DURING the last few days/weeks the issue of jurisdiction, i.e. in which Court the purchasers of immovable property in Cyprus must pursue their rights, has again become a major topic. One wonders why.
Could it be that the motive behind this is the pursuit of clients? We sincerely hope not (for the benefit of the purchasers who have already suffered enough, both financially and emotionally). From our part we retain the view that everyone is acting and expressing his/their opinion in a bona fide manner and it is in this spirit and in this spirit alone that what follows herein below is stated.
The issue also surrounding clients potentially being “time-barred” from making a claim has also been raised; we address this latter issue at the end of this article.
So why should the purchasers pursue their rights in Cyprus Courts? The main reasons are the following:
- (i) The purchasers are not “attacking” their agreements with the Developers (or at least the vast majority of them are not). Our policy is to “go after” the Loan Agreements which the purchasers entered into in order to purchase the properties. Why is this? For the obvious reason, that the big threat to the purchasers comes from them. They are facing alleged claims from the Banks of hundreds of thousands of pounds in each case.If we are successful it means that this enormous financial burden is removed. At the same time an enormous threat (as explained below) is done away with.
(ii) On the other hand going after the agreements with the Developers means that, if purchasers are successful, they will end up with a claim against the Developer of some thousands of pounds paid as down payment.
Damages will not be able to be recovered since in the vast majority of cases the properties purchased have not been paid for (since there has been a default on the Loan Agreements) and so the properties will be claimed by the Banks.
And a final word on this. Even if damages can be recovered, who will pay them? In most cases the Developers are bankrupt due to the dramatic fall of the property market. The same applies of course to the return of the down payment paid. - In conjunction with what is stated above what are the realities faced by the Purchasers bearing in mind always that the Loan Agreements were entered into with Cyprus Banks?
(i) The Banks are already proceeding in Cyprus Courts against their clients (the purchasers). What does this mean? The other party to the Loan Agreement has found himself before the Court in Cyprus even without his choice. Should he leave this Court Action undefended?
In our view it would be disastrous for a purchaser to ignore the Court proceedings in Cyprus which are initiated by the Bank. If he does – and provided of course the Court documents are properly served on him or her- the Court will issue a judgment in default against the purchaser and will then have it registered in England and have it executed against his property in England.
Naturally nobody wants this. So the Court Actions against the purchasers in Cyprus Courts have to be defended. This means retaining a Lawyer in Cyprus to represent the purchaser and trust the Court and the legal system in which the purchaser will argue his or her defence.
Incidentally the Cyprus legal system is the same as the English legal system and most judges are English trained. The same applies for a large number of the Lawyers.
(ii) This takes me to the next step. If you are going to raise – as a purchaser – various claims in Court in Cyprus as a defence in an Action against you why risk giving the impression that what you allege is an afterthought just because the Bank has sued you?
Why not move first and take the Bank to Court and raise first the various issues that relate to the illegality of the Loan Agreement? This puts the Bank on the defensive and apart from “doing away” with the above mentioned risk, if there is the possibility, along the way, of reaching an out of Court settlement the purchaser will negotiate this from a position of strength and not as a defendant in the Action. - I have studied the point raised relating to the jurisdiction of English Courts based on article 15 of EU Regulation 44/2001. I have serious doubts if this is so because it would involve interpreting it in a rather restricted way.
- What is then the end result of what I mention above?
(i) Cyprus Courts definitely have jurisdiction. The Banks will not dispute it. On the other hand the jurisdiction of English Courts has to be proved through Court proceedings as the Banks will dispute it. This means additional legal costs.
(ii) Even if English Courts have jurisdiction this is parallel to that of the Cyprus Courts. It’s not instead of the jurisdiction of Cyprus Courts. So purchasers will still find themselves as defendants in Actions brought against them by Banks in Cyprus Courts. This they cannot avoid. So in effect they will be “fighting a battle” on two fronts i.e. incurring double legal costs.
(iii) And then if they obtain a judgment in an English Court against the Bank how can they enforce it? Only by going to the Cyprus Court in order to register the English judgment. So again the Cyprus Court, a Cyprus Lawyer and additional expense cannot be avoided. - The above I think adequately answers the point made in relation to legal costs and that the possibility of bringing a group Court Action in England results in legal costs in England being less than if individual Court proceedings are initiated in Cyprus.
I do not agree with this position. How can this stand to logic when a purchaser will have to pay a lawyer in England to represent him as a member of a group Court Action and at the same time will have to pay a Lawyer to defend him in the Court proceedings brought against him by the Bank in the Court in Cyprus. Remember. This he cannot avoid as it does not depend on the Purchaser but the Bank. And in addition to this how can it stand to logic if he has to pay a Lawyer to represent him in a Cyprus Court in order to register the judgment he has obtained in England as a member of a group court Action so as to enforce it against the Bank.
