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International Civil Fraud - Cyprus

Contributed by Patrikios Pavlou & Associates LLC
07 February, 2014


Type of legal system

The Cyprus legal system is largely based on common law. Cyprus, as a former British colony, inherited common law doctrines and principles which were codified into legislation when the Republic of Cyprus was established in 1960. The Cyprus legal system benefits from the certainty of a codified law and the flexibility of well-developed common law and equity principles.

English case law and principles are widely applied and provide valuable guidance to the Cyprus courts. This stems statutorily from section 29(1)(c) of the Courts of Justice Law 1960 (Courts of Justice Law) which provides that common law is generally applied in Cyprus in the absence of other legislative provisions.

 

Statute

Fraud can arise under statute as:

  • a tort (civil wrong) under the Civil Wrongs Law, Cap. 148. Section 36 of the Civil Wrongs Law essentially codifies English common law principles relating to tort. The law is to be interpreted according to the legal principles that prevail in England, and the terms in law will be given the same meaning as in English law (section 2, Civil Wrongs Law); and
  • contractual fraud, under the Contracts Law, Cap. 149. Contractual fraud is covered in section 17 of the Contracts Law. Section 2 of the Contracts Law mirrors the interpretation guidelines found in the Civil Wrongs Law (see above).

Statutory provisions relating to fraud are also found in the Companies Law, Cap. 113, which mirrors the English Companies Act 1948, particularly in section 180 relating to directors' fiduciary duties.

 

Case law

Cypriot case law has stressed repeatedly that the codification of tort and contract law is not exhaustive in relation to fraud. Therefore Cyprus courts can look to English case law for guidance, with Cyprus cases prevailing if available.

For example other instances of fraud, such as the tort of conspiracy to defraud in the English case Scott v Metropolitan Police Commissioner [1975] AC 910,are available under common law. Therefore, any type of civil fraud recognised by common law is part of Cyprus law.

The nature of Cyprus fraud was examined in Pyrgas v Stavridou (1969) 1 CLR 332. The court stated that fraud, under section 36 of the Civil Wrongs Law, is one of a species of fraud and fraudulent misrepresentation, also known as actual fraud.

A Cyprus court has affirmed that the Civil Wrongs Law does not cover civil wrongs exhaustively (Vassiliou v Vassiliou (XVI CLR 70–101)). Therefore it does not exclude common law claims for civil wrongs that are not contained in the Civil Wrongs Law.

This was further elaborated in Paikkos v Kontemeniotis (1989) 1 CLR 50, where the court stated that common law principles apply as long as:

  • they are not contrary to the Constitution of Cyprus;
  • they are suitable for the special circumstances of Cyprus; and
  • they are not contrary to any provision of any law of Cyprus, where that law has the obvious aim of diverting from the common law.
  • The main elements of cause of action in Cyprus based on civil fraud

 

Tort

The tort of fraud consists of a false representation made with the knowledge that it is false, with the intention that the person deceived will act on this representation and suffer damage as a result (section 36, Civil Wrongs Law).

The main components of civil fraud under tort law are:

  • a false representation of a fact or event;
  • knowledge by the person making the representation that it was false or he had no true conviction that the representation was true;
  • intention that the person to whom the representation was addressed would act on the representation;
  • the person acts on this representation; and
  • the person suffers damage.

 

Contractual fraud

The definition of contractual fraud includes any of the following actions made with the intention of deceiving the other contracting party, or manipulating him to enter into a contract (section 17, Contracts Law):

  • the representation of a false fact as being true by a person who has no belief in it being true;
  • actively concealing a fact by a person who has knowledge of that fact or believes in it;
  • a promise which was given without any intention of it being fulfilled;
  • any other deceitful action with the aim to deceive; or
  • any act or omission which is specifically defined by the law as fraudulent.

The Supreme Court has asserted that it is also necessary to prove that the fraudulent representation was made in bad faith(Charalambous v Charalambous (2001) 1 AAD 71).

