In an era where business relationships and financial affairs are extending over national boundaries, there is a need for global legal collaboration between nations in order to preserve the legal rights of parties. One of the main pillars of global legal collaboration is the ability of a judgment creditor to seek the recognition and enforcement of a judgment issued by a foreign court, in another country’s jurisdiction, ensuring that justice is served.
Although there is no unified system for the enforcement of foreign judgments, Cyprus, as one of the EU’s Member States, has adopted the European Council (EC) Regulations on recognition and enforcement, while, on an international level, has entered into bilateral agreements with several countries and has developed different mechanisms for the recognition and enforcement of foreign judgments, via the enactment of legislation and through common law. The statutory regime that should be applied for the recognition and enforcement of a judgment depends on the facts of each case and mainly on the country where the judgment was issued, as explained below.
I. LEGAL FRAMEWORK FOR RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS
- EU Judgments
The Republic of Cyprus is bound by the following EC Regulations, by virtue of which a judgment issued by a Court of any EU Member State (except Denmark) is recognized and has the same legal effect as if it had been issued by a Cyprus Court:
EC Regulation 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters (“Brussels I”)
Notwithstanding the fact that the EC Regulation 44/2001, known as “Brussels I”, was repealed by Regulation 1215/2012, it continues to apply to, inter alia, judgments given in civil and commercial matters, issued by the Courts of Member States (except Denmark), before 10/01/2015.
For judgments falling under the scope of this Regulation, the judgment creditor, who seeks to obtain a declaration of enforceability within the jurisdiction of the Republic of Cyprus , must apply ex-parte (without notifying the judgment debtor) to the competent Court to issue such order. Once issued, the certificate of enforceability must be served to the judgment debtor, in accordance with the provisions of the Regulation and the latter will have the right to object to the order, within a specified time period. Provided that no appeal is filed against the issue of the Order, the foreign judgment becomes enforceable within the Republic of Cyprus.
- EC Regulation 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters (recast)
Under the scope of EC Regulation 1215/2012 falls any judgment issued by a Court of a Member State (except Denmark) after 10/01/2015. The main aim of the above-mentioned Regulation is to facilitate the recognition process by abolishing the intermediate procedure required for the issuance of a declaration of enforceability from the enforcement Court of the Member State. Specifically, Article 36 of the Regulation provides that a judgment given in a Member State, which is enforceable in that Member State, shall be automatically recognized in the other Member State without any special procedure required. Furthermore, Article 39 provides that a judgment given in a Member State, which is enforceable in that Member State, shall be enforceable in the other Member State without any declaration of enforceability being required.
In that respect, the party who wishes to invoke in Cyprus a foreign judgment given by a Court of any Member State shall produce a certificate of enforceability, issued by the Court of origin as well as a copy of the judgment, stamped and sealed, in accordance with the provisions of the Regulation.
As Brussels I, Regulation 1215/2012 applies to any judgment in civil and commercial matters. However, it does not extend to judgments relating to revenues, customs or administrative matters or to the liability of the State, the status or legal capacity of natural persons, matrimonial matters, wills and succession, bankruptcy and social security, as well as arbitral awards.
- EC Regulation 805/2004 – European Enforcement Order
The purpose of the European Enforcement Order, as established under EC Regulation 805/2004, is to enable judgments on uncontested civil and commercial claims, issued by a Court of a Member State (except Denmark) to be automatically recognized and enforced in any other Member State, without the need of any intermediate proceedings.
- EC Regulation No. 861/2007 – European Small Claims Procedure (ESCP)
The ESCP is addressed to civil and commercial disputes across the EU (except Denmark), where the value of the claim does not exceed €5.000. Aiming to facilitate the recognition and enforcement procedure, any decision issued under ESCP is recognized and enforced in other EU countries (except Denmark) without the need for a declaration of enforceability. For more information please visit our relevant article on the European Small Claims Procedure.
- UK Judgments
Going back to the years when Cyprus was a Crown colony, the Foreign Judgments (Reciprocal Enforcement) Law of 1935 (Cap. 10) was enacted and remains in force until today, providing for the registration in Cyprus of judgments issued in the United Kingdom, within 6 years from the date issued. Therefore, with the exit of the United Kingdom from the European Union and the absence of any relevant provision in the EU-UK Trade and Cooperation Agreement, Cyprus remains unaffected as it comes to the recognition of such judgments by virtue of the provisions of the above-mentioned legislation.
