Appointment of an Equitable Receiver in Cyprus

Описание: Harneys successfully secured the appointment of a receiver by way of equitable execution over a Cyprus private company, in order to assist in the execution of a judgment against a villa in Limassol Marina.

Facts

Our client obtained a Singapore judgment for over USD 124 million plus interest against the defendants. After filing a common law action in Cyprus based on that judgment, the District Court of Larnaca issued a summary judgment, effectively recognising and localising the Singapore judgment in Cyprus against the judgment debtors.

Subsequent enforcement measures were pursued in Cyprus to target assets of the judgment debtors located within the jurisdiction.

One such asset was a villa at the Limassol Marina, for which no separate title deed had been issued. This, in turn, necessitated the filing of an application for the appointment of a receiver over the judgment debtor owning the villa and/or the villa itself.

Legal background

The Cyprus courts may appoint a receiver by way of equitable execution, where there exists a practical or legal hindrance or difficulty, which prevents enforcement through ordinary statutory means.

The courts must be satisfied that the receiver is likely to meaningfully assist in executing the judgment. The appointment is discretionary and grounded in equity principles.

This type of order is particularly appropriate, as in this case, when the debtor's interest in immovable property cannot be enforced under existing statutory provisions.

The case

Harneys argued that there was a legal impediment to execution against the property, as no separate title deed had been issued in the name of the judgment debtor.

The property, one of the villas at the Limassol Marina, is held by the judgment debtor under a long-term lease agreement with the Ministry of Energy, Commerce and Industry, as well as a sublease agreement with another Cyprus company.

Following the issuance of the summary judgment, the judgment creditor attempted to register a memorandum of judgment over the property, with the intention of initiating its sale under the provisions of the Cyprus Civil Procedure Law, Cap. 6. However, this was not possible. The District Lands Office of Limassol confirmed in writing that such registration could not be effected "since [the judgment debtor] is not the registered owner [of the property] as provided by the relevant legislation."

Relying on this confirmation, Harneys argued that the absence of registered title deed meant that no other legal mechanism was available to execute the judgment against the property. This constituted a clear impediment to execution against the property, thereby justifying the appointment of a receiver by way of equitable execution.

Ruling

The District Court of Larnaca held that, indeed, the absence of a separate title deed created a legal difficulty that prevented the property from being sold through the ordinary execution process.

Accordingly, the Court found it necessary to appoint a receiver with powers to take control of the property, assess its condition and proceed with a private sale by one of several possible means:

assignment of rights;

cancellation of the existing lease and sublease agreements and execution of new agreements with a buyer; or

even the transfer of rights from the lease and sublease agreements to a company, with the sale ultimately effected through the sale of that company's shares.

The Court concluded that this was an appropriate case for the appointment of a receiver, finding that there was a reasonable prospect that the receiver's involvement and the ancillary powers granted would substantially assist in the execution of the judgment.

Consequently, the Court appointed the proposed receiver, an experienced lawyer and insolvency practitioner, and issued ancillary orders to facilitate the execution process.

Comment

This decision is particularly significant in the context of cross-border litigation and judgment enforcement, as it demonstrates the Cyprus cour...