In a recent case that the author was involved in the Supreme Court of Cyprus was asked to balance two competing interests:
- The principles of natural justice and of ‘fair trial’, and
- The need to combat international crime effectively
The facts of the case:
- The defendants, allegedly, defrauded a large multinational company in the hundreds of millions Euros.
- The fraud was committed via the conspiracy of persons working inside the company with parties outside the company as well as bankers, accountants etc.
- The fraud was perpetrated using a large web of companies in jurisdictions which included Cyprus.
- The plaintiff company applied, successfully, to the Cyprus court and obtained worldwide freezing of assets orders against 6 of the defendants who were allegedly involved in the fraud as well as injunctions ordering them to file affidavits disclosing all of their assets (‘the disclosure of assets order’). These orders were all obtained ex-parte (i.e. without the defendants having received prior notice that the relevant application had been filed against them).
- What was relevant in this case was that the disclosure of assets order compelled the defendants to file the necessary affidavits within 5 days from the day that the order was served on them.
- Against the above backdrop one of the defendants argued that, in relation to the disclosure of assets order, his right to a fair trial had been violated. This is because, as per his argument, he was obliged to make this disclosure before his position on the plaintiff’s allegations could be examined. If, the argument went, it later transpired that the plaintiff’s allegations were incorrect, there would be nothing that could be done to correct the situation for him. Because the disclosure affidavit would already have been filed and details of his assets would already be in the knowledge of the plaintiff.
The judgment of the Supreme Court:
The Supreme Court rejected the defendant’s application and confirmed as correct the issuance of the disclosure of assets order. The Supreme Court explained its judgment as follows:
- The court has a delicate balancing act to carry out. On the one hand a defendant should have the opportunity to present his position before he is forced to comply with a court order. On the other, court orders should not be rendered ineffective.
- Disclosure of assets orders are necessary to give effect to the freezing of assets orders that are issued in parallel with them. This is because only if the defendant discloses his assets can the plaintiff know if the freezing of assets order is being complied with.
- In cases of serious international fraud the courts should have the power to issue disclosure orders without giving the opportunity to defendants to object. This is because in the intervening time period a fraudulent defendant may alienate assets. The Supreme Court cited a case of the English Court of Appeal which confirmed this approach, citing the need to combat ‘rampant cross jurisdictional fraud.’