Free Standing Injunctions after Broad Idea International LTD V.Convoy Collateral LTD

The Courts of Cyprus have jurisdiction to issue “free standing” injunctions in aid of proceedings pending before Courts of the EU member states as per the article 35 of the EU Regulation No. 1215/2012 without the filling of substantive proceedings in Cyprus. Same jurisdictional power under section 9 of the Cyprus International Commercial Arbitration Law N. 101/1987 gives authority to Cyprus Courts to issue interim protective measures in aid of international commercial arbitration cases.

In a recent case of the District Court of Nicosia the Judge declined to issue freezing orders and Norwich Pharmacal orders in aid of Russian proceedings. The ruling of the Judge was based on the lack of necessary legal framework providing such power to Cyprus Courts. There is no provision in the Cyprus Law conferring power on the Cyprus Courts to grant interim inunctions when substantive proceedings are pending
outside the EU. In the Nicosia case the plaintiffs initiated proceedings in the BVI and sought worldwide freezing injunction and Norwich Pharmacal in aid of the foreign proceedings.

Broad Idea International Ltd v. Convoy Collateral Ltd, Privy Council Appeal Nos: 0043 of 2020 and 0073 of 2020, judgement given on 04/10/2021

The majority of the Privy Council rejected a long-established principle set by previous authorities, most notably the leading case The Siskina (Owners of cargo lately Laden on Board) v. Distos Compania Naviera SA (1979) AC 210. The judgment confirmed that when a common law Court has personal jurisdiction over a party, it further has power to grant a freezing injunction against that party in aid of foreign proceedings to assist the enforcement of a prospective or an existing foreign judgment. The Privy Council recognised that the principle set in the “Siskina” was decided at a time when the practice of granting freezing injunctions was yet to mature and that the law and practise have shifted since then. According to the majority, the restrictions on the Court’s power to grant interim injunctions imposed by the “Siskina” were undesirable
in modern day international commerce and legally unsound.
Lord Leggatt concluded by summarising the current test for granting freezing injunction:

  1. The applicant has already been granted or has a good arguable case for being granted a judgement or an order for the payment of a sum of money that is or will be enforceable through the Court,
  2. The respondent holds assets, or will take steps to reduce the value of assets, against which such a judgment could be enforced,
  3. There is a real risk that unless the injunction is granted, the respondent will deal with such assets in a way that is not in line with the ordinary course of business hindering the availability or value of the assets and eventually leaving the judgment unsatisfied.
Possible impact on Cyprus Courts

The Privy Council decision is a landmark development in the filed of injunctions especially for common law jurisdictions such as Cyprus. So far, the Cyprus Courts denied issuing freezing orders where the substantive proceedings were pending before a non-EU state. This recent judgment provides authority expected to be followed by Cyprus Courts in future time.