Introduction
‘Black Swan’ freestanding injunctions in aid of foreign substantive proceedings, have been available in the BVI since 2010, making the BVI a very appealing jurisdiction for claimants seeking to safeguard their interests. However, in May 2020 the Eastern Caribbean Court of Appeal in Broad Idea International Limited v Convoy Collateral Limited BVIHCMAP2019/0026, directly overruled Black Swan. Then, legislation conferring jurisdiction to the BVI Courts to issue freestanding injunctive relief was enacted in January 2021. Finally, in October 2021 the Privy Council issued a groundbreaking judgment (Broad Idea International Ltd v Convoy Collateral Ltd v Convoy Collateral Ltd v Cho Kwai Chee [2021] UKPC 24) restoring the Black Swan jurisdiction and giving hope to many common law jurisdictions such as Cyprus, that local Courts would follow suit.
Cyprus’ old regime
In Cyprus, pursuant to section 9 of the International Commercial Arbitration Law No. 101/1987, interim protective measures could be issued in aid of anticipated or existing international commercial arbitration cases, if both countries were signatories to the New York Convention of 1958.
However, the situation was different in relation to court proceedings since interim protective measures could only be issued in aid of foreign substantive court proceedings only where there was a multilateral treaty (e.g. article 35 of the Regulation (EU) No 1215/2012 for European Union member states) or a bilateral treaty connecting Cyprus with the country where the court proceedings were anticipated or existing, which specifically provided for the availability of such interim protective measures.
There is a number of reported cases (prior to the issuance of the Privy Council judgment in Broad Idea) where applicants tried to rely on the provisions of bilateral treaties on legal assistance (e.g. the bilateral treaties connecting Cyprus with the Soviet Union and by succession the Russian Federation or with Ukraine) to obtain interim measures. In such cases the Cypriot Courts refused to issue the requested interim measures, following the reasoning of The Siskina (Owners of cargo lately laden on board) v Distos Cia Naviera SA [1979] AC 210 and also highlighting the lack of an express statutory provision or a provision in the bilateral treaty, conferring such power upon the Cypriot Courts (CLOSED JOINT-STOCK INVESTMENT COMPANY FINANSOVY DOM ν. UFS CAPITAL LIMITED and others, Action no.: 4480/15 of the District Court of Nicosia dated 19/5/2016).
Cyprus’ new regime
The long awaited new Civil Procedure Rules (“new CPR”) have been in force since 1st September 2023. They have in essence replaced the old Civil Procedure Rules which were in force since the 1950s.
The new CPR have specific provisions enabling parties to obtain freestanding interim measures before the substantive proceedings are commenced and also after the issue of judgment (Part 25.2).
Section 32 of the Courts Law, 14/1960 was also amended in November 2023 (The Courts (Amendment) Law 114(1)/2023) to be in line with the new CPR, so that there is no doubt as to what orders the Cypriot courts can now issue. Section 32 now expressly provides that the Cyprus Courts have jurisdiction to hear any application for interim relief at any time, even before the filing of the substantive proceedings and also after the issuance of a decision, both in relation to court proceedings and arbitrations which have been concluded, are existing or anticipated, within or outside Cyprus.
Furthermore, following conflicting and frankly speaking unhelpful case law, it is now statutorily clarified that the Cyprus Courts can issue interim measures when:
- the respondent is within the Cyprus jurisdiction; or
- the assets or the object of the remedy are/is within the Cyprus jurisdiction; or
- there is such other link with Cyprus that the Court becomes appropriate to hear and decide the application.
Additionally, it is further clarified that the interim measures can be prohibitive, mandatory or resulting in the appointment of a receiver, if this is just and convenient under the circumstances.
Finally, the conditions the applicant has to satisfy for the interim measure to be issued remain unchanged and are the following:
- there is a serious issue to be tried; and
- there is a probability that the applicant is entitled to relief; and
- it would be difficult or impossible to do complete justice at a later stage if the interim order is not issued.
It is noted that the prior wording of section 32 was very wide and in theory entitled Courts to issue whatever order was appropriate including an order for the appointment of a receiver or an order for disclosure of assets etc. However, in practice the Courts were some times reluctant to do so, without giving the respondent the right to be heard first.
Hopefully this will no longer be the case, as Part 25.1 of the new CPR expressly lists the numerous types of orders that the Cyprus Courts may now issue (and it does look very similar to the UK Civil Procedure Rules, Part 25.1).
Part 25.1 expressly refers to the possibility of issue of the following orders, amongst others:
- an order for the appointment of a receiver;
- an order directing a party to disclose the location of property or of any assets and provide information in relation to such property/assets which are or may be the subject of an application for a freezing injunction;
- an order for disclosure of documents or inspection of property before a claim has been filed;
- an order in certain proceedings for disclosure of documents or inspection of property against a non-party;
- an order directing a party to prepare and file accounts relating to the dispute.
It is also stated that the fact that a particular kind of interim remedy is not listed in Part 25.1 does not affect any power that the Court may have to grant that remedy. Finally, the Court may grant an interim remedy whether or not there has been a claim for a final remedy of that kind.
Hearings in relation to interim orders will be concluded faster
The definition of the ‘overriding objective’ in Part 1 of the new CPR makes it clear that all relevant parties should do what is necessary for a case to be fully heard as soon as possible, without delay and unnecessary costs. The same is true in relation to an interim measure. It used to be the case that if you were acting for the claimant, you could obtain the interim order within 1-2 days of filing if all the criteria were met. Then, the claimant’s lawyers could strategically try and delay the hearing, by filing further interim applications in order to keep the interim order in force for as long as possible. E.g. it was pretty common for the claimants’ lawyers to file an application seeking the Court’s leave to introduce a supplementary affidavit, following the filing of the respondent’ s opposition. As a result, the respondent would have to wait for some time before the interim order hearing took place, even if the freezing order was causing them hardship. This will hopefully also be resolved with the new CPR as the parties need to abide by strict agreed timelines and provision can be made for the possibility of filing a supplementary affidavit by both sides, if this is deemed necessary (LAKON A.T.E. v DEMOU PAFOU, Action no.: 1186/2023 I-Justice of the District Court of Pafos dated 4/10/2023).
Conclusion
The implementation of the new Civil Procedure Rules coupled with the amendment of the relevant legislation, have equipped Cypriot lawyers with all the necessary weaponry to successfully go after international fraudsters and recover assets in multijurisdictional cases, making the Cyprus jurisdiction, if I may say so, an asset recovery haven.
This article first appeared on the website of the Asset Recovery Committee of the Legal Practice Division of the International Bar Association, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Marina Hadjisoteriou, Partner at our Limassol Office, Tel +357 25363685 or email marina.hadjisoteriou@kyprianou.com
