A. SECTION 32
Under Section 32 of the Courts of Justice Law 14/60 subject to any procedural Rules (see for example Order 48 Rules 1 – 13 and see also Section 9 of the Civil Procedure Rule Cap 6, for ex parte applications) any Court in the exercise of its civil jurisdiction can issue a prohibitive injunction (interlocutory or perpetual or mandatory) or to appoint a receiver in all cases in which the Court deems to be just or equitable whether damages are claimed or not along with any other relief.
It is provided that no interlocutory injunction or interim order shall be issued unless the Court is satisfied that there is a serious matter of trial and that there is a probability that the plaintiff is entitled to relief and unless the order be issued it will be difficult or impossible to administer full justice at a later stage.
All the above are provided in section 32 (1) of the Courts of Justice Law.
B. CIVIL PROCEDURE LAW, CAP 6
Similar provision for the issuing of injunctions is made in the Civil Procedure Law Cap 6 and in particular Sections 4 and 5.
Section 4 empowers the Court pending a civil action to issue an order for the sequestration, preservation or custody sale or detention or inspection of property subject matter of the action or for an order to prevent any loss or damage or prejudice.
An order for sequestration appoints a person to enter the immovable property in order to collect and receive any rents or income from it as well any goods and movable property of the defendants and keep as long as the Court orders.
Under Section 5 the Court may issue an interim order where a debt or damages are claimed restraining the alienation of the immovable property registered in the name of the defendant or which he is entitled to be registered provided there is a good cause of action and in case of the sale or transfer of the property it is probable that the plaintiff will be hindered from satisfying the judgment in his favor.
The provisions of Section 32 are wider in their scope and extent and of a more general nature than the more specific provisions of section 4 and 5 of Cap 6.
C. EQUITY
The power of the Court to issue injunctions whether perpetual or of an interim nature although emanating from the above statutory provisions is an equitable jurisdiction exercised in accordance with the principles of equity applicable in Cyprus by virtue of Section 29 of the Courts of Justice Law we have examined in detail in a previous lecture.
It is very useful in order to understand the usefulness of this remedy to look amongst others into Halsburys Laws of England 4th Edition, volume 24, page 509 – 613.
Since an injunction is an equitable remedy it will not be issued in favor of a person who does not come with clean hands before the Court.
It will also be refused in case there has been acquiescence and delay.
The Court will examine always in detail the conduct of the parties and will act in an equitable fashion to administer justice. It is not granted as a matter of course and its issue is regulated by extensive case law and precedents on the matter in more detail analyzed in the above cided reference of Halsbury’s Laws.
Our case law has by and large followed English precedents albeit with some variations in the light of the specific wording of section 32 of Law 14/60 and sections 4 and 5 of the Civil Procedure Law.
D. CASE LAW
Rather than try to analyze in detail the principles on which injunctions are issued in Cyprus it will more useful if we make reference and analyze briefly some of the leading Cyprus Case Law pertaining to the issue. .
In the case of Papastratis v. Petrides (1979) 1 CLR 231 it was decided that cases brought under Section 4 of CAP 6 cannot be considered independently of the provisions of Section 32 of Law 14/60.
Section 32 of Law 14/60 is of wider application. In cases where payment of compensation would be sufficient no interlocutory injunction will be issued. In that case the plaintiff was expelled from the “Trust” club. He sought an interim injunction to restrain the secretary of the club from implementing the decision to expel him.
In the leading case of Odysseos v. Pieris (1982) 1 CLR 557 the buyer of a flat moved in , in January 1981. In January 1982 the owners of the land in dispute with developers, leased the flat to a tenant. The purchaser sued them both. He asked for an interim/injunction pending trial to restrain owners and developers from interfering with his possession and from alienating the property. In appeal it was decided that he was entitled to the interim injunction. The Court interpreted Section 32 (1) of Law 14/60 in an authoritative manner as follows.
The plaintiff has to show (a) he has an arguable case (b) he has a visible chance of success and (c) without the interim injunction it will be difficult or impossible to do complete justice at a later stage (d) that it is “just” or “convenient” to grant the injunction.
In the Jonitexo Ltd v. Adidas (1983) 1 CLR 263 an injunction was granted in favour of the plaintiffs in a passing off action. The Court of Appeal held that in the trial for an interim Order the Court will not go into the merits at this stage. The Court should not prejudge the issue. A Court of Appeal will not normally interfere with the judgment of the Court at first instance unless its discretion was wrongly exercised.
