Cyprus: Asset Tracing In Cyprus

Last Updated: 27 July 2015
Article by Soteris Flourentzos

Even in cases in which the identity of the wrongdoer or the whereabouts of the misappropriated property is unknown, there are tools available for recovery of property, or proceeds of property, which have been misappropriated from a Cyprus company or a company managed and controlled from and in Cyprus,.

Tracing consists of the rules developed by common law to deal with situations where assets have been misappropriated and the wrongdoer is not in a position to compensate, or money compensation is not adequate. In Foskett v McKeown [2001] 1 AC 102, the House of Lords explained that "tracing" is the process of identifying a new asset as the substitute for the old. In other words, tracing identifies the traceable proceeds of the plaintiff's property, enabling a plaintiff to substitute the traceable proceeds of the original asset as the subject matter of the claim.

Asset Tracing Tools

The remedies available to victims whose assets have been misappropriated include: Norwich Parmacal orders, Bankers Trust orders, Anton-Pillar orders, Chambra orders, and the appointment of Interim Receivers. These interim relief orders are mostly done by way of ex parte applications, provided that the plaintiff can satisfy the Court that there is urgency for the ex parte issue of such an order, e.g. further alienation of the assets in question.

Obtaining Information through Norwich Parmacal & Bankers Trust Orders

Disclosure orders constitute a very powerful weapon for the tracking down and recovery of assets. This remedy is often made to Norwich Pharmacal relief, and it is available before action against third parties who have become involved in or facilitated wrongdoing by the intended defendant, however innocent their involvement may be.

The information sought must be relevant to and necessary for the plaintiff to pursue the wrongdoers. These orders are relevant in Cyprus and are frequently used to obtain information from corporate service providers relating to companies which they administer.

Cyprus Courts frequently issue also Bankers Trust orders, which is a remedy available against third parties in circumstances where a prima facie case of fraud or breach of trust has been made out and the information is required to recover, trace, or preserve assets
that are the subject of a proprietary claim.

This remedy is usually directed against the bank, at which the wrongdoers had or have their accounts, to provide information which might ordinarily be protected by the privilege of bankers' secrecy or other duty of confidentiality. In Bankers Trust v Shapira [1980] 1 WLR 1274, the order was granted in relation to bank records and was ancillary to the applicant's right to trace the missing monies. The applicant had no right against the bank itself.

Bankers Trust orders are similar to Norwich Pharmacal orders except that: (a) there is no requirement to prove any involvement in the alleged wrongdoing by the respondent; and (b) the remedy is only available where the plaintiff is tracing assets that he claims belong to him but have been taken by the defendant.

In order for an application for Bankers Trust relief to be successful, there must be strong evidence of fraud. Therefore, the applicant must be able to demonstrate that there is a good ground for thinking that the money is his money, and that there is an immediate danger of dissipation of assets.

Gagging Orders

Cyprus courts have an inherent jurisdiction to grant gagging orders to restrain a respondent against whom an ex parte disclosure order is made from communicating with the intended defendant regarding the disclosure order.

This relief is generally granted in conjunction with Norwich Pharmacal and Bankers Trust orders. Any breach of a gagging order may result in contempt proceedings.

Anton Pillar Orders

Anton Pillar orders are effectively search orders allowing persons to enter the respondent's premises to search for and remove property and preserve it as evidence pending trial. Anton Piller Search Orders may be pursued by a party so as to:-

  1. allow this party him to discover and preserve evidence against the defendant which is in the possession of the defendant and it is likely to be concealed or destroyed by the latter;
  2. identify and to obtain evidence against others who have been involved with the principal tortfeasor in the tortuous activities;
  3. prevent the defendant from warning others to destroy or conceal evidence; or
  4. unveil further ham and damage to the applicant.

Application for an Anton Pillar order is made ex parte. Due to the draconian type of the remedy, such an order is only granted where absolutely necessary and the court will ensure that the order contains sufficient safeguards to protect the person on whom the order is to be served, such as the appointment of independent lawyers to supervise the search and to specify the limits on the parameters of the search.

Securing Assets and Proceeds

Cyprus Courts have the power to grant an interim injunction to preserve assets. This enables the plaintiff to secure the assets to prevent them from being dissipated in any way pending the outcome of substantive proceedings. The application for such an order may be made ex parte at the same time as the filing of an action.

To succeed in an application for a freezing injunction (or often referred to as a Mareva injunction), the applicant must be able to demonstrate that: (i) he has a good arguable case against the defendant, (ii) the refusal of an injunction would involve a real risk that a judgment in favour of the applicant would go unsatisfied, and (iii) it is just and convenient for the injunction to be granted.

Nevertheless, as a general principle, a Mareva injunction ought not to interfere with the ordinary course of business of the defendant. It is not intended to give the plaintiff security in advance of judgment but merely to prevent the defendant from defeating the plaintiff's chances of recovery by dissipating or secreting away assets.

In determining whether it is just and convenient to grant the injunction, the court will consider factors such as the conduct of the plaintiff, the rights of any third party who may be affected and the potential hardship to the defendant.

When a freezing injunction is granted, the court will almost always require the applicant to give a cross undertaking in damages. This is intended to compensate the respondent if it is later found that the interim relief should not have been granted and the injunction has caused the respondent loss. Such an undertaking is enforced by an inquiry into what loss the respondent has suffered as a result of the injunction.

Appointment of Interim Receivers

Under Section 32 of the Courts Law 14/1960 (as amended), Cyprus Court have the power to appoint interim receivers and managers with mandate to secure and protect the relevant assets, on behalf of the party applying to appoint them, pending trial.

In order to obtain such relief, the court will have to be satisfied that the circumstances to justify a freezing order exist and that the additional protections afforded by a receivership order and any potential prejudice to the respondent can be justified in the circumstances of the case.

An interim receivership may also be granted to supplement the powers of a freezing injunction if it can be shown that the injunction is not providing adequate protection on its own.

Asset Tracing in Aid and/or in Support of Court Proceedings Pending Before Courts of Other Members States

Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, empowers the Cyprus Courts to issue any type of interim relief in aid and/or in support of proceedings to be commenced or pending before Courts of other Member States of the European Union, except Denmark.

The granting of interim measures of protection under the Regulation, is conditional on inter alia, the existence of a real connecting link, between the subject-matter of the measures sought, and the territorial jurisdiction of the contracting state of the Court, before which those measures are sought.

Therefore, all the above asset tracing tools are available in aid and/or support of proceedings to be commenced or pending before Courts of other Member States of the European Union

Asset Tracing in Aid and/or in Support of International Arbitration Proceedings

Pursuant to Section 9 of the International Commercial Arbitration Law of Cyprus, the Cyprus Courts have jurisdiction to grant interim measures of protection in aid and/or in support of international commercial arbitrations.

As such, all the above asset tracing tools are available in aid and/or support of International Arbitration (e.g. before the London Commercial International Arbitration).

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
 
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
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