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16 May 2017
The courts' power to grant interim orders to protect assets that may be at risk of alienation (ie, Mareva orders) pending the final determination of an action is well established under the Cyprus legal system. Interim orders constitute a discretionary remedy and each case is examined on its own facts.
The guiding principles regarding interim orders are set out in the leading Supreme Court decision Odysseos v Pieris Estates:
Section 32 of the Courts of Justice Law — 14/60; confers power on the court to grant an injunction 'in all cases in which it appears to the court just or convenient so to do'. However, the justice and convenience of the case is not the sole consideration to which the court should pay heed in the case of an interlocutory injunction, and no such injunction should be granted, unless the following conditions are satisfied:-
(a) a serious question arises to be tried at the hearing;
(b) there appears to be a probability that the plaintiff is entitled to relief and, lastly,
(c) unless it shall be difficult or impossible to do complete justice at a later stage without granting an interlocutory injunction."(1)
In practice, many Mareva order applications are made on an ex parte basis (without notice). In relation to such applications, the applicant must satisfy the court that there is an element of extreme urgency. Further, the applicant must make a full and frank disclosure of all material facts, since the opposing party is not present to dispute any of the applicant's assertions.
This duty of full and frank disclosure is a recurring theme. In Grigoriou v Christoforou it was held that:
"the procedure via an ex-parte application requires the applicant to disclose to the court all material facts which may have an influence in the court judgement. Such application is uberrima fides. The applicant has a duty to bring to the attention of the court any facts which he knew or which with reasonable diligence ought to have known which are favourable for the absent party and which may influence the judgement of the court."(2)
In its recent decision in Delincyp Company Ltd v Zronek Wolfgang,(3) the Supreme Court reaffirmed this principle and clarified that full and frank disclosure involves more than providing the court with every possible document and leaving it to discern what might be significant. This presents the risk that the court might be 'unable to see the wood for the trees' in the time available. On the contrary, the applicant must separate the significant matters and actively bring them to the court's attention, as indicated in Re Application of Commerzbank Auslandsbanken Holding AG and Others:
"In light of the drastic effects that usually follow a finding of the court that there was no full disclosure, in recent years two phenomena have been observed. First a justifiable fear on behalf of applicant lawyers as to the danger that their side may be deemed to have failed to make full disclosure. This has resulted in large volumes of documents being presented before the court, which, without explanation, most of the time tend to confuse instead of enlightening the court. As was mentioned in the English appeal case of National Bank of Sharjah v. Dellborg, The Times, December 24, 1992 (CA), there is an essential difference between full and frank disclosure and the flooding of the court with many documents, most of which are non-essential and unnecessary for the purpose before the court. It is therefore very important that the affidavit that supports the applicant should briefly explain the importance of the documents attached thereto. Furthermore, the important part of the documents will need to be highlighted so that the material facts are easily visible from a simple connected reading of the affidavit and the documents. Otherwise there is a danger that the disclosure may be deemed not to be full and frank."(4)
For further information on this topic please contact Costas Stamatiou at Elias Neocleous & Co LLC by telephone (+357 25 110 110) or email (email@example.com). The Elias Neocleous & Co LLC website can be accessed at www.neo.law.
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