Ex-parte injunctions are a critical component of the legal practice in Cyprus, often sought in urgent situations where immediate court intervention is necessary to prevent irreparable harm.
These injunctions are typically applied for without notice, i.e. without the presence of the opposing party (ex-parte), relying heavily on the applicant's presentation of urgency and the merits of their case.
However, a significant aspect that can determine the success of such applications is the timing of the application itself. This article will explore the requirements for obtaining ex-parte injunctions in Cyprus with a particular focus on the timing for submission and, whether an intentional or unintentional delay may severely undermine the application.
Legal Requirements for Ex-Parte Injunctions
To obtain an ex-parte injunction in Cyprus, an applicant must satisfy several legal requirements, as outlined by the courts. These include:
- Prima Facie Case – The applicant must demonstrate a strong prima facie case, showing that there is a serious question to be tried.
- Urgency – The need for immediate court intervention must be evident. This urgency must be genuine and not created by any action or inaction of the applicant.
- Irreparable Harm – The applicant must prove that without the injunction, they would suffer harm that could not be compensated by damages.
- Balance of Convenience – The court must be satisfied that the balance of convenience favors the granting of the injunction, meaning the potential harm to the applicant outweighs any inconvenience to the respondent.
- Full and Frank Disclosure – The applicant is obliged to provide full and frank disclosure of all material facts, including those that might be unfavorable to their case.
The Concept of "Fictitious" Delay
A critical aspect that courts scrutinize in ex-parte applications is the timing of the application. In a recent judgment dated June 26, 2024, from the Nicosia District Court, the court rejected an application for an ex-parte injunction on the grounds of "fictitious" delay.
In this case the applicant sought to prevent the defendants from taking several actions in violation of a Shareholders' Agreement, which, once taken, would have caused irreversible harm. While the court recognized that all legal requirements were proven, the urgency aspect, although present, was hindered by "fictitious" delay, as the court described it. Specifically, the court found that since March 2024 the applicant had known about the actions that the Defendants were about to take, yet only filed the application on June 2024. On the ground that since March the applicant was aware of the date that the event of default was about to take place, the judge rejected submissions that this time (March 2024 to June 2024) was necessary for the applicant to attempt amicable settlement with the Defendants through written correspondence, invoke a 30-day mediation process that was included as a provision to the Shareholders Agreement between the parties, but also to engage lawyers (in Russia and in Cyprus) to examine the case, issue their opinion and accordingly take actions. The judge held that this delay was unjustified and created a false sense of urgency (hence the reference to a "fictitious delay" by the Court), which deprived the respondents of the opportunity to be heard. Similar situations were brought up during court submissions, such as the Supreme Court cases of Tsantis v. Hellenic Bank (2001) and Mylonas v. Bank of Cyprus (2019), where delays attributed to the applicants themselves have been the subject of analysis by the Supreme Court.
Caselaw Analysis:
Tsantis v. Hellenic Bank and Mylonas v. Bank of Cyprus
In Tsantis v. Hellenic Bank (2001), the Supreme Court underscored the necessity of genuine urgency, stating that any delay caused by the applicant undermines their plea for immediate relief. The court emphasized that applicants must act promptly and diligently once they become aware of the need for an injunction and went on the say that within 4 months from the date that an event of default became known, an ex-parte injunction may still be justifiable.
In Mylonas v. Bank of Cyprus (2019), the Supreme Court held that applicants who create their own urgency through inaction cannot expect the courts to accommodate their last-minute requests. The court stressed the importance of procedural fairness and the right of respondents to have sufficient time to prepare their case.
Understanding "Fictitious" Delay as Analysed by the Court
The term "fictitious" in the context of legal proceedings refers to something that is artificially created or not real. In legal terms, a "fictitious" delay is a delay created by the actions or inactions of the applicant, which gives the false impression of urgency even if an event is about to happen with irreversible consequences. This can occur either intentionally, where the applicant deliberately delays action to create a scenario of urgency, or unintentionally, where the applicant's failure to act promptly results in a 'manufactured' urgency.
In the context of injunctions, particularly ex-parte injunctions, courts are wary of such delays because they can distort the judicial process and create an unfair advantage for the applicant. As per court's decision, a "fictitious" delay undermines the principle of fairness by preventing the court from having adequate time to hear the respondent's position to the case. Therefore, courts scrutinize the timeline of events leading up to the application to ensure that any claimed urgency is genuine and not a result of the applicant's own making.
Implications of "Fictitious" Delay
The implications of a "fictitious" delay are profound. When an applicant delays taking action, they not only weaken their argument for urgency but also risk having their application dismissed outright. Courts are cautious against attempts to manipulate the timing of applications to create a false narrative of urgency, which can lead to an abuse of the judicial process. The same scrutiny applies even for unintentional and innocent delays. Therefore, parties need to consider taking legal advice promptly to avoid any detrimental impact on their applications.
Conclusion and Recommendations
In conclusion, while ex-parte injunctions are a powerful tool in the Cypriot legal system, their successful outcome very much depends on the applicant's ability to demonstrate genuine urgency and prompt action. "Fictitious" delay, whether intentional or innocent, can be fatal to an application, as it compromises the principles of fairness and procedural justice. Applicants must be diligent and timely in their actions to avoid the pitfalls of "fictitious" delay and ensure their applications are considered on their merits.
Recommendations:
- Act Promptly. As soon as a potential need for an injunction is identified, take immediate steps to seek legal advice and prepare the necessary documentation.
- Document Everything. Keep a detailed record of all communications and actions taken from the moment an issue arises. This documentation can be crucial in demonstrating the genuineness of the urgency.
- Seek Early Legal Advice. Engage with legal counsel at the earliest opportunity to understand the implications of the situation and to ensure that all procedural requirements are met without unnecessary delays.
- Be Transparent. Provide full and frank disclosure to the court, including any potential weaknesses or delays in your case. Transparency can help in building credibility with the court.
- By following these recommendations, applicants can strengthen their chances of obtaining ex-parte injunctions and avoid the detrimental effects of "fictitious" delays.
About the Case Before the Court:
Although a Shareholders' Agreement was governed by English law and all disputes were to be resolved before the London Court of International Arbitration (LCIA), a general application followed by an ex-parte injunction (interim orders) was filed in Cyprus under the International Commercial Arbitration Law 1987 in aid and support of the arbitration that was about to be filed. The injunction was filed against a number of Cypriot subsidiaries of the parties to the Shareholders' Agreement, in order to preserve the status quo ante. The applicant's delay in taking actions, while requesting for an ex-parte injunction few days before the even of default, caused the Court to reject the application on the ground that 'should the applicant come earlier then the Court would not have been under pressure to issue a drastic measure without the counterparties to be heard'.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.