the context of main proceedings or in aid of foreign judicial or arbitration proceedings, provided all statutory and case law requirements are met. This makes Cyprus the ideal jurisdiction through which to pursue interim relief. Against this background, this article examines:

  • Commercial litigation in Cyprus; and
  • Various interim relief and injunctions granted by Cypriot courts.

Commercial litigation in Cyprus

The process of litigation in Cyprus takes place in the Republic's civil courts and is governed by the Civil Procedure Rules. These Civil Procedure Rules are in fact identical to the respective rules applicable in England prior to Cyprus' independence from British colonial rule in 1960, thus benefiting from considerable case law that clarifies the scope, method and results of their application in commercial proceedings.

The independent judiciary and the constitutional rights and guarantees, which essentially incorporate the rights enshrined and protected under the European Convention on Human Rights into the Cypriot legal order, are the pillars on which the integrity of Cypriot courts has been built throughout the past 50 years. Cypriot courts afford litigants impartiality, equity and fairness, in carrying out an unbiased adjudication of disputes brought before them. The independence of the judiciary is enshrined as a fundamental aspect of the constitution and the prevalence of the rule of law is unquestionable.

The official languages of Cyprus are Greek and Turkish, and judicial proceedings are conducted, and judgments are drawn up, in one of these official languages. However, English is widely used and documents in English can be produced before or accepted by a court in Cyprus, since documents including affidavits in a foreign language are admissible as evidence.

Civil proceedings before Cyprus' courts commence with an originating summons, which can be a writ of summons or an originating application. Typically, in the case of a civil action, the main stages are the following:

  • Filing a writ of summons by the claimant (plaintiff), generally indorsed or specially indorsed, for service of a writ of summons on the defendants.
  • Filing a note of appearance by the defendants within ten days from the time of service. If a defendant disputes the jurisdiction, he must apply for leave to file a conditional appearance. If the defendant is outside the jurisdiction, the plaintiff must first apply for leave to seal the writ, and then for leave to serve it outside the jurisdiction. If a generally indorsed statement of claim is filed, then a statement of claim must be filed within ten days of the defendant's appearance.
  • A defendant must file a statement of defence within 14 days after filing an appearance if a specially indorsed writ of summons is filed, or 14 days after the statement of claim if a generally indorsed writ of summons is filed.
  • The plaintiff can file a reply within seven days after receiving the defence, but it is not compulsory.
  • If the defendant has a counterclaim, the plaintiff will file a reply to and defence against the counterclaim within 14 days of the counterclaim.
  • Once the pleadings close, which is usually followed by discovery (and, possibly, inspection) of documents, any party is entitled to apply to the court for a hearing date. The registrar fixes the matter for directions, and the judge decides when to fix the matter for hearing.
  • During the trial, parties produce witnesses and their evidence (which are subject to cross-examination by the other party).
  • Following the submissions of the parties, the Court issues a judgment in the case.

A litigant not satisfied with the judgment issued by the court of first instance has the right to appeal to the Supreme Court against the judgment. A notice of appeal, setting out the grounds for appeal and the reasons relied on in full, must be filed within six weeks from the date of a judgment on the merits of the case (unless an extension is granted by the court), or 14 days from the date of an interim judgment.

Interim relief and injunctions granted by Cyprus courts

Civil courts in Cyprus have jurisdiction to issue interim orders in support and/or in aid of the following proceedings:

  • Judicial proceedings pending before Cyprus courts.
  • Arbitration proceedings pending in Cyprus.
  • Judicial proceedings pending before national courts of any EU member state (excluding Denmark).
  • International commercial arbitration proceedings to be filed or pending in any state (EU and non-EU).

Freezing orders (Mareva injunctions)

Freezing orders over assets in any part of the world can be issued on a successful application, including both tangible (immovable property only if situated in Cyprus) and intangible assets (funds, deposits, shares, and goods). 

The Cypriot legal order has incorporated the power of the courts to issue freezing orders to protect assets in risk of alienation, or to preserve a particular status quo pending the final and conclusive determination of the relevant proceedings.

The Supreme Court emphatically confirmed in 2007 that the courts of Cyprus can issue freezing orders with worldwide effect, stating that (Seamark Consultancy Services Limited v Joseph P Lasala et al (2007) 1 ΑΑΔ 162):

"It is apparent that by virtue of Section 32 of Law 14/60...having regard to the modern changes people make to their transactions, the court at first instance had the opportunity to grant the interim orders in question pursuant to which the assets of the appellants outside of the jurisdiction were frozen.

It is therefore obvious that by virtue of section 32 of Law 14/60...the court of first instance had the right, in this case, to make interim orders that also freeze assets of the appellants outside of the jurisdiction.

With the breadth of Section 32 of Law 14/60, as interpreted in the case of Κitalides (above), we decide that there was no obstacle whatsoever for the court of first instance to extend the Mareva type order that it issued to assets outside of the jurisdiction. We note that in Section 32 there is no restriction whatsoever, apart from the three preconditions".

Injunctions preventing acts or events from taking place

Cyprus courts can issue interim orders preventing various acts or events, for example the implementation of corporate resolutions and the convening of annual general meetings (or extraordinary general meetings) of companies.

These types of interim orders are often issued, without limitation, in the context of shareholders' disputes or derivative actions.