Procedurally, any party interested in registering an English Judgment in Cyprus shall apply, under the provisions of Cap. 10, ex-parte (without notifying the other party) for such order. Following its issuance, the order must be served to the judgment debtor who has the right to dispute the recognition by applying to the Court to set-aside the registration.
- Non- EU Judgments and Judgments issued by countries with which Cyprus has Bilateral Agreements
The Decisions of Foreign Courts (Recognition, Registration and Enforcement) Law of 2000 (Law 121(I)/2000) provides the legal framework for the recognition and enforcement of any foreign judgments issued by any Court or tribunal of a foreign country with whom Cyprus has entered into a bilateral agreement for the mutual recognition and enforcement of judgments.
Cyprus has entered into various Bilateral Agreements and Treaties relating to the recognition and enforcement of foreign judgments with a number of countries, included but not limited to the Russian Federation, Ukraine, Georgia, China, Belarus, Egypt, Serbia etc. Such Treaties provide also for the procedure that needs to be followed regarding the recognition of judgments by both signatory parties. In the absence of such provisions, the procedure through the Court, as indicated under Law 121(I)/2000, shall be followed by any judgment creditor.
- Recognition and Enforcement of a foreign judgment through common law
As regards foreign judgments, which were issued by the Court of a country outside the EU and with whom Cyprus has not entered into any Bilateral Agreement or Treaty or Convention, they can be enforced by the judgment creditor, within the Republic, by initiating fresh proceedings and seeking relief, identical to the relief provided by the foreign judgment. Simultaneously with the filing of the civil action, an interim relief may be sought by the Court, such as a freezing order over any assets of the judgment debtor, to preserve the rights of the judgment creditor until the issue of a final decision.
Once the civil action and/or any interim order issued is served to the judgment debtor/defendant, the judgment creditor/claimant may apply, under the relevant provisions of the Civil Procedure Rules, for a summary judgment, on the ground that the defendant has no defense to the claim.
II. TRACING & PRESERVING JUDGMENT DEBTOR’S ASSETS WITHIN THE REPUBLIC
Although procedures for the recognition and enforcement of a foreign judgment are well-entrenched in our legal system, one of the main concerns of a judgment creditor, before initiating any procedures for the recognition and execution of a foreign judgment, is how the execution will be practically performed. Since information regarding a party’s assets is not publicly available, either for a natural person or a legal entity, tracing assets may be crucial for any further decisions taken by the judgment creditor.
Once identified, any assets held by the judgment debtor has to be preserved, to avoid the risk of alienation or dissipation, pending the completion of any procedures for the recognition and enforcement of a foreign judgment. Disclosure of information and preservation of a debtor’s assets can be performed only through the Court, which is vested with a wide discretionary power to issue interim orders and injunctions, as the followings:
- Tracing/Discovering Order (Norwich Pharmacal Order) – The purpose of such order is to enable the Applicant to obtain any information, as well as trace and preserve assets held by the judgment debtor. Such an Order is commonly addressed to a third innocent party (i.e a bank), who is ordered to provide the required information.
- Freezing Order (Mareva Injunction) – Aiming to preserve the applicant’s rights, a Freezing Order prevents and prohibits the respondent from disposing of, transferring or otherwise alienating his assets specified in the order.
- Chabra Order – Another type of freezing order which is not addressed to the debtor but to a third party who holds assets for the benefit of the first, in his capacity as a trustee or nominee.
III. DOMESTIC EXECUTION MEASURES AVAILABLE
As stated above, once the relevant procedure for the recognition and enforcement of a foreign judgment is completed, it adopts the same legal effect as if it has been issued by a Cypriot Court. Therefore, the following enforcement measures and procedures, as provided under the Civil Procedure Law of 1960 (Cap. 6) are available for the judgment creditor:
- Writ of movable or immovable property of the judgment debtor;
- Registration of a charge over an immovable property through the Land Registry Department (“MEMO”);
- Guarnishee proceedings – a procedure by virtue of which the judgment creditor may seek to freeze the debtor’s bank accounts and payment of the amount awarded under the judgment;
- Provided that the judgment debtor is a Cypriot company, delivery of a statutory demand under the Companies Law (Cap. 113) for payment of the liquidated and undisputed sum within 21 days from the date of its service. In case of failure to comply, the judgment creditor has the right to file a winding-up petition to the Court;
- Appointment of equitable receiver;
- Examination of the judgment debtor in respect of his financial situation and issuance of an order for the repayment of the judgment debt via monthly installments.