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Contributed by Soteris Pittas of SOTERIS PITTAS & CO LLC

September 23rd, 2010

In a recent decision of a Cyprus Court, it has been held that an applicant cannot abuse the machinery of the mareva injunction in order to trap a respondent, in the completion of a transaction, for the sale of assets by the applicant to the respondent, in exchange of consideration, whose transfer and registration was blocked previously by the Applicants.

In the said case, the applicants and the respondents had an agreement for the completion of an option of the respondents to purchase shares of the applicant. Before the completion, a dispute arose between the parties.

The applicants in the morning of the completion date of the transaction, obtained an ex parte mareva injunction, freezing all shares registered in the name of the Respondent.

The applicant did not disclose to the Court at the ex parte hearing that he was planning to serve the ex parte injunction to the respondent after the Completion of the transaction and the payment of the agreed consideration.

After the completion of the transaction and the collection of the agreed price of the shares sold by the applicant, the latter served the mareva injunctions to the respondent.

After an inter-partes hearing, the Court discharged the ex parte injunction on the following inter alia grounds:

(i) The applicant failed to disclose to the Court his plan to use the mareva injunction to trap the respondent in the completion of a transaction for the sale of assets in exchange of consideration.
(ii) The applicant came before the Court with unclean hands.

 


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).

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