Recognition & Enforcement Of UK Court Judgments In Cyprus Post Brexit

  1. Introduction

As an EU Member State, Cyprus is currently bound by Regulation (EU) No 1215/2012 (‘the EU Regulation’) on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (recast). Under Article 2 of the Regulation ‘judgment’ means any judgment given by a court or tribunal of a Member State. Accordingly, any judgment delivered in a Member State after 10 January 2015 is recognisable and enforceable in any other Member State without the need for a certificate of enforceability.

Alas, under Article 67(2)(a) of the Withdrawal Agreement signed between the EU and the UK, the EU Regulation only applies to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period, i.e. 31 December 2020. Any subsequent UK proceedings therefore cannot proceed under the EU Regulation.

Recognition and enforcement of UK court judgments post-Brexit now proceeds under Cypriot domestic legislation which predates Cyprus joining the EU, namely the Foreign Judgments (Reciprocal Enforcement) Law Cap. 10 (‘the Cyprus Law’), which is supplemented by the Foreign Judgments (Reciprocal Enforcement) Rules 1062/1935 (‘the Cyprus Rules’). The Cyprus Law specifically covers judgments obtained in UK courts under Article 9.

In addition, Cyprus and the UK remain bound by the Hague Convention on Choice of Court Agreements (‘the Hague Court Agreements Convention’), which applies to exclusive choice of court agreements concluded in civil or commercial matters. Under Article 8 a judgment given by a court of a Contracting State designated in an exclusive choice of court agreement shall be recognised and enforced in other Contracting States.

  1. Recognition & enforcement of a UK judgment under the Cyprus Law

In Achilleas Konstantinou and others v Demokritos Publishing Company Ltd (1996) 1 AAD 206, the Cyprus Supreme Court held that when a foreign judgment is registrable under the provisions of the Cyprus Law, then the person who holds the benefit of that judgment has no alternative but to register that foreign judgment under the Cyprus Law for it to become enforceable.

Under Article 2 of the Cyprus Law ‘judgment’ means a judgment or order given or made by a Court in any civil or criminal proceedings, for the payment of a sum of money in respect of compensation or damages to any injured party. The above definition is the same as the definition of ‘judgment’ in section 11(1) of the Foreign Judgments (Reciprocal Enforcement) Act, 1933, in England.

Under Article 3(2)(1) the Cyprus Law provisions apply where the judgment to be registered is final as between the parties. Under Article 3(3) a judgment shall be deemed to be final notwithstanding that an appeal may be pending against it, or that it may still be subject to appeal, in the courts of the country of the original court. In BM-Bank JSC (former BM-BANK και OJSC BANK OF MOSCOW) ν. Andrey Valerievich Chernyakov and others, Application no.: 1/17, 7/7/2017 it was held that for the purposes of Article 3(3) a judgment is deemed final where all margins for review on the merits have been exhausted. This definition could therefore extend to summary judgments.

The Cyprus Law under Article 9 applies on UK territory and on judgments obtained in UK courts. In Gazin Holdings Corp ν. Magot Incorporation Limited, Claim No: 2715/2015, 18/8/2016 it was held that the provisions of the Cyprus Law extend to foreign courts regarding which a relevant order has been issued under the provisions of Article 3. Such an order has been made by the Council and includes inter alia the (former) House of Lords, and the Supreme Court of Judicature i.e. the Court of Appeal and the High Court of Justice for England and Wales.

A Cypriot court shall not review the merits of a foreign judgment. However, it may refuse to register or indeed set aside a registered judgment upon application of the aggrieved party under Article 6 of the Cyprus Law, if that judgment has been registered in violation of the Cyprus Law; if the original court had no jurisdiction; if the judgment debtor in the original proceedings was not given sufficient notice; if the judgment entails fraud; if enforcement of the judgment is against public policy in Cyprus; if the applicant for registration is not a person entitled to the benefits of the original judgment; or if final judgment was issued on the disputed  matter from a court having jurisdiction prior to the judgment of the original court.

Under Article 4(2) of the Cyprus Law a successfully registered foreign judgment has (a) the same force of law and bears the same result in terms of enforcement (b) enforcement proceedings may be commenced (c) the claimed damages bear interest and (d) the Court of registration retains the same control over enforcement, as if the judgment had been issued by the court of registration at the date the foreign judgment was registered.

