Cyprus Court Orders: Freezing, Discovery and Search Orders
The protection of the interests of the parties involved in a litigation proceeding is the main reason of granting Interim orders or injunctions. These orders or injunctions are temporary orders which oblige someone to proceed or not to proceed to a specific action. Therefore interim orders can be and are considered to be temporary measures effective, pending the settlement of a Court action or Arbitration award.
INTERIM ORDERS BY THE COURTS OF CYPRUS
According to Section 32 of Court of Justice Law (14/60), Cypriot Courts have jurisdiction to issue interim orders or injunctions, “in all cases, in which it appears to the Court, just and convenient to do so”, provided that:
- A serious issue exists, that is to be tried at the hearing;
- It appears that the Applicant has a “probability” to obtain a favourable judgement;
- There is a significant risk that if the interim order is not issued, it will be difficult or impossible for Justice to be served at a later stage;
- The balance of convenience is in favour of the Applicant.
TYPES OF INTERIM ORDERS
Interim orders are divided into two types: a) prohibitory and b) mandatory injunctions. A prohibitory injunction prevents someone from doing something. On the other hand, a mandatory injunction obliges someone to do a specific act within a well-defined timeframe.
Among the main categories of interim orders issued by Cyprus Courts are:
- Freezing Injunctions which are issued by the Courts in order to protect assets situated in Cyprus or abroad. Assets may include movable and/or immovable property. These orders are largely-known as ‘Mareva’ injunctions due to the leading case of the Court of Appeal called Mareva Compania Naviera SA v International Bulk Carrier SA. The purpose of a Mareva is to ensure that a judgment/award will be satisfied and effectively enforced.
- Injunctions issued in order to prevent specific acts or events. For example, Courts can issue these orders to block the implementation of corporate resolutions or the convention of Shareholders Meeting of Cyprus Companies, the Annual General Meeting of a company, etc.
- Discovery and Disclosure order which are are widely known as ‘’Norwich Pharmacal’’ orders due to the case ‘’Norwich Pharmacal Co. & Others v Customs and Excise Commissioners”. This order is a procedure whereby someone may discover the identity of an alleged wrongdoer through a party who facilitated the wrongdoing. The applicant through the use of the discovery orders may obtain:
- Full details of beneficial owners of a Cyprus Company or of an overseas company which is managed and controlled from Cyprus, and relevant documentation (i.e. copies of passports, trust deeds etc.).
- Full details of signatories of bank accounts of the above Companies.
- Full details of bank accounts, bank statements, payments made, transfers received, instructions given, supporting documents justifying transfers etc.
- Corporate documents, including, but not limited, to resolutions of shareholders, resolutions of the Board of directors, powers of Attorney, agreements executed etc.
- Chabra Order is an injunction against a codefendant against whom no direct cause of action lies, but there are grounds to believe that the co-defendant is in a possession or control, of assets to which the principal defendant is beneficially entitled.
- Search Orders (Anton Piller) are a form of interim injunctive relief, originally known as “Anton Piller orders”. The name derives from the English case of “Anton Piller KG v Manufacturing Processes Ltd”. It is the classic example of a without-notice application due to the fact that notice given to the Respondent would negate the whole purpose and go against the nature of such orders that ultimately seek to preserve evidence that relates to the proceedings in issue. The point is that if and once notice is given to the defendant, evidence may be destroyed or concealed. Therefore, the purpose of Anton Pillerorders is to preserve evidence.
- Anti-suit injunction is another type of order that blocks an opposing party from initiating or continuing legal proceedings in another jurisdiction or forum. However, according to the decision of the European Court of Justice there is no room for anti-suit injunctions where EC Regulation 44/2001 is applicable in disputes within the European Union. Therefore anti-suit injunctions may in principle be available only when the question of “natural forum” arises in instances where EC Regulation 44/2001 does not apply.
- Quia timet is an injunction to prevent wrongful acts that have not been committed yet.
The Applicant must meet the following requirements:
- Injunctions can be issued by the Courts, on an ex-parte basis (without-notice application) to the respondent, given that the Applicant proves to the Court that there is an element of urgency. To succeed on an ex-parte application, the element of ‘urgency’ as well as the ongoing ‘duty of full and frank disclosure’ must be satisfied. Any failure to satisfy the aforesaid condition will result in the failure to obtain the order ex-parte and the judge will order for the application to be served so that the other side is heard on the matter before adjudicating accordingly. At this point in time, the initial ex-parte application transforms automatically into a by-summons one.
- Disclosure of all material facts and documents. The Applicant is obliged to disclose, fully and frankly all material facts, and documents, regarding the case, to the Court.
- The applicant will be simultaneously ordered to file a security into Court and such security is a pre-condition to the granting of the order. Such security is necessary in order to cover for all potential loss to be caused to the respondent in the even that such order was groundlessly and wrongly obtained.
BREACH OF INJUCTION
A breach of an injunction constitutes a contempt of Court, punishable by either penalty or imprisonment or both.