I could go on and enumerate additional reasons that lead to the inevitable conclusion that Cyprus Courts are the ones that have the jurisdiction purchasers must chose in order to fight to safeguard their legal rights. I will not do it because the objective is not to give the impression that a fight is going on who will attract more clients.
The pure fact of the matter is that Cyprus Courts definitely have jurisdiction. English Courts may or may not have jurisdiction. At the end of the day though the fact that Cyprus Courts definitely have jurisdiction will lead the cases before them (the Banks will follow this course). This means, for the reasons stated above, that it is much more reasonable in every respect for the purchaser to follow this course as well.
And remember. We are talking all along about fighting the Banks and disputing the validity of the Loan Agreements and not fighting the Developers. The big risks lie in the amounts involved in the Agreements with the Banks. This is the fight that must be fought and hopefully won.
This is the fight that Banks definitely will bring into the Courts in Cyprus and this is the purchasers must fight it. Whether they like it or not. Otherwise they will end up fighting in two fronts (if English Courts are found to have jurisdiction since Cyprus Courts definitely have one) with all the negatives that such an approach entails the most prominent of which being the one I mention above namely the enforcement against a purchaser of judgment of the Cyprus Court against him in the proceedings initiated by the Bank if these remain undefended and the consequential threat to his or her property in England.
Limitation
Before I “close” I will add a word in relation to the issue of the Court actions by the Purchasers being time barred on the basis of the relevant statutory provision.
Under Cyprus Law – and remember, this is the one the Banks will use in their Court Actions against the Purchasers in the Courts in Cyprus – this eventuality does not arise: Based on the relevant statutory provision the period of six years does not start to run until the Bank sends demand letter.
It could be said that this applies in the case of the Court Action by The Bank and not by the Purchasers. This is doubtful but even if it is so and taking into account all that is stated above this is one more reason why the Purchasers should chose to litigate in Cyprus Courts.
Court proceedings in England will still “leave them open” to Court proceedings against them in Cyprus by the Banks, with no six year time limit and all the negatives mentioned above.
All legal comment within is provided by;
Christos M. Triantafyllides
Barrister-at-Law
Advocate
Member of the Law Firm of Triantafyllides & Christoforou & Lead Counsel for Judicare in Cyprus
Dear Janner,
Absolutely not!!!
Ever since I uncovered the dastardly plot (end 2010), my strategy, that I have shared on this forum MANY, MANY times has been unchanged (and, if you accept the basic premise, is really the only strategy to take). We first though have to take the BIG step (which is actually VERY hard to accept) of acknowledging exactly what is going on here: NONE of what has happened in the Cyprus Property Market has happened by chance/ is just a mistake/ is due to Cypriots not being very clever (or competent or any of the other slurs we normally associate with lazy, good-for-nothing foreign johnnies dozing around in the sun all day).
We have to remember that this little ol’ island has been invaded by: the Egyptians, the Romans, the Turks, Crusaders, the Genoans, the Venetians, the Turks again, the Brits (wey-hey!) and the Turks (again!) The one thing all the invaders had in common is that we’ve all eventually left. The two-state solution is rejected by virtually everyone in the ROC cos they believe that, in the long run, the island will all belong to them again.
So, any notion of “imposed justice†by the present Imperialists doesn’t really apply cos when the foreigners eventually leave, it’ll just be good old Greek Cypriots in charge, who have their own notions of justice anyway (a type of tribal feudalism, but we can go into that another time).
Now, can you imagine, say 10, 15, 20 years ago, you’re an average Cypriot with a bit of ancestral land worth diddly squat and someone says to you, “If you build a few badly-constructed pieces of concrete on this (or even just SAY you were going to build…), it’s now worth TENS OF MILLIONSâ€Â, what would you do (knowing that the very REAL money you get, you’ll be able to keep because the foreigners i.e. US will eventually go back home anyway and the temporary craziness of believing your land was worth squillions will go with them)?
Plus, you could borrow lots of REAL money from your mate at the bank (whose bank borrowed it from the lovely French and German banks at never-before-available-and-never-to-be-repeated-once-they-sussed-out-what-was-going-on rates) and basically, NEVER have to pay interest on it and actually, not really have to build anything that conformed to any building regs (or indeed, build at all!)
So, when all the squirming and complaining starts from the foreigners who realise that they’ve paid lots of money for a poorly constructed piece of concrete mortgaged up to the eyeballs and the “too good to be true†finance they’ve arranged is exactly that and bites them in the bum, what would you do (as the average Cypriot)?
Answer: turn the screw more (holding their “Dream in the Sun†as hostage). If you can still get REAL money out of them for the castles in the sand you’ve built, then do it. Until you can’t any more.