Mere silence as to the facts which may affect the will of the person about to enter into the contract is not fraud, unless the circumstances are such that the person being silent may be found to be committing a fraud.

  • Remedies available under Cyprus law in relation to civil fraud

There are four main types of remedies available to courts in Cyprus:

  • damages;
  • declarations;
  • special/specific performance; and
  • court orders.

The most common remedy is damages in the form of compensation. Special/specific performance and court orders stem from principles of equity, are discretionary, and are used by the courts when the circumstances are appropriate.

 

Contract

Section 73 of the Contracts Law provides for compensation for damage caused due to breach of contract. It does not allow compensation for remote or indirect damages (see section 4).

The requirements for special/specific performance are contained in section 76(1) of the Contracts Law. The courts can make a specific order to enforce certain aspects of a contract and can also issue declaratory judgments on the request of the claimant. The court will grant remedies, following common law and equity principles, based on the principle of restitution (see section 4).

The contract can be rescinded if any element of fraud is found in the contract and, as such, it is not necessary that the innocent party's actions were made exclusively due to the fraudulent representation. In this case the parties are relieved from their obligations under the contract, and the party that gained any benefit from the contract must return this benefit or compensate the other party from whom that benefit was obtained (section 59, Contracts Law). However, punitive damages are not available for contractual fraud.

 

Tort

In tort, the person defrauded is to be compensated to restore him into his previous position as if the fraud had not occurred. Courts can use restitution (see section 4) and equitable tracing to aid restitution and claim the fruits that result from the fraud.

Damages for tort intend to put the claimant in the position he would have been in had the fraud not been committed (see Section 4). Cyprus courts can award damages to allow the claimant to recover and be compensated for all loss and damage suffered due to the tort.

Courts can also award punitive or exemplary damages for a fraud committed in tort, when appropriate, to punish a defendant or deter similar future behaviour. However, punitive or exemplary damages are rarely awarded.

  • Damages: basis of calculation

 

General

Tortious and contractual damages differ but they both intend to compensate the claimant for the loss or damage suffered. The basis for compensation is the actual loss or damage, and may also include any foreseeable loss. In general, all damage that can be reasonably linked to the fraud can be recovered.

There are two main principles regarding compensation as a remedy for fraud in both tort and contract law:

  • according to the restitutionary principle, the innocent party should be adequately compensated. This means that he should return to the position he was prior to the contract, or be put in the position he would have been in if the contract had been properly performed. This may not always be applicable or possible;
  • if the restitutionary principle is impractical, compensation can be calculated on the basis of the monetary amount invested in the contract. This can be calculated in a number of ways. In the English case Anglia Television Ltd v Reed [1971] 3 All ER 690, the court could not determine the profit from the participation of an actor in a television series, so it considered how much the channel had spent for that actor to be in the series. Alternatively, compensation can be calculated based on the extent that the other party has profited from the contract. In the English case Attorney General v Blake [2000] UKHL 45, the court ordered all proceeds from a published book written by a spy to be paid as compensation for breach of a confidentiality agreement.

In principle, the Supreme Court does not intervene in an award of damages granted by a first instance court, unless the Supreme Court believes that the first instance court directed itself wrongly on the principles for deciding the award, or if the award itself is excessive.

 

Tort

The Civil Wrongs Law does not specifically provide how the courts should award damages in tort. Damages are calculated on different principles and vary according to the cause of action. Damages for tort intend to put the claimant in the position he would have been in had the fraud not been committed. Cyprus courts can award damages to allow the claimant to recover and be compensated for all loss and damage suffered due to the tort.

Courts can also award punitive or exemplary damages for a fraud committed in tort, when appropriate, to punish a defendant or deter similar future behaviour. However, punitive or exemplary damages are rarely awarded.

 

Contract

In contract law, damages under section 73 of the Contracts Law are designed to put the claimant in the position which he would have been in had the contract not been breached. If a false representation is made, damages intend to put the claimant in the position which he would have been in had the representation been true.

