General Principles – Interim relief issued by arbitral tribunal
Granting of injunction restraining companies or individuals involved in arbitral proceedings from disposing of their assets, in order to ensure that a successful party will not be frustrated in its attempt to enforce the final arbitral award in its favour, it is commonly used in arbitral proceedings.
The Arbitration Law, Cap. 4, as it is amended (the "Cap. 4") and the International Commercial Arbitration Law 101/1987, as it is amended (the "Law 101/1987") provide that an arbitral tribunal may grant interim relief against any party with regard to the subject matter of the dispute, without any assistance of the Cyprus Courts. It is of utmost importance to note that, under Law 101/1987 and Cap.4, there is no mandatory provision and hence, the parties have the right to agree otherwise, i.e to agree that both parties will not have the right to request any interim relief by the arbitral tribunal. If the parties agreed otherwise, not to apply for an interim relief before the arbitral tribunal, the arbitral tribunal will not have the power to grant any interim relief. In this case, the parties may proceed with an application for interim relief before Cypriot Courts.
The arbitral tribunals powers are not unlimited. They may order freezing orders, disclosure orders and anti-suit orders. However, it should be noted that an arbitral tribunal cannot issue at interim stage any Chabra and Anton Piller orders. Furthermore, an arbitral tribunal cannot issue an interim application for security for costs for the arbitration proceedings, unless this remedy is available under the rules chosen and adopted by the parties.
Finally, if an interim relief is granted by the arbitral tribunal, the latter may request security and/or guarantees from the applicant.
Procedure for the issuance of interim relief by the arbitral tribunal
Contrary to what is available before Cypriot Courts, the interim application requesting by the arbitral tribunal an interim relief is usually filed by summons (i.e with service of the application to the other party) rather than ex-parte (without notice to the other party). And this is because the Law 101/1987 expressly provides that each party shall be given a full opportunity of presenting its case.
Therefore, an interim relief in most of the cases is granted by the arbitral tribunal on by summons application.
General Principles – Interim relief issued by Cypriot Court in aid of arbitration
Cyprus Arbitration proceedings
In international arbitrations, the court has the power to order the issuance of protective measures at any time either before the initiation of the arbitration proceedings or during them, which are considered in support of (in aid of) and are issued in parallel with the arbitration proceedings. Additionally, interim measures in support of the arbitration proceedings can also be issued under the Recast Brussels Regulation (Regulation (EU) 1215 /2012).
On the other hand, in domestic arbitration, the Cypriot Courts, without prejudice to the arbitrators' abilities to issue orders, may grant orders in support of the arbitration proceedings, regarding various issues which are listed in Cap.4 and include the following:
- Set aside of an interim relief granted by the arbitral tribunal.
- Security of costs.
- Discovery of documents and interrogatories.
- Taking and preserving evidence.
- Maintenance, storage or sale of any goods which are the subject matter of the arbitration.
- Securing the amount of the dispute.
- Detention, preservation or inspection of any property or thing which is the subject of the arbitration.
- Other interim relief or appointment of a receiver.
Foreign arbitration proceedings
The Cypriot Courts may have jurisdiction to grant interim relief in support of foreign arbitration proceedings. In a number of cases, the Cypriot Courts, have granted interim relief in support of anticipated or ongoing foreign arbitration proceedings. It should be noted that, under the Law 101/1987, the Cypriot Courts are only empowered to order preservatory measures (i.e freezing orders).
Procedure for the issuance of interim relief by the Courts in aid of arbitration
As explained above, the Cypriot Courts have the power to grant interim relief in support of arbitration proceedings, either in Cyprus or abroad, so as to ensure that a successful party will not be frustrated in its attempt to enforce an award in its favour.
An applicant requesting interim relief must satisfy before the Court the specific requirements as are stipulated in the Courts of Justice Law, L.14/1960 as well as case law of the Supreme Court. Particularly, please note that for the purposes of an interim application the applicant must proof (i) the existence of a cause of action; (ii) that there is a visible chance of success; (iii) difficulty or impossibility to do complete justice at a later stage; and (iv) that the issuance of the injunction is just and/or convenient. It must be noted that, if the application is made ex-parte, the Court must be satisfied that there is a matter of "urgency". In this case the Court must be provided by the applicant with sufficient proof that it is a matter of urgency the interim relief to be granted ex-parte because if the interim relief is not issued ex-parte, the adjudication of the action at a later stage will have no effect.
Since an injunction cannot exist as an independent process under Cyprus law, an application for an injunction must be made within the context of an underlying action – i.e in the form of a general application for recognition and enforcement of an arbitration award or as an interim measure within the context of an application in aid of a dispute to be referred to arbitration or a pending arbitration, or as an interim measure in an action.
Furthermore, the application must be supported by an affidavit stating the facts of the case and showing that the application meets the criteria noted above.
Anti-suit and anti-arbitration injunctions
Anti-suit and anti-arbitration injunctions are generally available and enforceable in Cyprus. In these cases however an injunction granted either by Cypriot Court or by an arbitral tribunal, it will be granted against the parties, not against a court or arbitral tribunal. Nevertheless, the effect of such an injunction is that the procedure before the Court or arbitral tribunal must be ceased.
It is noted that, Courts in EU member states are effectively precluded from granting?anti-suit?injunctions restraining the pursuit of Court proceedings commenced in another member state in breach of an?arbitration?clause. On the other hand, an anti-suit injunction relating to court procedures pending before the courts of an EU member state can be issued by a Cyprus arbitral tribunal.
An anti-suit injunction can be issued by a Cypriot Court to stop court procedures pending before courts of third countries.
The Cyprus Courts have the power to grant anti-arbitration injunctions in foreign arbitral proceedings in exceptional circumstances.
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.
