Cyprus: Worldwide freezing orders
In the English case of Derby& Co v Weldon (No3 and 4) (1990) Ch 65, the Court of Appeal held unequivocally that a court can order a defendant’s assets to be frozen even if they are situated outside of the jurisdiction. However what is vital to be established in such circumstances is:
(a) Court must generally have jurisdiction over the cause of action;
(b) Court must also be able to claim jurisdiction over assets that are held overseas. On this point one of the fundamental characteristics of an equitable remedy is that it operates in personam, hence provided that the Court can properly claim jurisdiction over an individual, it does not offend against the jurisdiction of another court to make an order against that person.
In the above English case as well as later cases as in Re Bank of Credit and Commerce International SA(No 9)(1994) 3 All ER 764, it was stated that worldwide freezing orders shall be granted only in exceptional circumstances. Nonetheless in the case of Credit Suisse Fides Trust v Cuoghi the Court of Appeal stated that the only relevant question was whether it would be ‘inexpedient’ to make the order.
Furthermore the potential powerful impact of a worldwide freezing order has led the Courts to require safeguards to be put in place to protect defendants. Partly to meet such concerns, it became the practice to require the claimant to file an undertaking not to seek to enforce the world wide freezing order abroad, without the permission of the court. That posed the question as to what factors the court should consider before granting the permission. The Court of Appeal in Dadourian Group International Inc v. Simms (2006) EWHC Civ 399 indentified eight non exhaustive guidelines such as the role of justice and convenience, the need to balance the interests of all actual and potential parties to the foreign proceedings, as well as the risk of dissipation of the assets.
In Cyprus, the Courts have followed the example of English courts on the issuance of worldwide freezing orders as in the case of Seamark Consultancy Services Limited v Joseph P Lasala et al (2007) 1 C.L.R 162 whereby the Supreme Court emphatically confirmed in 2007 that the courts of Cyprus can issue freezing orders with worldwide effect, stating that:
"It is apparent that by virtue of Section 32 of Law 14/60...having regard to the modern changes people make to their transactions, the court at first instance had the opportunity to grant the interim orders in question pursuant to which the assets of the appellants outside of the jurisdiction were frozen. It is therefore obvious that by virtue of section 32 of Law 14/60...the court of first instance had the right, in this case, to make interim orders that also freeze assets of the appellants outside of the jurisdiction.”
For further information on this topic please contact
Ms. Nada Starovlah (firstname.lastname@example.org) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)
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