Exemplary or punitive damages are not available for breach of contract. Additionally, the contract can be rescinded to put the parties in the position they were in before entering into it.

Cyprus courts apply several principles that guide them through the calculation of damages. The nature and circumstances of the contract determine the amount of compensation. Moreover, difficulty in calculating the damages cannot be a hindrance to the award of damages. Compensation should be sufficient but not to the extent that it benefits the party more than if the contract had been properly performed.

  • Available interim relief

Interim orders can be issued if the court is convinced that (section 32, Courts of Justice Law):

  • there is a serious issue to be tried;
  • the applicant has a chance of success in his claim; and
  • it will be difficult or impossible to do justice at a later stage if the interim order is not granted.

Orders can be granted ex parte, since an application for interim relief can be made without notice if it is urgent or other special circumstances justify not giving notice to the opponent (section 9(1), Civil Procedure Law, Cap. 6). A court has wide discretion as to what interim measures it can issue.

The courts can, depending on the nature of relief sought, grant any of the following interim relief orders:

  • freezing orders, also known as Mareva injunctions. They are prohibitory injunctions to restrain the respondent from dealing with his assets, to ensure they are not dissipated before judgment. This is to ensure there are sufficient funds to satisfy any later money judgment made by the court;
  • disclosure orders, also known as Norwich Pharmacal orders. They identify wrongdoers and the current location of alienated assets, if unknown. Disclosure will only be ordered by the court if there are sufficient grounds, for example that it is necessary in the interests of justice. A standard form freezing order includes an order against the defendant for disclosure of their assets on affidavit, but may also target third parties who may hold information about assets, such as banks, accountants and lawyers. Disclosure may also be ordered in Cyprus in respect of ancillary proceedings in foreign jurisdictions. Disclosure orders may also be sought against third parties to obtain information to support claims, though this often has to wait until later in the proceedings. Third party disclosure orders permit a court to order discovery from a person against whom the applicant has no cause of action, and who is not a party to the litigation proceedings;
  • search and seizure orders, also known as Anton Piller orders. These are mandatory injunctions to prevent the destruction of key evidence. They can be granted where there is a strong prima facie case, clear evidence that the respondent possesses material evidence that may be destroyed and potential damage to the applicant that is likely to be significant. In Cyprus, the principles of the Anton Piller order were applied and adopted in Re Pelekanos (1989) 1 CLR 178. Given the 'draconian nature' of such an order, it can only be applied to the extent necessary to achieve the purpose for which it is granted;
  • other mandatory orders where appropriate, for example for delivery of possession. However, obtaining these is usually more difficult than obtaining prohibitive orders, and they are usually only granted if necessary to preserve the existing state of affairs or the previous state of affairs; 
  • appointment of a receiver, to preserve an asset that may be taken away or alienated by the respondent or for other purposes, including appointing a receiver in a company with specific powers in exceptional situations;
  • anti-suit injunctions preventing a party from taking steps in other jurisdictions, in cross-border claims and in exceptional cases; and
  • interim relief to support foreign proceedings when fraud claims are raised outside Cyprus, especially in commercial arbitration, and there is a connection to Cyprus rendering the issue of interim orders by a Cyprus court useful for a claimant.
  • Bars to relief for civil fraud
    • Delay

Delay cannot generally be a bar to relief as long as the civil fraud claim is made within the limitation period (see below, Applicable limitation periods). However, in Margarita Christou Pourgouridi v Themidos Vasou Mezou (1994) 1 AAD 201, it was ruled that a six-year delay in bringing an action for trespass over land was a tacit acceptance of the trespass and the claimant was estopped from claiming any damage.

In addition, delay may affect the obtaining of interim relief. The claimant may not be able to prove that it will be difficult or impossible to do justice at a later stage if the interim order is not granted (see section 5). However, the Supreme Court has ruled that delay should not preclude the courts from granting interim relief if there is a risk that the claimant may suffer further damage (Martha Georgiou Ilia Plakidi v Nomisko Developers LTD (2010) 1 AAD 557).

