Loading...
topic
HOME  /  PUBLICATIONS  /  CYPRUS COURT OFFERS DIRECTIONS TO A BANK ON THE AMBIT OF A FREEZING INJUNCTION

Publications

Search Publications
Cyprus Court offers Directions to a Bank on the Ambit of a Freezing Injunction

Cyprus Court offers Directions to a Bank on the Ambit of a Freezing Injunction

The District Court of Nicosia accepted a request to offer directions, in the form of clarifications, on the ambit of a freezing order, which was previously issued by the Court. With its judgment in Libra Capital Limited and others v. Bitzios and others, Action no.1339/20, 07/08/2020, the Court found that there was power to offer such clarifications on the scope of application of an order and proceeded to offer the requested clarifications.

The judgment was issued further to the application of a Cyprus bank, which had been served and had to comply with the freezing order. With its judgment, the Court set a useful precedent by allowing a third party served with a Court order to receive clarifications as to the ambit and application of the order.

Facts

The judgment was issued in the frames of a multi-million euro claim for fraud and conspiracy, in the course of which freezing injunctions were issued against 6 individuals, freezing assets in excess of EUR 350.000.000 in value.

The claimants served the injunctions on Cyprus banks, including a bank with which bank accounts were maintained by companies belonging to 1 of the 6 individuals. The Bank found itself in the difficult position of having to decide whether to freeze the bank accounts of the companies on a proper application of the freezing injunctions.

As a result, the Bank took the matter in Court and sought directions on ambit of the freezing injunctions. The claimants opposed the application on the ground that the Court did not have competence to clarify or interpret the scope of an order previously issued by the Court.

Decision

The District Court of Nicosia ruled that a third party who is served with a Court order may request for directions by the Court on the proper application of that order, so that it is not found in contempt. Whereas applications for the interpretation or clarification of a Court order by a party who opposed the issuing of the same are not generally permissible, the Court found that applications requesting directions to enable the effective enforcement of a Court order by a third party may be allowed.

The Court went on to clarify that, unless the wording of a freezing order provides otherwise, a freezing order against an individual only covers the assets of the individual, including shares or interests in companies, but did not extend to the assets of companies belonging to that individual.

Comment

This judgment constitutes a significant and useful development in Cyprus litigation for third parties, such as banks, who are often served with Court orders of uncertain ambit. The difficulties in the application of Court orders often faced by banks and other stakeholders who hold assets for others can now be addressed with a relevant intervention and directions’ application to the Court.

Related Publications

Following Cyprus's increasing role as an international dispute resolution center, a new Commercial Court is to be established to handle high-value commercial disputes litigated in Cyprus.
Our firm provided pro bono assistance for the preparation of the Commonwealth Human Rights Initiative report titled "Guilty Till Proven Innocent?".
Our firm has authored the Cyprus chapter of Lexology Getting The Deal Through: Dispute Resolution 2022. 
Recent developments, sanctions and capital controls have disrupted finance arrangements and bond issuance going through Cyprus, with many innocent parties getting caught in the crossfire.
Our firm has authored the Cyprus chapter of CDR - Fraud, Asset Tracing & Recovery 2022.