Black Swan was wrongly decided in the BVI – What is the situation in Cyprus?

Posted on 15 Jun 2020, by Marina Hadjisoteriou

In 2010 the BVI Commercial Court ruled that claimants could seek Black Swan freestanding freezing injunctions in the BVI, in support of foreign substantive proceedings, without the need to bring a substantive claim in the BVI. This innovative Black Swan jurisdiction was named after the landmark judgment in Black Swan Investment ISA v Harvest View Limited and it made the BVI jurisdiction very appealing to claimants seeking to safeguard their interests.

However, on 29 May 2020, the Eastern Caribbean Court of Appeal in Broad Idea International Limited v Convoy Collateral Limited, directly overruled Black Swan and held that the BVI Courts do not have the power to grant freestanding injunctions in aid of foreign substantive proceedings.

What is the situation in Cyprus?

In Cyprus a freezing injunction (or other injunctive relief) can be obtained in aid of foreign arbitration proceedings pursuant to section 9 of the International Commercial Arbitration Law No. 101/1987, provided both countries are signatories to the New York Convention of 1958.

A freezing injunction can only be obtained in aid of foreign substantive court proceedings, where there is a multilateral or bilateral treaty connecting Cyprus with the country where the court proceedings are filed, specifically providing for the availability of such an interim protective measure.

However, this should be changing soon since the long awaited new Civil Procedure Rules are expected to have a specific provision enabling parties to secure injunctive relief in aid of foreign substantive court proceedings even where there is no multilateral or bilateral treaty connecting Cyprus with the other country. However, we believe that relevant amendments would have to be made to primary legislation as well and namely to the Courts of Justice Law 14/1960 (‘the Law’). The said Law has specific provisions as to when the Cyprus Courts have jurisdiction to adjudicate a dispute. It also grants powers to the Cyprus Courts to grant interim relief, namely issue injunctions or appoint receivers.

The Minister of Justice and the President of the Supreme Court of Cyprus announced in end of February 2020 (just before the lockdown as a result of the Covid-19 pandemic), that work for the modernisation of the Civil Procedure Rules was in its final stages. They also explained that the modernisation will, in practice, involve the replacement in full of the current Civil Procedure Rules, which have been in force since the 1950s, with a completely new set of rules.

We are eagerly awaiting the enactment of the new Civil Procedure Rules and the relevant amendments to the Law, as the availability of a Black Swan injunction in Cyprus will add to the tools available to claimants in international asset recovery cases and will make the Cyprus jurisdiction even more attractive.

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 a specific matter before acting on any information provided.  For further information, please contact Marina Hadjisoteriou, Partner, at marina.hadjisoteriou@kyprianou.com