  • (Lack of) good faith

Lack of good faith may act as a bar to equitable relief (see section 3). This concept has been specifically endorsed in Cyprus in cases of ex parte applications for interim relief, under section 9 of the Courts of Justice Law. The Supreme Court has ruled that there is an obligation of full and frank disclosure when the applicant applies for interim relief by an ex parte application. If the applicant fails to fully disclose the material facts, this amounts to lack of good faith, and any interim relief granted at the ex parte stage is dismissed (Demstar Limited ? Zim Israel Navigation Co Limited (1996) 1 CLR 597).

  • Applicable limitation periods

Cypriot law imposes time-barring provisions for all claims and actionable rights (limitation of action periods). It is not possible to analyse all the relevant limitation of action legislation in this article, since it relates to a history of inter-communal disturbances and several pieces of legislation suspending its application.

The most recent legislation is the new Limitation Law (N. 66(I)/2012), which entered into force on 1 July 2012 with respect to limitation periods for actionable rights:

  • section 3 of the Limitation Law provides that the limitation period starts running from the day of completion of the basis of the claim (defined in section 2 as all events that give rise to an actionable right concerning a claim);
  • the Limitation Law stipulates that a general limitation period of six years both for civil wrongs (section 6) and for actions based on contractual claims (section 7) applies. This general limitation period is subject to exceptions that provide for shorter limitation periods, and/or the right to extend the limitation period under certain circumstances.
    • Position of good faith purchaser for value without notice (innocent third parties)

A good faith purchaser for value without notice and generally innocent third parties are recognised and protected in Cyprus. For example the Contracts Law provides that a contract entered into as a result of fraudulent representations is voidable and not void. The Contracts Law is interpreted in accordance with the interpretation rules applicable in England (section 2, Contracts Law). As such, a voidable contract would not affect the rights acquired by an innocent third party in a subsequent transaction.

  • Aspects of pleading fraud in Cyprus
    • Lifting the corporate veil

A fundamental principle of company law in Cyprus, stemming from English common law, is that a company has a separate legal personality from its members (Salomon v A Salomon & Co Ltd [1897] AC 22). As such, the company's shareholders cannot be held personally liable for its debts and/or liabilities. However, there are circumstances where a court will lift or pierce the corporate veil and look beyond the separate personality of the company to its shareholders or directors, to establish liability.

One such circumstance and a statutory exception to the above principles is section 311 of the Companies Law, which covers fraudulent trading. A shareholder can be personally liable for the debts of the company if, in the course of the winding up of a company, it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, and the shareholder was knowingly party to the carrying on of the business in this way (section 311, Companies Law).

The intention to defraud creditors is ascertained by a subjective test. In situations where the directors of the company know that the creditors are not going to be paid, but the company still carries on with business activities resulting in the company incurring debts, it can be inferred that business is being carried on with the intention to defraud (Re William C Leitch Brothers Ltd [1932] 2 Ch 71). The references to 'intent to defraud' and 'fraudulent purpose' in section 311 import an element of actual dishonesty for which evidence must be adduced to prove fraud (Re Patrick and Lyon Ltd [1933] Ch 786).

The Salomon principle (see above) cannot be used as an engine of fraud, or to avoid pre-existing legal obligations (Gilford Motor Company Ltd. v Horne [1933] Ch. 935). The English Court of Appeal in this case held that the company was a mere façade or sham, formed to disguise Horne's breach.

In Kensington International Ltd v Congo [2005] EWHC 2684 (Comm), the court held that various transactions and company structures were a sham or facade with no legal substance, and were simply set up to defeat claims of creditors against the Republic of Congo. The court pierced the corporate veil in relation to the particular transactions and structures.

