articles | 04 May 2020 | Soteris Pittas & Co LLC

CYPRUS: Power of the Court to Order the Continuation of a Mareva Injunction and Receivership Post Judgment, in Aid of Execution

Under Cyprus Law, any interim order or interim relief granted in the context of an action, Originating Summons or petition, remains in force until the date of issue of a final decision on the merits of such proceedings.

In the case RCB Bank ltd -v- Igor Bakay & Others (2017), the District Court of Limassol, relying on the appellate case Limnare Shipping Co Ltd -v- Mounir Boustani (1981) 1 CLR 386, decided to extend post judgment, the validity of mareva injunctions and of an interim Receivership, until the final execution of the final judgment, which was about to be issued in the above action.

The Linmare Shipping Co. Ltd v. Mounir Boustani (Supra) was an Admiralty case, and in the context of which the Plaintiff had previously succeeded in getting a Mareva Injunction restraining the defendant from taking its assets outside of jurisdiction. The counsel of the Plaintiff in the course of his address during the final hearing of the case and before the issue of the final judgment applied orally for the issued Mareva Injunctions, to remain in force post judgment in aid of execution.

In assessing the request of the Plaintiff for continuation of the Mareva Injunction post judgment, the Supreme Court (in its admiralty jurisdiction), relied on the English case of Stewart Chartering v C. & O. Managements [1980] 1 All ER 718 and granted such request for extension of the validity of the injunctions post judgment, by adopting inter alia the following passage:.

"[……] If the plaintiffs were unable to obtain a judgment in the present case without abandoning their Mareva injunction, it would be open to a defendant to defeat the very purpose of the proceedings simply by declining to enter an appearance. Such conduct would be an abuse of the process of the Court; and in my judgment the Court has power to take the necessary steps, by virtue of its inherent jurisdiction, to prevent any such abuse of its process. The appropriate action to be taken by the Court in such circumstances is, in my judgment to grant leave to the plaintiffs, in an appropriate case, to enter judgment in default of appearance, notwithstanding that the writ is indorsed with a claim for an injunction. If the Court so acts, it can also order that the Mareva injunction continue in force after the judgment, in aid of execution. The purpose of a Mareva injunction is to prevent a defendant from removing his assets from the jurisdiction so as to prevent the plaintiff from obtaining the fruits of his judgment; from this it follows that the policy underlying the Mareva injunction can only be given effect to if the Court has power to continue the Mareva injunction after judgment, in aid of execution. [….]".

(emphasis added)

Based on inter alia the above passage, the Cypriot Supreme Court held that leaving it open to the defendant to defeat the very purpose for which the injunction was granted, would be an abuse of the process of the Court, and for this reason the Court, in the course of exercising its inherent jurisdiction to control its own process, ordered for the Mareva Injunction to remain in force post judgment in aid of execution.

It should be noted that a request for the continuation of a Mareva Injunction post judgment in aid of execution, can be made by the Applicant orally in Court, but has to be made before the Court issues the judgment. This is because, according to the case of Ioannou v Manoli (1998) 1 AAD 1423, if the Court intends for the prohibitive injunctions to remain in force after the judgment is issued, it has to explicitly state it in its final judgment.

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