Interim orders in aid of court or arbitration proceedings in Cyprus and overseas

Posted on 03 Jan 2014, by Marina Hadjisoteriou

Interim Orders in General

The Courts of Cyprus can grant interim orders in all cases in which it appears just and convenient to do so, provided that the following conditions, as set out in section 32 of the Courts of Justice Law 14/1960, are fulfilled:

  • A serious question arises to be tried at the hearing;

  • There appears to be ‘a probability’ that the applicant is entitled to relief;

  • Unless an interim order is granted it shall be difficult or impossible to do complete justice at a later stage.

It is possible to apply for interim orders on an ex parte basis provided that the applicant can show an element of urgency. Moreover, when no notice is given to the respondent, the applicant has a duty to make full and frank disclosure of all material facts. This duty is not restricted to facts actually known by the applicant but also extends to additional facts which the applicant would have known if he had made proper enquiries. A breach of the disclosure duty can automatically result to the cancellation of the interim orders issued on an ex parte basis by the Court.

The Courts of Cyprus have jurisdiction to issue interim orders in aid of:

  • Proceedings pending before the Courts of Cyprus;

  • Arbitration proceedings pending in Cyprus;

  • International Commercial Arbitration proceedings;

  • Proceedings pending before national courts of any Member State of the European Union (with the exception of Denmark).

The Courts of Cyprus can issue, inter alia, the following types of interim orders:

a) Freezing Injunctions (Mareva):

The Courts of Cyprus can issue freezing injunctions over assets worldwide.

b) Prohibitory Injunctions:

The Courts of Cyprus can issue prohibitory injunctions preventing various acts or events, such as the convening of Annual General Meetings of companies.

c) Disclosure Orders:

The Courts of Cyprus are reluctant to grant such orders on an ex parte basis and usually direct that the application is served upon the respondent.

Usually an order is sought for disclosure on oath by the respondent of the location and value of his assets over a certain value. Such an order can be issued simultaneously with a freezing injunction, in order to enable the applicant to police the freezing injunction.

Moreover, by applying equitable principles and the case of Norwich Pharmacal the Courts of Cyprus can in certain circumstances grant an order for the disclosure of documents or information against a party who is “mixed up” in the wrongdoing but is unlikely to be a party to any proceedings arising from it. The disclosure of documents or information must be necessary to assist to identify the wrongdoer or to be able to fully plead the case against the wrongdoer.

Interim Orders in aid of International Commercial Arbitration Proceedings:

Section 9 of the International Commercial Arbitration Law 101/87 provides the legal basis upon which the Courts of Cyprus can grant interim orders in aid of international commercial arbitration under the following terms: “the Court has the power, following the request of one of the parties, to issue interim orders, at any time before the commencement or during the arbitration proceedings”. Therefore, it is not necessary for the arbitration proceedings to have been filed overseas in order to obtain an interim order in Cyprus. It is actually advisable to obtain an interim order before the filing of the arbitration proceedings overseas.

Pursuant to section 2(1) of the said Law, the arbitration proceedings must derive from a written arbitration agreement or clause.

A very wide definition is given of what is deemed to be “commercial” for the purposes of the law in section 2(4) as follows: “‘commercial’ is the arbitration which refers to matters that arise out of relations of a commercial nature, contractual or otherwise”. Section 2(5) provides that relations of a commercial nature include, without limitation, commercial transactions for the provision of goods or services, distribution agreements, leases, construction projects, provision of advisory services, mechanical constructions, granting of licences, investments, financing, banking and insurance services, operating licences, joint business ventures and other forms of industrialised or professional cooperation and aerial, marine, railway and road transport of goods or passengers.

The arbitration is deemed to be ‘international’ if any of the following are fulfilled:

  • When the arbitration agreement was signed, the parties had their place of business in different countries; or

  • If any of the following places is located outside the country where the parties have their place of business:

    • The seat of the arbitration, as defined in the arbitration agreement;

    • The place of performance of a significant part of the obligations that arise from the relation of commercial nature which constitutes the subject matter of the dispute or the place which is closely connected with the subject matter of the dispute; or

  • If by the express agreement of the parties it was defined that the subject matter of the dispute is related to more than one country.

If one of the parties has more than one place of business, its place of business which is closely related to the arbitration agreement is considered as its place of business for the purposes of the said Law and, when the party lacks a place of business, its place of ordinary residence is considered as its place of business for the purposes of the said Law.

Interim Orders in aid of Proceedings in European Union Member States (with the exception of Denmark):

The Republic of Cyprus acceded to the European Union on 1st May 2004 and is therefore bound by EC Regulation No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Regulation”). No measures are required nor have been taken, to implement the said EC Regulation in the national law, since EC Regulations are considered as binding law for all the Member States.

Article 1 of the Regulation limits its application to civil and commercial matters and clarifies that its application does not extend to revenue, customs or administrative matters. Additionally, pursuant to Article 2 of the Regulation, the Regulation shall not apply to the following:

  1. "the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession;

  2. bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;

  3. social security;

  4. arbitration."

Article 31 of the Regulation provides the following: “Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.”

The text of Article 31 of the Regulation is identical with the text of Article 24 of the Brussels Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (“the Convention”). The wording of Article 24 of the Convention (and respectively Article 31 of the Regulation) outlines that the type of provisional measures that can be granted are determined by the national law of the Court that hears the application. The European Court of Justice (ECJ) has in various cases interpreted Article 24 of the Convention. The ECJ has held in the case of Van Uden Maritive BV, C-391/95, that before interim orders can be granted, the applicant must show “the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the Court before which those measures are sought.”