However, a fraudulent activity does not necessarily justify piercing the corporate veil. In Dadourian Group v Simms [2006] EWHC 2973 (Ch), there was no conspiracy to injure the claimant, but a genuine intention that the company would buy equipment under a contract. Therefore, the corporate veil was not lifted. There is an increasing reluctance, evidenced by English court decisions, in relation to lifting the veil in the absence of a sham. The veil will not be lifted simply because it is in the interests of justice to do so. A recent example is the case of VTB Capital plc v Nutritek International Corp [2013] UKSC 5.

  • Settlements/exclusion clauses

A contractual clause purporting to restrict or entirely exclude a person's liability or a legal obligation from arising is termed an exclusion clause. Exclusion clauses found in standard form contracts often attempt to exclude the rights and expectations of the weaker party to a contract. Under Cypriot law, there is no way to limit or exclude liability for fraud through exclusion clauses. 

There are several common law actions that invalidate the effect of exclusion clauses, for example misrepresentation, and special rules for interpreting exclusion clauses in the case of negligent liability. The Unfair Terms in Consumer Contracts Law 1996 provides additional legal protection against exclusion clauses in the case of negligence, but makes no specific reference to fraud.   

Moreover, an express statement made at the time of formation of a contract, which is inconsistent with a written exclusion clause, overrides the effect of the exclusion clause. The contra proferentem rule also allows for the interpretation of an exclusion clause against the party relying on it, when the clause is ambiguous.

In addition, liability for fraud can neither be excluded nor limited before the committing of the fraud, since 'fraud unravels all' (S Pearson & Son Ltd v Dublin Corp [1907] AC 351).

  • Extension of limitation

If fraud is involved in a claim or actionable right, and the defendant's fraud conceals the claimant's right of action, the relevant limitation period is extended (see section 6.3, Applicable limitation periods). The limitation period is suspended until the fraud is discovered by the claimant or could have been discovered by the claimant with reasonable diligence. In addition, the limitation period begins to run if the claimant's agent or any person whose actions bind the claimant discovers the fraud, or the fraud could have been discovered by such persons with reasonable diligence. This is also the case when an action is brought to relieve the claimant from the consequences of a mistake. The limitation period is suspended until that mistake is discovered.

Any deliberate breach of duty in circumstances which would make discovery of fraud especially difficult is equivalent to a deliberate concealment of fact in relation to the breach.

  • Punitive damages

Exemplary or punitive damages are not available for breach of contract (see section 4).

Courts can award punitive or exemplary damages for a fraud committed in tort, when appropriate, to punish a defendant or deter similar future behaviour. However, punitive or exemplary damages are rarely awarded (see Section 4).

In case of fraud, the loss suffered by the claimant need not be a foreseeable consequence of the fraud (Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] 1 BCLC 350). This allows for a greater scope in relation to the recovery of damages.

  • Standard of proof

In civil cases, the principle 'he who asserts must prove' applies. The party making a claim bears the burden of proving the claim in court (Leshi Ippodromion Lefkosias v Andrea Konstantinou (2004) 1 AAD 1580).

The standard of proof required in civil cases before Cypriot courts, as regards the legal and evidential burden, is that of proof on the balance of probabilities, simply meaning that one party has clearer and more convincing evidence in his favour than the other party.

The more serious the allegation, the more compelling the evidence will need to be to satisfy the court on the balance of probabilities. When the allegation in a civil action is that of fraud, which carries significant gravity, more compelling evidence is required to tilt the balance of probabilities, therefore setting a higher standard of proof for civil cases concerning fraud. These assertions are illustrated by Cyprus case law and in principle, fraud is more difficult to prove and the courts seem generally reluctant to conclude that fraud has been committed.

  • Lawyers' duties when pleading fraud

The duties of lawyers as to the exercise of their profession are imposed by the Advocates Law, Cap 2 (Advocates Law) and the Advocates Ethics Code (Code). The Code sets out general provisions and principles which relate among other things to appropriate behaviour, trust, moral integrity and professional privilege. Additionally, the Code highlights the duties of lawyers as to their relationships with clients, judges, other lawyers, and arbitrators. There is no explicit reference to a higher duty on lawyers when pleading fraud in either the Advocates Law or the Code. However, the general duty of lawyers in the Code to handle a case in a fair manner applies.