Recognition

Under Article 4 of the Cyprus Law the judgment creditor may apply to the District Court at any time within 6 years of the date of the judgment, or in case of an appeal within 6 years of the final judgment in the appeals process, to register the judgment in the District Court. Under the Cyprus Rules, this application may be made ex parte and must be accompanied by an affidavit of facts which complies with the specific provisions of Rule 3(1)(b) of the Cyprus Rules.

An order giving leave to register the judgment shall be drawn up on behalf of the judgment creditor. Moreover, every such order shall state the period within which an application may be made to set aside the registration. Such application must be made by summons supported by an affidavit, and under Rule 11 of the Cyprus Rules if an application is made to set aside the registration of a judgment, execution shall not issue until such application has been disposed of.

A notice in writing of the registration of the judgment must be served on the judgment debtor (а) if within Cyprus by service as in the case of a writ of summons, unless some other mode of service is ordered by the Court or a Judge ; and (b) if out of Cyprus, in accordance with the rules applicable to the service of a writ of summons out of Cyprus, save that special leave to serve out of Cyprus shall not be required.

Enforcement

Enforcement against either movable or immovable property is possible following successful registration of the foreign judgment. Enforcement proceeds under Article 14 of the Civil Procedure Law, which allows a writ of execution for sale of movables, a writ for sale of immovable property or a charging order/security over the property through registering a MEMO at the Land Registry, a writ of sequestration of immovable property, a garnishee/third party order, a writ of possession, a writ of delivery, and court injunctions and/or orders encumbering the interest of the judgment debtor on shares or other stock.

Execution of a writ of attachment of money held in a bank account can be used for the payment of a judgment debt, and execution measures such as freezing or attachment of shares belonging to a judgment debtor may also be taken. In this case the judgment creditor must apply to court under The Law On Charging Orders Of 1992 (31 (Ι)/1992) and specifically under Article 3 for the issuance of a charging order over the assets of the judgment debtor.

Where the judgment debtor is a company, insolvency proceedings may be commenced by the court on petition by the creditor if the company is unable to pay its debts under any of the provisions of Article 212 of the Cyprus Company Law, upon successful recognition of the foreign judgment. However, insolvency proceedings are not regarded as an enforcement method per se, and attention should be given to other secured/unsecured creditors and proven debts, as well as preferential payments under Article 300.

Upon filing an application for registration of a UK judgment, one should also consider seeking an interim order such as a freezing injunction from a Court in Cyprus under Article 32 of Court of Justice Law (14/60) (‘the Courts Law’), to minimise the risk of alienation of assets, or other adverse action preventing enforcement. Other interim orders could include Chabra orders, Anton Piller and Norwich Pharmacal orders, and appointment of an interim Receiver.

Under Article 32 of the Civil Procedure Law a Cypriot court may issue an interim order where it deems it just and convenient, provided that (i) a serious issue to be tried exists at the hearing of the main proceedings, (ii) it appears probable that the Applicant may obtain a favourable judgement, and (iii) there is a significant risk that if the interim order is not issued, it will be difficult or impossible for justice to be served at a later stage. Moreover, Cypriot law requires that the applicant files counter-security to cover respondent’s losses, should the court later discover such order was sought without reasonable cause or mala fides.

Costs & duration

Recognition of a foreign judgment under the Cyprus Law can take place between 1-2 months of filing an ex-parte application under Rule 2 of the accompanying Cyprus Rules. Commencement of enforcement however may be delayed upon the filing of a by summons application to set aside the recognised judgement as outlined above by as much as 3-5 months. Procedural costs for filing the application and serving the pleadings to the judgment debtors are minimal. Legal costs shall vary with the complexity of the case, and the strength of any opposition to the recognition of the foreign judgment.

  1. Conclusion

Recognition of a UK court judgment which is deemed final post Brexit now proceeds under the Cyprus Law, and could be obtained following an ex parte application by the judgment creditor within 1-2 months. Enforcement could however be delayed by 3-5 months should an application by summons for setting aside the recognised judgment be filed by the judgment debtor.

Once a foreign judgment is recognised, it is enforced as if it were a domestic judgment of the court of registration. Enforcement against both movable and immovable property is possible, and proceeds under the Civil Procedure Law. Insolvency proceedings against a debtor company are not an enforcement method per se, but could be commenced by the court following application by the judgment creditor.  

Moreover, an application for an interim order in Cyprus such as a freezing injunction under Article 32 of the Courts Law should be considered upon filing the application for recognition of the UK judgment. This shall reduce associated risks such as alienation of assets. 

Author: Ioannis Generalis

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