Summary
Injunctions are orders made by the court against a person that prohibits an action or order the taking of an action. Injunctions may be issued as a final remedy (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. This guide explains the different types of injunctions and the requirements to obtain an injunction in Cyprus.
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 us 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 in the discretion of the Court. Usually, the Court does not ask for collateral for the guarantee. In other words, the claimant will sign a document guaranteeing any damages to the defendant up to a certain amount but will not usually have to deposit such an amount in a bank or the Court.
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. Such circumstances for example arise when:
-It is impossible to give notice about the proceedings and injunction application against a person who is at risk of dissipating his assets upon notice
-If the defendant is in possession of important documents to prove the case against him and there is a real risk of destruction of those documents.
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 for the following requirements:
-There is a serious question to be tried at the hearing
-That 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. As the High Court in Odysseos v Pieris (1982) 1 CLR 557 at 567 said: “The concept of “a probability” imports something more than a mere possibility but something much less than the “balance of probabilities”, the standard required for proof of a civil action”. 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).
When the Court examines whether it is just and equitable to issue an injunction it purports to maintain the status quo that existed prior to the dispute arising. It will take into account the circumstances of the case and examine amongst other:
-The risk of injustice to each of the parties
-Whether the damage complained of is small or immaterial
-If the claimant came to the Court with “clean hands”
-Whether there was any delay in applying to the Court
-Whether it will adversely affect the business of the defendant.
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
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)
Note. This guide contains information for general guidance and does not substitute professional advice which must be sought prior to taking any actions.