The Civil Procedure Rules contain detailed provisions for commencing actions in court and the form of written submissions. An action in which fraud is alleged by the claimant must be commenced by a writ of summons, as generally provided by Order 2.1 of the Civil Procedure Rules (Order 2.6(4), Civil Procedure Rules). Summary judgment cannot be obtained in these circumstances. Historically, this rule has developed in relation to instances where the allegations have a moral dimension of a serious nature.

In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default, or undue influence, full particulars of it must be stated in the pleading. In the case of fraud, the alleged fraudulent acts must be specially set out and it must be averred that such acts were done fraudulently (Order 19.5, Civil Procedure Rules). This was repeated in the case of Demetrakis Fakonti v Nikolas Pavlou Brioni (2004) 1 ??D 1404.

It is up to individual lawyers to acknowledge the gravity of an allegation of civil fraud, the damage that it can do to individual reputations and private lives and the higher ethical duty they have in such cases.

  • Basic requirements in relation to issuing proceedings; applying for injunctive or interim relief; or serving proceedings abroad

 

Issuing proceedings

To start civil fraud proceedings, a writ of summons must be filed and sealed at a district court. The writ of summons is filed with the court registry during working hours when it is open to the public, which are usually between 8:30 to 13:00 Monday to Friday.

Two copies of the writ of summons must be served on the defendant after they have been certified by the court registrar as true copies of the original. Service of the writ of summons on the defendant is usually effected by a private bailiff, unless leave for alternative service is obtained from the court.

If the writ of summons or notice of it is to be served abroad, leave of the court must be obtained before it can be filed and sealed by the court registrar, unless the person outside Cyprus is a necessary or proper party to an action properly brought against another person duly served in Cyprus (in this case, leave for serving abroad can be obtained after filing the action) (see below, Serving proceedings abroad). If the action is made through an advocate by a claimant who lives in Cyprus at the time of filing the action, it must be accompanied by a retainer proving the appointment of the advocate.

 

Applying for injunctive or interim relief

Once the action is filed and sealed, the claimant can apply for interim relief from the court where the action was filed. An application for interim relief must be supported by an affidavit and in principle should be made by summons and served on the respondent. However, interim applications are usually urgent or there are other circumstances requiring the claimant to proceed without informing the opponent. In these circumstances, the application can be made ex parte (see section 5). In urgent cases, the advocate can orally request and obtain leave for the application to be heard on the same day or very near to it.

In an ex parte application, one copy of the application attaching the sworn affidavit and relevant exhibits must be filed with the court. The affidavit must be sworn by a person who can positively swear to the facts of the case, or a person who can swear to the best of his knowledge and belief provided he discloses his source of knowledge. If the application is to be served on the other party, two copies of the application, affidavit and exhibits must be served on the respondents after being certified by the court registrar as true copies of the original.

The court on hearing an ex parte application for interim relief can give the following orders (see also section 5):

  • grant the interim relief sought, and direct the application and the interim order to be served on the respondent. The respondent will be given a date by which he can oppose the order and/or the application. The interim relief will remain valid in the meantime. This period usually lasts between one to three months or longer, especially in complex matters requiring lengthy preparation time. The interim relief will remain in force after that, if the court rejects the respondent's application to oppose the interim relief;
  • order the application to be served on the respondent, so that he has the opportunity to oppose it. The application for interim relief will be set for a new date, so that the claimant has sufficient time to serve the application on the respondent. This period usually lasts between one to three months or longer (see above); or
  • reject the application.

If civil fraud claims are made in an EU member state, in a court or arbitral tribunal, interim or injunctive relief can be obtained in Cyprus in support of those proceedings, through Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation). A Cyprus court has confirmed the application of the Brussels Regulation in Cyprus(Hampton Advisory Group S.A. v Bost Ad and others Civil Appeal No. 13/2009, 27 March 2012).

