Injunctions in Cyprus

Injunction in Cyprus - Polycarpos Philippou

Definition and Understanding of Injunctions

An injunction is a court order that requires a person or entity to either cease doing or start doing a specific action. It is an equitable remedy that can be used in various areas of law, including family law and harassment cases. Injunctions serve as a powerful tool to either compel a party to act (mandatory injunction) or to prevent a party from acting (prohibitory injunction). For instance, a mandatory injunction might require a company to clean up environmental damage it caused, while a prohibitory injunction could stop a neighbor from building a fence that encroaches on your property. These court orders are essential in maintaining fairness and justice, ensuring that parties adhere to legal and ethical standards.

Injunctions may be issued as a final remedy (final injunction) at the end of a case or during the claim to retain the status quo until the final judgment is issued (called interim or interlocutory injunctions). For example, interim injunctions may freeze the money of a defendant in bank accounts in Cyprus and abroad until the case is finally decided (Freezing or Mareva Injunctions), order a defendant to permit access to his business for a search of important documents, stop the sale of a property or the construction of a project.

Without notice (ex-parte) applications in Cyprus

Interim injunctions can be made with notice to the defendant or without notice to the defendant. Without notice applications are the applications made and decided by the Court before the other party has the ability to object to it. If an injunction is issued, then the Court:

• will order the service of the injunction to the defendant and the date when the defendant may appear in Court with his objection (referred to as the date when the injunction is returnable)
• will order the claimant to give a guarantee against the damages caused to the defendant should the defendant successfully object to it and sets it aside. The amount of such guarantee is at the discretion of the Court. Usually, the Court does not ask for collateral for the guarantee.

On the day the injunction is returnable, the defendant has the right to seek its cancellation or its modification (for example to permit the use of a certain sum of money for living and legal expenses). To apply for a without notice (also referred to as ex-parte) application for an injunction in Cyprus it must be extremely urgent or other special circumstances must exist which justify the issuance of the injunction without notice.

The requirement of urgency is in addition to the other requirements for the issuance of an injunction mentioned below. If the Court is not satisfied as to the urgency of the matter it will order the service of the application (without making an injunction) or reject the application altogether.

Requirements for the issuance of an interim injunction

Where an injunction is sought with an application where notice is given to the defendant, the Court will have to be satisfied with the following requirements for issuing a preliminary injunction:

• There is a serious question to be tried at the hearing
• There is a probability that the plaintiff is entitled to relief
• It will be difficult or impossible to do complete justice at a later stage if the injunction is not issued.

In addition, the issuance of an injunction must be just and equitable in the circumstances of the case. The first requirement, on the serious question to be tried at the hearing, refers to the pleadings showing an arguable case. The second requirement, that there is a probability the claimant is entitled to relief, refers to the evidential strength of the pleaded case.

The third requirement usually refers to one of the following three circumstances:

• When damages are an inadequate remedy (either because of difficulties in quantification proof or the type of loss cannot be compensated with money. For example, copyright protection)
• When the injunction has to be issued to avoid a risk of non-payment (for example against persons who are likely to dissipate their assets)
• When the injunction has to be issued to allow the claimant to prove a case (such as search orders for evidence) or proceed with a case (disclosure orders against persons that are not liable for a claim but know the identity of a person against whom there is a claim).

Requirements for the issuance of a without-notice application

Where a claimant applies for a without notice injunction, then in addition to the standard injunction requirements that must be proven he must:

• Prove that it is extremely urgent or other special circumstances exist which justify the issuance of the injunction without notice (as explained above). The Court will reject applications when there is an unreasonable delay to apply for the injunction
• Disclose all information that may possibly affect the judgment of the court (full and honest disclosure of all material facts)

These two grounds are the main sources of objection by defendants. If the defendants succeed in them the injunction is cancelled.

Types of injunctions: Prohibitory injunction

In Cyprus, there is no specific statutory mention of freezing orders or search orders, however, they apply in a similar way as in England. The Cypriot Courts, following English case law, have issued worldwide freezing injunctions (freezing the bank accounts of a defendant worldwide up to a certain amount). In a freezing injunction application, the Court will examine amongst other the following:

• The nature of the assets being frozen (for example money in bank accounts) and the ease with which they can be dissipated
• The financial circumstances of the defendant and his business
• If the defendant is a company, the nature of its activities and the time it exists and is in business

The previous behaviour of the defendant and if he has defaulted on other debts and the behavior of the defendant in the particular proceedings (such as not disclosing important information or putting forward contradictory arguments)

A permanent injunction is a court order granted when a plaintiff demonstrates irreparable injury and monetary damages are inadequate. Preliminary and permanent injunctions are issued in legal actions to prevent harmful actions by a defendant based on presented evidence. Temporary restraining orders are a form of court action requiring individuals or entities to either stop or commence specific actions.

Preliminary Relief

Preliminary relief, also known as an interim injunction or temporary injunction, is a type of court order granted before a full trial of the dispute. This form of relief is crucial when immediate action is necessary to prevent irreparable harm. To obtain preliminary relief, the applicant must demonstrate a good arguable case, show that they are likely to suffer irreparable harm if the injunction is not granted, and prove that there is no adequate remedy at law. The primary purpose of preliminary relief is to preserve the status quo until the court can fully hear and decide the case. By doing so, it ensures that the rights of the parties are protected during the legal proceedings.

Enforcement of Injunctions

Enforcement of injunctions is vital to ensure compliance with the court order. Failure to adhere to an injunction can result in contempt of court charges, leading to criminal penalties, civil penalties, monetary sanctions, and even imprisonment. Various methods are available to enforce injunctions, including the use of a Mareva injunction, which is a type of freezing injunction that prevents a party from disposing of or dealing with their assets. Additionally, the court can issue a search order, compelling the defendant to allow the claimant’s representatives to enter their premises and search for, copy, remove, and detain documents, information, or material.

Tracking and enforcing injunctions can be challenging, especially in complex legal proceedings. However, the court plays a crucial role in addressing any issues that arise during enforcement, ensuring that justice is served. Parties involved in such cases are advised to seek legal counsel to navigate the intricacies of compliance with court orders. Ultimately, the enforcement of injunctions is essential to uphold the rule of law and ensure that the parties involved adhere to the court’s directives.