A. Introduction
It is not uncommon for high-value commercial disputes to give rise to jurisdictional issues, particularly where they involve multiple defendants domiciled in different jurisdictions or where one or more parties have entered into agreements containing jurisdiction clauses. The reason is straightforward: if the Court determines that it lacks jurisdiction to hear the matter, the proceedings may effectively come to an end at the outset. Accordingly, the issue of jurisdiction must be determined by the Court as a preliminary matter and at the earliest stage of proceedings.
Jurisdictional challenges therefore arise frequently in cross-border litigation, particularly in high-value commercial disputes where substantial sums are at stake. Against this background, the recent interim judgment of the Limassol District Court, dated 24 June 2026, in Z.Y. et al. v. S.F. Ltd. et al., Civil Action No. 1346/2025, provides useful guidance on a number of important jurisdictional issues and is consistent with the principle articulated in Dolphin Shipping Co Ltd and Another v Cantieri Navali Ruiniti S.P.A. (1984) 1 C.L.R. 853, namely that “a plaintiff should not lightly be deprived of the right to bring an action before the Cyprus Courts where the jurisdiction of the Cyprus Court is properly established.”
B. Facts of the Case
In a nutshell, the claim concerns, inter alia, allegations of fraudulent and conspiratorial conduct on the part of the Defendants arising from the alleged embezzlement of approximately US$8.5 million. At the center of the dispute are two investment companies operating under the same trade name, i.e. ‘Squared Financial’. One was based and operated through Cyprus and, at the material time, held a CySEC license. The other was based and licensed in the Seychelles but, according to the Claimants, in reality operated through the Cyprus offices and infrastructure of the Cyprus entity.
Although the Plaintiffs had entered into an agreement with the Seychelles entity for the provision of investment services, which agreement contained a jurisdiction clause in favor of the courts of the Seychelles, they commenced proceedings before the Limassol District Court alleging fraud and conspiracy. They also applied for, and obtained ex parte, a freezing injunction against the Defendants in the amount of US$8.5 million.
The Defendants challenged the jurisdiction of the Cyprus courts, arguing, among other things, that the claim had been framed in fraud and conspiracy in an attempt to confer jurisdiction on the Cypriot courts, whereas, in substance, the dispute was contractual in nature and arose from the relationship between the Plaintiffs and the Seychelles entity. They further contended that, in light of the exclusive jurisdiction clause in favor of the Seychelles courts, the Cyprus courts lacked jurisdiction to hear the dispute. In addition, the Defendants argued that, in any event, Cyprus was not the appropriate forum for the determination of the dispute and that service of the proceedings was defective.
The Plaintiffs, on the other hand, argued that: (i) the claim is founded on fraud, deceit and conspiracy rather than on contract; (ii) the material facts giving rise to the claim, including the relevant representations and meetings with key personnel of the investment firms, occurred in Cyprus; (iii) two of the principal Defendants are situated in Cyprus; and (iv) the Seychelles entity has no real substance and operates as a mere shell company whose true operational presence has, in reality, always been in Cyprus.
C. Legal Analysis
As the new Cyprus CPR have been in force only since 2023, the body of local case law remains necessarily limited. Accordingly, the Court has, where appropriate, sought guidance on various procedural and legal issues from the established body of English case law. At the outset of its judgment, the Court emphasized that, in accordance with the spirit of the new CPR, questions concerning the Court’s jurisdiction, including the Defendant’s right to challenge such jurisdiction, are to be determined as a matter of priority. Then the court with reference to specific rules under the CPR1 and English caselaw,2 outlined the proper procedure to be followed by a Defendant seeking to challenge the Court’s jurisdiction without submitting to it.
- Request to strike out the Claim in its entirety
The Court next considered the request to set aside the Claim in its entirety on the ground that the Claimants had no cause of action. The Judge observed, once again, that the relevant provisions of the CPR3 had not yet been the subject of authoritative interpretation by the Court of Appeal. The Court followed Partco Group Ltd v. Wragg4 where it was pointed out that only unwinnable cases, the continuation of which would serve only to waste resources, should be struck out. The Court further clarified that, where there are disputed facts requiring determination, or where a point of law arises which cannot be answered clearly, the matter should be left for determination at trial.5
- Request to set aside service of the proceedings
The court, with reference to the facts of the case, first discussed the circumstances under which an order for service outside the jurisdiction can be granted6 and further explained that, in applications for leave to serve a Claim Form out of the jurisdiction (i) it must be satisfied that there is a serious issue to be tried (ii) that the Claimant has a good arguable case (iii) that the claim falls within one of the categories in respect of which service out of the jurisdiction is permitted under CPR Part 6.8, and (iv) that Cyprus is the appropriate forum for the determination of the claim.7
The Judge cited ‘Blackstone Civil Practice’2018, para. 16.43, p. 385, where it was stated:
“whether there is a real (as opposed to a fanciful) prospect of success (e.g. Carvill America Inc v Camperdown UK Ltd [2005] EWCA Civ. 645, 2 Lloyd’s Rep 457). Where a question of law goes to the existence of jurisdiction, the court will normally decide it, rather than treating it as a question of whether there is a good arguable case, unless the facts are not clear (on the basis of the pleaded case) or the point of law is exceptionally difficult and doubtful (Lungowe v Veranda Resources plc [2017] EWCA Civ. 1528, LTL 02/11/2017).
