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Contributed by Soteris Pittas of SOTERIS PITTAS & CO LLC

Anti-Suit Injunctions

December 28th, 2009

In a recent decision a Cyprus First Instance Court issued an anti-suit injunction blocking and/or forbidding a Cypriot Company from continuing a legal action filed before the Courts of Kazakhstan against another foreign company.

The Cypriot Court granted the anti-suit injunction in order to enforce a forum selection agreement existed between the Parties making the issuing Court (Cyprus Courts) the competent and exclusive forum for the adjudication of any disputes arising out and/or in connection with their agreement.

There is no case law of the Supreme Court of Cyprus on the matter and the Cypriot Court followed the English Common Law principles on Anti-Suit injunctions.

English Courts have long exercised a jurisdiction to restrain a party from instituting proceedings in a foreign Court. It was said that this jurisdiction is grounded “not upon any pretension to the exercise of judicial…… rights abroad” but upon the fact that the party to whom the order is directed is subject to the in personam jurisdiction of the Court.

But although the injunction operates only in personam against the Party to the foreign litigation, the remedy is an indirect interference with the process of the foreign Court and the jurisdiction must be exercised with caution.

In addition, since the jurisdiction is exercised in personam, the Court must have jurisdiction over the Defendants or one of the Defendants.

The underlying principle is that the jurisdiction is exercised “where it is appropriate to avoid injunctice” or “where the foreign proceedings are contrary to equity and good conscience”.

The Cyprus Court – (following the English legal principles on anti-suit injunctions)- may restrain proceedings brought abroad in breach of a contract not to sue, or in breach of a contract to be bound by the result of Cyprus proceedings or to sue only in Cyprus. The Cypriot Courts will also restrain proceedings which interfere with “the due process of the Court”. Thus the Court will enjoin proceedings taken abroad to recover foreign assets, whereby the Party taking them will obtain an unfair advantage over other Claimants in a Cypriot administration of Estates, or bankruptcy or winding up”.

It is also clear that the Court may restrain foreign proceedings which are “oppressive or vexatious”.

It is not necessary for a plaintiff who seeks an injunction to restrain foreign proceedings to seek any relief in Cyprus on the substance of the dispute.

Since May 1st 2004, Cyprus became a member of EU and consequently all decisions of ECJ are binding on the Cyprus Courts.

In the case TURNER –V- GROVIT the ECJ did not leave any doubt about the incompatibility of the anti-suit injunction with the Brussels Regulation. In the above case the ECJ stated that the Regulation is based on a system of mutual trust and equality between the national Courts. That there is no room under the Regulation for a review by one Court of the jurisdiction claimed by another Court-save in a limited number of exceptional cases.

The ECJ has left no room for the anti-suit injunction within the European judicial area. The only room left for anti-suit injunctions is the relationship with non EU Member States.

For further information on this topic please contact Mr. Soteris Pittas at SOTERIS PITTAS & CO LLC, by telephone (+357 25 028460) or by fax (+357 25 028461) or by e-mail (spittas@pittaslegal.com).

 

 

 The statements contained in this publication are not legal opinions and readers should not act on the basis of such statements without first consulting a lawyer.