Bringing a claim - initial considerations

Key issues to consider

What key issues should a party consider before bringing a claim?

There are various factors that a party should consider before bringing a claim, including the following:

  • the limitation period;
  • the chance of success and the strength, availability and admissibility of the evidence;
  • the financial position of the prospective defendant and the existence, availability and location of his or her assets;
  • the time and cost involved in litigation;
  • the existence of jurisdiction of the Cypriot courts to hear the case; and
  • the possibility of obtaining interim relief.
Establishing jurisdiction

How is jurisdiction established?

The principal source of law on jurisdiction in civil and commercial matters is Regulation (EU) No. 1215/2012. Where the matter before the court is civil or commercial, it would generally fall within the Regulation’s ambit, and its provisions would therefore apply to determine whether the Cypriot court has jurisdiction. Where the matter before the court does not fall within the Regulation’s ambit, domestic legislation and common law principles apply.

The principal basis for jurisdiction under both regimes is the domicile of the defendant. Persons domiciled in Cyprus may be sued in the Cypriot courts unless it is shown that another court has exclusive jurisdiction, for example because of an exclusive jurisdiction clause. In the case of a foreign defendant, the Cypriot court will consider whether it has subject-matter jurisdiction, that is, whether the facts and matters of the case may be the object of adjudication by it. Examples include actions in which the subject matter is immovable property located in Cyprus and actions for breach of contract in which the breach in question was wholly or partly committed in Cyprus.

Preclusion

Res judicata: is preclusion applicable, and if so how?

Yes, the doctrine of res judicata is recognised under Cyprus law, so where a decision is given by a competent court or tribunal over a particular matter, that same matter cannot be reopened by parties bound by the decision. This doctrine embraces both cause of action estoppel and issue estoppel and may also be used to prevent a party from raising matters that, even though they had not been raised in earlier proceedings, could and should have been raised.

Applicability of foreign laws

In what circumstances will the courts apply foreign laws to determine issues being litigated before them?

The rules for determining the law applicable to obligations arising in civil and commercial matters are set out in Regulation (EC) No. 593/2008 on the law applicable to contractual obligations (Rome I) and Regulation (EC) No. 864/2007 on the law applicable to non-contractual obligations (Rome II). A party may therefore rely on foreign law provided that it is applicable to the circumstances of the case (eg, where a dispute relates to a contract and the contracting parties had agreed that the contract must be governed by that law). Where a party relies on foreign law, it will need to plead and prove that foreign law as a fact to the satisfaction of the court with expert evidence. In the absence of such evidence, the foreign law will be taken as being similar to Cypriot law.

Initial steps

What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?

The most effective and powerful remedies for a claimant to ensure the satisfaction of a potential judgment in his or her favour are the interim freezing orders or injunctions that can be obtained ahead of a trial so that the defendant’s assets are preserved pending final determination of the case. As the true extent of the defendant’s assets is very often unclear, it is also possible to obtain ancillary disclosure orders in support of a freezing order.

If urgency is proved, such interim orders can be obtained swiftly using a without notice application.

The defendant and any third persons served with a freezing order will be under a duty to comply strictly with its terms and will be punished for contempt if they do not. A defendant will therefore be prevented from removing his or her assets from the claimant’s reach so as to make him or herself ‘judgment proof’.

In cases where a freezing order is not issued, a defendant will be able to deal with his or her assets freely. However, if a final judgment is eventually issued against the defendant, the court may hold any prior transactions carried out with the purpose of preventing the satisfaction of the judgment to be fraudulent and void, unless the defendant proves that they were made in good faith and for value.

Freezing assets

When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?

As mentioned above, a freezing order can be a very effective and powerful remedy for a claimant. It is therefore always appropriate to consider obtaining one, especially where it seems likely that the defendant’s assets will be removed from the claimant’s reach.

The court may grant a freezing order if it is satisfied that:

  • there is a serious issue to be tried at the hearing;
  • there appears to be a probability that the plaintiff is entitled to relief;
  • it will be difficult or impossible to achieve complete justice at a later stage without granting it; and
  • the balance of convenience lies in favour of granting it.

Where urgency is proved, the freezing order can be obtained without notice to the defendant. In such cases, there is a duty on the plaintiff to make full and frank disclosure of all relevant information. This is a strict duty, and requires such disclosure to be full, fair and accurate.

Pre-action conduct requirements

Are there requirements for pre-action conduct and what are the consequences of non-compliance?

There are no requirements for pre-action conduct. In certain proceedings, however, such as in winding-up petitions, the law prescribes specific actions and deadlines that must be observed before going to court.

Other interim relief

What other forms of interim relief can be sought?

In addition to the freezing orders already discussed above (which can be of domestic or worldwide application and which can be issued both against a defendant and against third parties holding assets for the benefit of the defendant), a Cypriot court may grant a wide range of interim orders such as:

  • interim injunctions preventing certain acts or events;
  • discovery and tracing orders (Norwich Pharmacal orders);
  • Anton Piller orders to search premises and seize evidence;
  • ancillary disclosure orders;
  • gagging orders;
  • orders for the appointment of an interim receiver or administrator;
  • quia timet injunctions to restrain threatened unlawful action;
  • anti-suit injunctions and anti-enforcement injunctions.
Alternative dispute resolution

Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?

There is no obligation or expectation for the parties to engage in ADR either at the pre-action stage or later in a case, unless specifically agreed by the parties.

Claims against natural persons versus corporations

Are there different considerations for claims against natural persons as opposed to corporations?

While a duly registered company can be sued in its own name and is subject to legal obligations in the same manner as natural persons, a primary consideration when bringing a claim against a company is its ability to satisfy a potential judgment against it. If this would seem implausible, a claimant may consider whether a claim can also be brought against persons that had acted for or represented the company, eg, in negligence or for fraud or conspiracy.

Class actions

Are any of the considerations different for class actions, multi-party or group litigations?

Where numerous persons have the same interest in one cause or matter, they may authorise one or more persons to represent them in the said cause or matter either by suing or defending on their behalf. All the members of the said class should have the same interest in the proceedings and the relief should be beneficial to all.

In addition, two or more actions may be consolidated by the court if their claims involve a common question of law or fact of such importance in proportion to the rest of the matters involved in such actions as to render consolidation desirable.

Third-party funding

What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?

In the absence of a special framework regulating third-party litigation funding, the common law rules against maintenance and champerty will most likely be applied. Accordingly, an agreement by one person to finance another’s litigation in return for a share in the proceeds without having any genuine or substantial interest in the outcome of that litigation may amount to maintenance or champerty and may be deemed unenforceable and void.

Contingency fee arrangements

Can lawyers act on a contingency fee basis? What options are available? What issues should be considered before entering into an arrangement of this nature?

No, since contingency fee agreements between lawyers and clients are unenforceable and void at common law.