Cyprus is a Common Law jurisdiction, and although many important areas of substantive law have been codified, English Common Law principles are still applicable where there is no covering specific Cyprus legislation or case law. More specifically, Section 29 (1) (c) of the Courts of justice Law (law No. 14 of 1960) provides that the Courts of Cyprus will apply “the Common Law and the doctrines of equity save in so far as other provision has been or shall be made by any law made or becoming applicable under the Constitution or any law saved under paragraph (b) of this opinion should also refer to English case law , as well as case law of the European Court of Justice on the issues raised.
The only decision of the Supreme Court of Cyprus which analyzes the principles regulating the power of the Courts of the Republic of Cyprus to issue anti suit injunction is the CASTO SHIPPING COMPANY – v- MINEAG SQM (AFRICA) (PROPRIETARY) LTD & ANOTHER (1999) a case law of the European Court of Justice, AAD page 1634.
There is also a decision of the First Instance Admiralty Court GANNET SHIPPING LTD –V- NAAFI & OTHERS (1995) 1 CLR 10.
In the above cases the Cyprus Courts adopted the approach of the English Courts on the issue.
English Courts have long exercised a jurisdiction to restrain a party from instituting proceedings in a foreign court. It was said that this injunction is grounded “not upon any pretension to the exercise of judicial….rights abroad” but upon the fact that the party to whom the order is directed is subject to the in personam jurisdiction of the court.
But although the injunction operates only in personam against the party to the foreign litigation, the remedy is an indirect interference with process of the foreign court, and the jurisdiction must be exercised with caution. In addition, since the jurisdiction is exercised in personam, the court must have jurisdiction over the Defendants or one of the Defendants (the defendants shall reside in Cyprus in order the injunction to be enforced against him).
The underlying principles is that the jurisdiction is exercised “where it is appropriate to avoid injunctice”, or, as it was once put, where the foreign proceedings are “contrary to equity and good conscience”. Although it is possible to identify certain categories of cases in which the jurisdiction has been exercised “the width and flexibility of equity are not to be undermined by categorization”. Thus, the English court may restrain proceedings brought abroad in breach of a contract not to sue, or in breach of a contract to be bound by the result of English proceedings, or to sue only in England.
The Court will also restrain proceedings which interfere with “the process of the court”. Thus the Court will enjoin proceedings taken abroad to recover foreign assets, whereby the party taking them will obtain an unfair advantage over other claimants in an English administration, or bankruptcy or winding up.
It is also clear that the court may restrain foreign proceedings which are “oppressive or vexatious” in the traditional sense (see SOUTH CAROLINA (1987) A.C. 24 AND AEROSPATIALE (1987) A.C. 871 at page 893).
The actual decision in the Aerospatiale case (above) shoes that the concept of vexatious and oppressive conduct was given a wide interpretation, so as to encompass the conduct of foreign proceedings which would cause injustice – or serious injustice of the need for caution is to be given its proper weight. Thus an injunction may be granted to a plaintiff to prevent the other party from asserting a claim abroad to which the plaintiff has a defense, especially if the claim abroad is bound to fail and is brought purely for tactical reasons.
It is not necessary for a plaintiff who seeks an injunction to restrain foreign proceedings to seek any relief in England on the substance of the dispute. Sometimes the plaintiff in the English proceedings has sought a negative declaration (i.e. a declaration that he is not liable to the defendant), but this is not a pre-condition of the right to seek an injunction, although it may be appropriate if the plaintiff in England has some reason to establish his defense to the claim by the plaintiff in the foreign proceedings.