The test for establishing a good arguable case “has been held to mean that one side has a much better argument than the other (Canada Trust Co v. Stolzenberg (No.2) [1998] 1 WLR 547, [2002] 1 AC; Bols Distilleries BV v Superior Yacht Services Ltd [2006] UKPC 45, [2007] 1 WLR 12).”
The Court next considered the principal arguments advanced by both sides, as briefly outlined in Part B above. The Defendants’ position was that there was a duly executed agreement containing a jurisdiction clause in favor of the courts of the Seychelles. The Claimants, on the other hand, argued that their claim was not contractual in nature, but was instead founded on the civil torts of fraud, deceit, misrepresentation and conspiracy allegedly committed by the Defendants within the jurisdiction of the court, with the intention of defrauding the Claimants.
The Court concluded that the Claimants had established a sufficient legal and factual basis for their claims, while emphasising that, at this early stage of the proceedings, it would be premature and inappropriate for the Court to undertake an assessment of disputed facts or determine the competing arguments advanced by the parties, pointing out that such issues could only properly be determined at the main trial (Digimed Communications Ltd v. 1. Matra Marconi Space UK Ltd κ.α. (2010) 1Α C.L.R. 625).
- The issue of jurisdiction in a nutshell
The Court noted the international element of the dispute and went on to consider the principles governing international jurisdiction under Regulation (EU) No. 1215/2012, given that two of the four Defendants are resident in Cyprus, the third appears to be resident in Monaco, and the fourth is an entity incorporated in the Seychelles.
As regards the Defendant domiciled in Cyprus, the Court noted that the principle of general jurisdiction under Article 4(1) of Regulation (EU) No. 1215/2012 was applicable, citing, first, Owusu v. Jackson8 and, subsequently, Aerocandia Aviation Services Cy Ltd v. Panayiotis Spanos,9 where it was stated:
“The above Regulation, which governs international jurisdiction within the European Union, provides in Article 4(1), as a general rule, that persons domiciled in a Member State of the Union shall be sued in the courts of that Member State, regardless of their nationality.”
As regards Defendant 3, who is resident in Monaco, the Court noted that its international jurisdiction had to be determined by reference to the established principles of domestic law. The Court found that it had jurisdiction over Defendant 3 pursuant to section 21(1) of the Courts of Justice Law (Law 14/60), on the basis that the alleged tortious acts had taken place in Cyprus. In reaching this conclusion, the Court also referred to Blackstone, para. 16.53, p. 391, where it is stated, inter alia:
“Jurisdiction may be founded either on the basis of damage being suffered in England or through the tortious act being committed in England. It is sufficient if damage has been or will be sustained, within the jurisdiction.”
- Forum (non) conveniens
As regards both Defendants 3 and 4, neither of whom is domiciled in Cyprus, the Court also rejected their argument that the courts of the Seychelles were the more appropriate forum to hear the dispute. Following the principles10 established in Spiliada Maritime Corporation v Cansulex Ltd,11 the Court emphasised that the defendants failed to demonstrate that the alternative forum is clearly or distinctly more appropriate and that justice can be obtained there. The Court particularly emphasised that the mere identification of another potentially appropriate forum does not, in itself, justify a stay of proceedings.
D. Conclusion
Taking into consideration all the facts and circumstances of the matter, the decision underscores the important role of the Courts in determining challenges to jurisdiction. Defendants may raise a range of arguments in support of an application challenging the jurisdiction of the Court. However, the issue of jurisdiction is not always black and white, and the mere existence of a jurisdiction clause in an agreement does not necessarily determine the issue conclusively where other relevant legal and factual considerations arise. Ultimately, each case turns on its own particular facts and circumstances, and the Court must determine the jurisdictional issues accordingly.
Footnotes
1 CPR, Part 12.
2 See Hoddinot v. Persimmon Homes (Wessex) Ltd [2008] 1 WRL 806 and Burns – Anderson Independent Network Plc v. Wheeler [2005] EWHC 575.
3 CPR, Part 23(4) and (5)
4 [2002] EWCA Civ. 594
5 see Hughes v Colin Richards & Co [2004] EWCA Civ. 266 και D v East Berkshire Community Health NHS Trust [2005] UKHL 23, [2005] AC 373.
6 CPR, Part 6.8
7 See Altimo Holdings and Investments Ltd v. Kyrgyz Mobil Tel Ltd [2001] UKPC 7, [2012] 1 WLR 1804.
8 Case C - 281/02
9 Civil Appeal 210/21, dd 9/4/25
10 i.e. availability of witnesses, costs, evidence etc.
11 [1987] AC 460
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.