 

Serving proceedings abroad

To serve a writ of summons or a notice of it abroad, leave of the court is required. Leave can be obtained by filing an ex parte application with a Cyprus court, supported by affidavit, showing:

  • that the court has jurisdiction to hear the case;
  • that the claimant has a prima facie good cause of action, showing in what place or country the defendant is or probably may be found; and
  • the mode of service, to satisfy the court that the defendant will receive adequate notice of the proceedings.

One copy of the ex parte application attaching the sworn affidavit and the exhibits must be filed with the court. One copy of the application, affidavit and exhibits must be served on the defendant after being certified by the court registrar as a true copy.

The application for leave to serve abroad will usually be determined within three weeks from the date it is filed. In urgent situations, the claimant's advocate can orally request and obtain leave for the application to be heard on the same day, or very near to it.

Service of the application, the court order and the writ of summons or notice of it is usually effected through the prescribed channel provided in the relevant treaty between Cyprus and the country of the opponent:

  • Service of documents in EU member states is provided for in Council Regulation (EC) No. 1348/2000 of 29 May 2000 on the service in the member states of judicial and extrajudicial documents in civil or commercial matters.
  • Service in non-EU countries is provided where relevant by the bilateral and multilateral treaties Cyprus has entered into with Syria, Russia, Ukraine, Belarus, Georgia, Serbia, Montenegro, Egypt and China. Additionally, Cyprus is a party to the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.
  • Procedure and requirements for enforcing interim injunctions from abroad in Cyprus

 

Statute and international treaties

Foreign injunctions issued in an EU member state, or in a country with which Cyprus has entered into a bilateral treaty or which is a signatory to a multilateral treaty to which Cyprus is a party, can be recognised, registered and enforced in Cyprus through statute, specifically the Recognition of Judgments of Foreign Courts (Recognition, Registration, Execution by Means of Contract) Law 2000 (121(I)/2000).

Injunctions issued in EU member states (and Iceland, Norway and Switzerland, which are covered by the Lugano Conventions 1988 and 2007) are enforced through the Brussels Regulation. The Brussels Regulation also covers ex parte injunctions (Denilauler [1980] ECR 1553 (C-125/79)).

In addition, Cyprus has entered into bilateral treaties that provide for the enforcement of interim injunctions with Syria, Russia, Ukraine, Belarus, Georgia, Serbia, Montenegro, Egypt and China.

Cyprus is a party to the following multilateral treaties:

  • The Hague Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters.
  • The New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

To enforce an injunction using the Cyprus statute (see above), the person in whose favour the injunction was issued must file an application with a Cyprus court supported by an affidavit and serve it on the respondent (if there is no respondent, the application can be made ex parte).

A copy of the application attaching the sworn affidavit and exhibits must be filed with the court. One copy of the application, affidavit and exhibits must be served on the respondent after being certified by the court registrar as a true copy. The application is usually served on the respondent by a private bailiff, unless leave for alternative service is obtained.

The application will be set for a hearing within four weeks from the date it is filed. If the respondent wishes to oppose the application, an opposition must be filed at least two days before the hearing. The grounds for opposing the application must be limited to:

  • matters concerning the court's jurisdiction;
  • a proved settlement of the original claim; or
  • non-compliance with the provisions of the treaty/regulation under which the injunction is to be enforced.

The final determination of the application takes between one to three months.

 

Common law

To enforce an injunction issued in a country that has no agreement for the recognition of a judgment with Cyprus, the claimant must file a new action in a Cyprus court under common law. The action will follow the usual Cyprus process and timeframes (see section 8). Subject to the final determination of the new action, the applicant can apply for a new injunction in Cyprus.

If the injunction is eligible for recognition under the statute (see above, Statute and international treaties), it cannot be recognised under common law.




 


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