The House of Lords, in BRITISH AIRWAYS BOARD V. LAKER AIRWAYS LTD, and the Court of Appeal, in MIDLAND BANK PLC V. LAKER AIRWAYS LTD, have considered in detail those exceptional cases where an injunction may be granted to restrain foreign proceedings even where the would-be plaintiff in the foreign proceedings has no remedy in England. Both cases arose from the anti-trust proceedings brought, or threatened, in the United States against (among other defendants) certain British airlines and banks by the English liquidator of Laker Airways Ltd., in connection with an alleged conspiracy to drive Laker Airways Ltd, out of business. The House of Lords held an injunction might be granted to restrain foreign proceedings even if the plaintiff in those proceedings had no remedy in England (the so-called “single –forum” case), but only if the bringing of the action in the foreign court were in the circumstances so unconscionable that it could be regarded as an infringement of an equitable right. In the circumstances the British airlines were not entitled to an injunction, since by carrying on their business in the United States they had accepted that they were subject to United States Law, including United States anti- trust law. In the subsequent case of MIDLAND BANK PLC V. LAKER AIRWAYS LTD, the Court of Appeal held that two British Banks were entitled to an injunction restraining the liquidator from joining them in the United States proceedings. They had been the bankers to Laker Airways Ltd., and it was alleged that they had joined in a conspiracy to deprive Laker Airways Ltd., of the benefits of a financial rescue package. It was held that for an English plaintiff to sue them in the United States on the basis of the extra-territorial application of United States anti-trust law to activities in England, intended to be governed by English law, was unconscionable and unjust.
In the GASTO CASE (Supra), the Cypriot Supreme Court refused to allow the service of the action to foreign defendants of inter alia that the remedy for the issue of an anti-suit injunction was not justified due to the fact that there were no foreign proceedings pending and that there were not actual threats for the commencement of such proceedings.
In the GANNET CASE (Supra) the Cyprus Court refused to allow the service out of jurisdiction of the action because of inter alia that the remedy for the issue of anti-suit injunction was not justified due to the fact that the defendants were residing outside the jurisdiction and the Cyprus Court could not force them to obey to the anti-suit injunction.
EU DEVELOPMENTS
In 2009 two cases, WEST TANKERS (2009) 1 A.C. 1138 and NATIONAL NAVIGATION (2009) EWCA CIV 1397 significantly narrowed the scope of an English Court to grant an anti-suit injunction against a party located in an EU Member State.
In 2004 the European Court decided in TURNER –V- GROVIT (2005) 1 A.C. 101 that the EU Regulation precluded the grant of an injunction whereby a Court of a Member State prohibits a party to proceedings pending before it, from commencing or continuing legal proceedings before a Court of another Member State, even where that Party, is acting in bad faith with a view to frustrating the existing proceedings.
NEW ENGLISH DEVELOPMENTS
In 2010 an English Court decided in AES UST – KAMENOGORSK KYDROPOWER PLANT LLP –V- UST – KAMENOGORSK KYDROPOWER PLANT JSC (2010) EWHC 772 that it has jurisdiction to issue an anti-suit injunction to restrain court proceedings pending in Kazakhstan due to the existence of an arbitration agreement providing for the reference of the dispute to arbitration in England.
In a very recent English case SKYPE TECHNOLOGIES SA –V- JULTID LTD & OTHERS (2009) EWHC, the English Courts issued an anti-suit injunction blocking the continuation of legal proceedings in United States (a non member state of EU).
CONCLUSSION
The European Court of Justice has left no room for the anti-suit injunction, within the EU judicial arena. Therefore, it appears that anti-suit injunctions may be used in Cyprus only against parties for legal proceedings pending before Courts of non EU Member States.
Following the English principles, the Cypriot courts may stop proceedings that have been brought abroad – (not before Courts of EU Member States) - in breach of a contract:
• Not to sue;
• To be bound by the result of Cypriot proceedings; or
• To sue only in Cyprus.
The Cypriot courts will also act to stop proceedings that interfere with the due process of the court. Thus, the court will enjoin proceedings started abroad to recover foreign assets if the party bringing the proceedings will obtain an unfair advantage over other claimants in a Cypriot administration of an estate or in the case of bankruptcy or winding-up. The court may also stop foreign proceedings that are “oppressive or vexatious”.
It is not necessary for a plaintiff that seeks an injunction to stop foreign proceedings to seek any relief in Cyprus on the substance of the dispute.
For further information on this topic please contact
Mr. Soteris Pittas( spittas@pittaslegal.com ) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)
The content of this article is intended to provide a general guide to the subject matter. Specialist advise should be sought about your specific circumstances.
