SUCCESSFUL DEFENCE OF USD 20 MILLION GUARANTEE JUDGMENT BEFORE THE COURT OF APPEAL

The firm successfully represented Gordian Holdings Limited before the Court of Appeal of Cyprus in Civil Appeal No. 273/2019, opposing an appeal filed by the guarantor against a judgment of the District Court of Nicosia.

The appeal concerned a substantial banking and guarantee dispute arising from a personal guarantee dated 31 October 2008. The guarantor had been ordered at first instance to pay USD 20,000,000, or the equivalent amount in Euro, together with contractual interest, in respect of liabilities arising from three guarantee letters issued by Bank of Cyprus in favour of ABN AMRO Bank N.V.

The appellant argued that the guarantee was not a continuing guarantee and that it was limited only to a specific short-term loan facility of USD 10.5 million. Gordian Holdings Limited opposed the appeal, arguing that the wording of the guarantee, the surrounding commercial circumstances, and the documentary evidence clearly established that the guarantee covered the principal debtor’s present and future obligations up to USD 20,000,000, including the liabilities arising from the three guarantee letters.

The respondent was represented by Christos Clerides, Managing Partner and Co-Founder, together with Antonis Georgiou, Partner, who argued in support of the correctness of the first instance judgment and, in particular, that the alleged defence relied upon by the appellant had not been properly pleaded and was in any event inconsistent with the wording and commercial purpose of the guarantee.

The Court of Appeal accepted the respondent’s position and held that the guarantee was a continuing guarantee covering the three guarantee letters, and not merely a guarantee for the alleged short-term loan. The Court further upheld the finding that the appellant’s central defence had not been properly pleaded, confirming the importance of pleadings in defining the issues for trial.

The Court also rejected the appellant’s arguments based on the guarantors’ protection legislation and upheld the effect of the clause by which the guarantor assumed liability as principal debtor.

The appeal was dismissed in full, with costs awarded in favour of Gordian Holdings Limited.