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Issuance of worldwide freezing orders pursuant to the Lugano Convention

Cyprus court examines the standing of receivership orders and worldwide freezing orders in aid of foreign proceedings under the Lugano Convention


In an interesting judgment, the District Court of Nicosia examined, the unchartered area, of whether Cyprus Courts, in aid of a Swiss proceeding, can, pursuant to Article 31 of the Lugano Convention (the “Convention”), grant relief affecting the respond’s foreign assets, either in the form of receivership order or of worldwide freezing order (Mareva order).


BVI proceedings


The Applicants initially had applied to the BVI courts and succeeded- at first instance - in issuing Receivership orders in aid of the proceedings in Switzerland, by virtue of the Black Swan Jurisdiction. The Eastern Caribbean Supreme Court in the Court of Appeal (the “CoA”) set aside the Receivership order, inter alia, on the ground that there was no risk of dissipation. Obiter, the CoA notably commented that for the present case, a freezing order would be a more appropriate remedy than a Receivership order.


Cypriot proceedings


Further to the judgment of the CoA, the Applicant initiated proceedings in Cyprus in aid of the ongoing proceedings in Switzerland by virtue of Article 31 of the Convention, requesting the issuance of a Receivership order and worldwide freezing orders.


The Cypriot judge considered the (a) nature of the protective measures sought under Article 31 of the Convention; and (b) well-settled test of requiring a “real connecting link” between the subject matter of the measures sought and the territorial jurisdiction of the contracting state, before such measures are sought, as laid down in the landmark case of C-391/95, Van Uden Maritime BV v. Deco Line and Another [1998] ECR I-07091.


In doing so, it concluded that it was appropriate to issue a worldwide freezing order along with ancillary disclosure for policing purposes- as the common practice.


Interestingly, the Respondents’ Counsel indicated that as of today, it is unclear whether Cyprus receivership and worldwide freezing orders concerning assets abroad could satisfy the “real connecting link” test of Van Uden, under Article 31 of the Convention. In turn, he argued that since all of the Respondent’s assets, were situated in Russia and there were no assets within the amenable jurisdiction of the Cyprus Courts, no real connecting link existed in Cyprus.


The judge pithily reasoned that Cyprus Courts exert jurisdiction in personam and as long as the orders are sought against Respondents within or situated in the territorial jurisdiction of Cyprus, a real connecting link exist, even if all their assets were situated abroad.


In doing so, the learned judge referred to the eminent work of Andrian Briggs QC, Civil Jurisdiction and Judgments 6th and enunciated the dicta of Credit Suisse Fides Trust SA v Cuoghi (1998) QB 818 and Masri v Consolidated Contractors International (UK) Ltd & Other (No 2) (2008) QB 450.


Comment


The judge’s conclusion is welcoming since it provides clarity on a grey area of private international law and most importantly indicates that the Cyprus Courts are willing to utilize their nuclear weapon where appropriate - to aid foreign proceedings.


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The content of this article is valid as of the date of its first publication. It is only intended to provide a brief introduction to the particular subject matter. Detailed specialist advice should be taken prior to taking or refraining from taking any action as a result of the information contained in this article.


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