Discovery and tracing orders (Norwich Pharmacal orders)

Cyprus courts have jurisdiction to issue discovery orders under both:

  • Section 32 of the Courts of Justice Law 14/1960. This empowers a court to grant an injunction in all cases in which appears to the court to be just and convenient to do so.
  • Section 29(1)(c) of the Courts of Justice Law, which requires courts to apply the principles of equity.

In the context of applications for discovery or tracing of assets, Cyprus courts can issue orders towards:

  • Disclosure on oath by a respondent of the location and value of specified assets.
  • Tracing purposes, namely leading to the disclosure of information and documents regarding assets deprived or stolen from the applicant, to enable the person having suffered harm to identify and pursue proceedings against the real person committing the tort (tortfeasor).

In addition to satisfying the requirements imposed under section 32 of the Courts of Justice Law, a litigant applying to the court for a discovery order must satisfy the court of all the following:

  • A wrong has been carried out to the detriment of the applicant by an ultimate tortfeasor;
  • The applicant intends to commence proceedings against the ultimate tortfeasor;
  • A discovery order should be issued to assist the applicant in:

    • pleading and proving his claim;
    • identifying other wrongdoers; and
    • tracing alienated or stolen assets.
  • The person against whom the discovery order will be issued has been, innocently or not, involved with the wrongdoing against the injured party and is able, or likely to be able, to provide the requested information or documentation; and
  • There are no alternative means of obtaining the information or documentation sought by the applicant, other than issuing the order.

Appointment of interim receiver or administrator

In the appropriate circumstances, Cypriot courts can be seized and have jurisdiction to issue an order to appoint an interim receiver or administrator of assets, in the form of ancillary relief to support a protective regime imposed by a freezing order or other interim order. 

In issuing this order, the court will instruct the applicant to secure by bank guarantee the fees of the receiver to be appointed, in addition to counter-security needed to secure the losses of the respondent if the order is later reversed. The latter is a common requirement for all interim orders issued by a Cyprus court. 

The court will further stipulate in the order the powers, duties and rights of the interim receiver. On a number of occasions the receiver will be able to exercise voting rights in holding companies, to protect assets held by their subsidiaries.

Chabra orders

Chabra interim orders are injunctions issued by Cyprus courts against a defendant other than the main defendant, where there are reasonable grounds to believe that this co-defendant is in possession or control of assets to which the principal defendant is beneficially entitled. This is an exceptional order granted to prevent subsequent losses to the claimant applying for the order. 

Based on the homonymous English case (TSB Private Bank International v Chabra [1992] 1 WLR 231), a Chabra injunction is essentially a freezing order directed to a party against which the claimant does not have a substantive cause of action, made to enforce a judgment (or an anticipated judgment) against a party against which the claimant does have a substantive cause of action.

The rationale for such orders is that since the principal defendant controls a third party, it indirectly controls the assets of that third party. Therefore such assets can be considered as being the principal defendant's assets, and therefore subject to freezing.

A further case confirmed the principle that a freezing order can be obtained against the assets of a non-cause of action defendant, once it is established that such defendant is controlled directly or indirectly by the principal defendant (JSC VTB Bank v (1) Pavel Valerjevich Skurikhin and others [2014] EWHC 271).

If the court is satisfied on a prima facie basis that such assets are in the possession or control of the co-defendant, a Chabra Order can be issued freezing or blocking the assets in the hands of the co-defendant as ancillary and incidental to the main claim against the principal defendant, despite there being no direct cause of action against such co-defendant.

Search orders (Anton Piller orders)

Anton Piller orders are interim orders issued by Cyprus courts. They order a party to admit another party to the former party's premises, for the purpose of preserving evidence or property which is or may become the subject matter of the main proceedings.

Anton Piller orders can be claimed by a party to:

  • Allow this party to discover and preserve evidence against the defendant, which is in the possession of the defendant and is likely to be concealed or destroyed by the defendant.
  • Identify and obtain evidence against others who have been involved with the principal tortfeasor in the tortious activities.
  • Prevent the defendant from warning others to destroy or conceal evidence.
  • Reveal further harm and damage to the applicant.

Interim orders in aid and/or support of arbitration and other proceedings

Cyprus courts have jurisdiction to grant interim orders in aid and/or in support of international commercial arbitration proceedings conducted or to be conducted in Cyprus or overseas, whether in the EU or non-EU jurisdictions. Applying for such orders can be pursued on an ex-parte basis, provided the element of urgency exists in the facts of the case.

Cypriot courts have jurisdiction to issue interim orders in support and/or in aid of the following proceedings:

  • Judicial proceedings pending before Cyprus courts.
  • Arbitration proceedings pending in Cyprus.
  • Judicial proceedings pending before national courts of any EU member state (excluding Denmark).
  • International commercial arbitration proceedings to be filed or pending in any state (EU and non-EU).

With respect to judicial proceedings in another EU member state, Cyprus courts can issue at any time an interim order in aid and/or in support of court proceedings pending before the courts of an EU member state (Article 31, Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) (Brussels Regulation). 

The Brussels Regulation has been recast by Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (Recast Brussels Regulation), applicable as of 10 January 2015.

The Recast Brussels Regulation clarifies that arbitration is absolutely excluded from its ambit. As such, a Cyprus court being seized over a dispute which may be subject to arbitration will no longer bar another member state court from exercising jurisdiction to address the question of the validity of the arbitration agreement and to refer the parties to arbitration. In addition, the revised Brussels Regulation sets out in its recital the primacy of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, which Cyprus has ratified as of 1980.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Soteris Flourentzos & Associates LLC
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Soteris Flourentzos & Associates LLC
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions