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In Compania Naviera Iris SA v Andrenal Shipping Company
Ltd,1 the Supreme Court recently
reaffirmed the power of the courts to issue declaratory orders in
accordance with Article 41 of the Administration of Justice
Law.2 The case concerned the filing of an action by
various single ship companies seeking declaratory orders to the
effect that they were the owners of the relevant vessels, which was
disputed by the defendant companies.
As the Supreme Court noted in its judgment, the principles that
regulate the issuance of a declaratory order in the absence of a
claim for special or ancillary remedy are summarised in the Annual
Practice 1960 as follows:
"Construction of Rule: The
validity of the Rule was unsuccessfully attacked in Guaranty
Trust Co. of New York v. Hannay [1915] [1653]2 K.B. 536. That
case may be taken to establish the proposition that the
jurisdiction to make a declaration under the Rule is not confined
to cases in which the plaintiff has a complete and subsisting cause
of action apart from the Rule. But where specific relief, other
than a declaration, is not claimed, the jurisdiction is one which
should be exercised with great caution; and a declaration ought not
to be made upon a preliminary point in an action brought for that
purpose, where the substantive relief must be claimed in another
action..... Where a declaration can be made, it is a matter of
discretion (ib.). The plaintiff must be entitled to relief in the
fullest meaning of the word, but the relief claimed must be
something which it would not be unlawful, or unconstitutional, or
inequitable for the Court to grant, or contrary to the accepted
principles upon which the Court exercises its jurisdiction ..... A
claim for a declaration only, not followed by a claim for
consequential relief, will be carefully watched; but properly
employed it is useful (Gray v. Spyer [1922] 2 Ch. 22, 27,
C.A.). Thus a declaration will not be made against a person who has
asserted no right nor formulated any specific claim (Re Clay
[1919] 1 Ch. 66), and only of a legal right (Nixon v. A.G.
[1930] 1 Ch. 574), not of the plaintiff's right where the
declaration is merely asked as a foundation for substantive relief
which fails (Earl of Dysart v. Hammerton [1914] 1 Ch. 822,
and see ib., [1916] 1 A.C. p.65); nor will a declaration be made
merely to enable the plaintiff to utilise it in a foreign action
(see Guaranty Trust of New York v. Hannay [1915] 2 K.B.
575) ".
While reaffirming this power, the Supreme Court made clear that
the courts should exercise caution when considering actions that
seek only a declaratory order without another ancillary remedy.
Negative declaratory orders
As noted in The Declaratory
Judgment, by Zamir and Woolf:
"Plaintiffs will generally
seek negative declarations where no right of theirs has yet been
infringed and, therefore, coercive relief is usually unobtainable.
They may, however, have been confronted with a demand or threatened
action. An authoritative declaration, dispelling or affirming the
claim of the defendant, may then be useful and desirable as a guide
for the future conduct of the parties...In many cases negative
declarations were sought by plaintiffs anticipating actions against
them, and the propriety of the proceedings was generally not
questioned. It seems that the courts, far from objecting on
principle to such proceedings, examine in each case which is the
more appropriate method, that is, whether the plaintiff should be
left to defend himself if and when he is sued or be allowed to
forestall such a suit by declaratory proceedings. In this process
the court will weigh the interest of the plaintiff against that of
the defendant to see which one turns the scale."
Until 2000 the prevailing attitude to negative declaratory
injunctions was that the discretion in favour of making a negative
declaration was an unusual remedy which would rarely be exercised.
In Gasto Shipping Company Ltd ν Mineag SQM
Africa (PTY) Ltd,3 the Supreme Court of
Cyprus decided as follows, on the basis of the relevant English
case law of the time:
- The issuance of negative declarations is appropriate only in
exceptional circumstances.
- Claims for negative declarations must be closely scrutinised
and subject to vigorous examination.
- The applicant must show that a clear benefit will arise from
the issuance of a negative declaration.
- The court must be persuaded that it would not be possible fully
to award justice unless a negative declaration were issued.
The applicable law in the dispute is one of the factors to be
taken into consideration, and must be considered alongside all
other factors in deciding whether it is appropriate for the court
to issue a negative declaration.
Comment
Courts in Cyprus have the discretionary power to issue
declaratory orders and are prepared to exercise that power, but as
indicated by the case law, each application must be carefully
examined on its own facts, especially if no other remedy is
requested or if a negative declaration is requested.
Footnotes
1.Admiralty Action 13/07 (January 13 2014).
2. Law 14/1960.
3. (1999) 1 CLR 1634.
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