Introduction
Facts
Decision
Comment
The District Court of Nicosia accepted a request to offer directions, in the form of clarifications, on the ambit of a freezing order which was previously issued by the Court. With its judgment,(1) the Court found that it was able to offer clarification on the scope of application of an order. Thus, it proceeded to offer the requested clarifications.
The judgment was issued further to the application of a Cyprus bank, which had been served and had to comply with the freezing order. With its judgment, the Court set a useful precedent by allowing a third party served with a Court order to receive clarifications as to the ambit and application of the order.
The judgment was issued in the frames of a multi-million euro claim for fraud and conspiracy, during which freezing injunctions were issued against six individuals, freezing assets exceeding €350,000,000 in value.
The claimants served the injunctions on Cyprus banks, including a bank which had bank accounts maintained by companies belonging to one of the six individuals. The bank found itself in the difficult position of having to decide whether to freeze the bank accounts of the companies in accordance with proper application of the freezing injunctions.
As a result, the bank took the matter to court and sought directions on ambit of the freezing injunctions. The claimants opposed the application on the ground that the Court did not have competence to clarify or interpret the scope of an order previously issued by the Court.
The District Court of Nicosia ruled that a third party who is served with a court order may request directions from the court on the proper application of that order so that it is not found in contempt. Whereas applications for the interpretation or clarification of a court order by a party who opposed the issuing of the same are not generally permissible, the Court found that applications requesting directions to enable the effective enforcement of a court order by a third party may be allowed.
The Court went on to clarify that, unless the wording of a freezing order provides otherwise, a freezing order against an individual only covers the assets of the individual, including shares or interests in companies, but does not extend to the assets of companies belonging to that individual.
This judgment constitutes a significant and useful development in Cyprus litigation for third parties, such as banks, which are often served with court orders of uncertain ambit. The difficulties in the application of court orders often faced by banks and other stakeholders that hold assets for others can now be addressed with a relevant intervention and directions' application to the court.
For further information on this topic please contact Irena Markitani at AG Erotocritou LLC by telephone (+357 25 370 101) or email ([email protected]). The AG Erotocritou LLC​ website can be accessed at www.erotocritou.com.
Endnotes
(1) Libra Capital Limited and others v Felix Bitzios and others, action No.1339/20, 07/08/2020.