In the National Iranian Company Ltd v. Pastella Marine Company Ltd (1987) 1 CLR 120 it was decided that the doctrines of equity are applicable in Cyprus by virtue of Section 29 of Law 14/60. As a result where the defendants have no further assets except the vessel in question , it shall be difficult if not impossible to do complete justice at a later stage and therefore a “Mareva” injunction will be granted restraining the defendants from selling mortgaging or otherwise alienating the Cyprus Ship which was not in Cyprus.
A “Mareva” injunction (after the name of the case first granted, Mareva Companies Naviera SA v. International Bulkanies SA (1975) [1980] 1 All ER 213, is normally granted where the defendant has no other assets in Cyprus and there is a risk of alienation, dissipation of the assets. The Supreme Court on Appeal in its Admiralty Jurisdiction disagreed. The injunction could not be granted for assets outside jurisdiction. Nevertheless it upheld the doctrine of “Mareva” with regard to assets within jurisdiction.
In Metro Shipping v. Global Crnisars (1989) 1 CLR 182 a Mareva injunction was issued to restrain the defendants from withdrawing, transferring and/or otherwise disposing $80.000 in the Bank.
The principles relating to the Mareva injunction were carried further forward by the Supreme Court in the case of Seamark & Others v. Lasala & Others (2007) 1 AAΔ 162.
A Mareva type injunction was issued freezing bank accounts of the defendant in Cyprus and abroad this time as well as immovable and movable property, shares etc. Also defendants were ordered to supply information as to their assets as well as documentation.
The Plaintiff claim was for the huge amount of $500.000.000 on account of fraud, false pretences etc. Earlier the Court in Spidertrade v.Χατζηγαβριήλ (2003) 1 ΑΑΔ 121 clarified that the freezing of assets, not the subject matter of the action, is an exceptional measure which can be justified only in exceptional circumstances where there is an immediate and tangible risk of a dissipation abroad.
In the case of Re Pelekanos (1989) 1 CLR 467 the Court at first instance granted what is known as an Anton Pillar Order which prohibited the applicants from disposing of evidence and or using machinery the property of the plaintiffs.The Court in its judgment referred to the case of Anton Pillar v. Manufacturing Processed Ltd [1976] 1 All ER 779 a copyright and misuse of confidential information case. The Anton Pillar Order authorized the plaintiffs to enter the defendants premises to inspect the evidence and remove it to their solicitors. The Supreme Court did not interfere with the first instance Court Order.
Relating to the practice followed for interim Orders reference should also be made to the following cases :
1. The affidavit to support an application for an interim Order must be filed after filling the proceedings and in case it covers matters not the subject matter of the action must be based on Section 32 of Law 14/60 (See Re Stavros Hotel Apartments (1994) 1 CLR 836).
2. When an interim order is made returnable under Section 9 of CAP 6 i.e it is issued ex parte and time is given for the Order to be served on the Respondent to appear and oppose it, the time must be reasonable. (Re Henry Chalhoub (1999) 1 AAΔ 1333).
3. If it is not necessary to prove intention to alienate property or to charge it. You only have to prove a risk of the judgment not being satisfied. If the value of the land is much higher that the claim this does not prevent the issue of an order- Phasarias v. Σκυροποια «Λεωνίκ» Λιμιτεδ (2001) 785 (See also Larticon v. Detergenta (2004) 1 AAΔ 1121).
4. There is a duty of full disclosure in ex parte applications. Non disclosure maybe fatal. A recourse in another Court which was pending should have been disclosed. The Order was set aside. Δήμος Πάφου v. Βοσκού (2001) 1 ΑΑΔ 2001.
5. Where the defendant proves that he is able to meet a judgment a freezing order will not be issued. Marketrends v. Γεωργίου (2002) 1ΑΔΔ 1759.
6. Only in exceptional cases an interim order will be published prohibiting publication of matters that may prove to be defamatory e.g. where the matter is beyond doubt defamatory. CT Tobacco Ltd v. Αρκτίνος (2003) 853.
E. USEFULNESS
As it can be seen from the above the principles of equity in the filed of injunctions are very active in Cyprus. The Courts will normally grant interim injunctions to maintain the status quo pending proceedings and to assure the effectiveness of a final judgment.
They will prevent a party from stealing a marche as it were. The injunction as a remedy especially of an interim nature is a very usefull weapon in the hands of a litigant and for the final resolution of the dispute at the very early stages of litigation.
Dr. Christos Clerides
Associate Professor of Law
European University
Nicosia 04/11/2009