The Cypriot establishment have worked this all out and are playing the game until the end (when we all leave). Everything that has happened over the last 3 years is completely consistent with this “theoryâ€Â.
The country has no money (which is completely different to the individuals who have all of OUR money, please see tribalism above) and will borrow and scrape together – promising to “reform†(yeah, right) – what it can until sizeable funding arrives (Eurozone loans, Medigas, further ransom from US). We have to make sure it gets NO money to carry on and force it into doing something really dumb (like, exposing itself, unacceptably as far as the Americans are concerned, to Russia). It is only then that a new regime MAY listen to us.
So, don’t pay anyone a d#mn thing, LEAST OF ALL the lawyers. If you have a mortgage and have UK property with REAL value, you have no choice other than to pay. If you’re like Paul (and are being threatened with repossession for someone else’s debt on the hostage), they really don’t want your property, they want your real MONEY, so don’t pay. You may have to consider your hostage as lost and hope all collapses before repossession (you can string it out for at least 7 years) but anything you give them merely prolongs the current regime. New and clever ways are being devised all the time to squeeze more ransom from us, so we have to do all we can to STOP FEEDING THE BEAR!
Phew, I think I need a lie down now…
So what do you suggest then odd job. Roll over and take it?
One may very well doubt the message (as many people rushing headlong into legal action in the UK obviously must do, much to the delight of the lawyers in the UK), presented by different people for different reasons (lawyers cos they have a loving affection for FEES, SoOJB cos I want people to STOP FEEDING THE BEAR – or Moufflon – as it’ll never change its ways if you don’t!) but one cannot hide from the simple facts:
1) If you manage to win the fight for jurisdiction (which will be contested tooth and nail) and
2) If you can prove that the bank either deliberately misled, badly advised, lied cheated and gave no inkling whatsoever to their clients that they were entering a loaded game of 3-exchange-rate poker and WIN in a UK court and
3) If you can win the appeal before running out of money and
4) If the bank doesn’t counter-sue in Cyprus
then the judgement will have to go to court in Cyprus to be enforced there.
So, if you get through all the above, you’ll only end up in a Cyprus court, and we all know how that ends…
In the meantime, the lawyers will cradle their tummies grown fat off the misery of the hapless property purchasers and chortle their way, a la Jabba the Hut http://www.youtube.com/watch?v=OPcod8IS214 to their (offshore) bank accounts.
We really have to stop feeding the bear. It’s licking its lips as we speak (or write)…
This article is all well and good for people who have bought a property on a mortgage and have now chosen for whatever reason to default on their loan.
What about those who bought their properties outright in cash and who now find the banks pursuing them to recover debts incurred by a now defunct developer? This is the situation I, along with others find ourselves in.
The banks threatening to repossess the properties we purchased in 2008 in order to clear a mortgage taken out by the developer on the land on which the property is built! Unless of course we all agree to hand them another 60,000 euros each to clear the debt.
Cyprus justice? Don’t make me laugh! As for the assertion in the article that Cyprus law is the same as that in England!! A travesty of the truth if ever I heard one!
I hear you Odd Job. It’s not that I don’t like what you or the author of the article say. Like does not come into it. I just doubt the message (not the legal process of a European enforcement order)….
I would suggest that, for anyone mixed up in this artful mess, serious consideration should be given to the legal ownership status of their UK assets in order to protect them from the thieves we all know only too well.
Janner!
You can’t go around questioning someone’s motives just because they said something you didn’t like (even though I probably do it all the time)!
Also, I think you may be misunderstanding the difference between recognition of any judgement arrived at in a foreign (non-Cypriot) court and enforcement of that judgement in Cyprus, where it will HAVE to be enforced. Have a read of this: http://www.neocleous.com/assets/modules/neo/publications/1587/docs/Cyprus_chapt.pdf.
Bit 19.3 states rather unequivocally: “the recognizing court in Cyprus is entitled to decide the matter (of actually enforcing anything agreed elsewhere) for itself”.
What this means is that even IF (and it’s a very big if) there is a ruling in a foreign court, a Cyprus court, run by the very people who orchestrated much of the present situation, get to decide whether or not they have to pay any attention to it.
You see where this is going now?
The Author of the article should remember that for his opinion to work requires confidence and trust in the Cyprus Legal System.
Trust Trust Trust ?
Maybe he could express his views on the Disciplinary Board of Advocates and the public statements made by its President or is that a no-go area for the author to commentate on ?
I question the motives of those who already seem to know the outcome of jurisdiction hearings. There is conflicting information it appears and it looks like we will just have to wait for the legal process to run its course.
Had to comment on the above article as it could be written (almost) completely tongue-in-cheek! There are too many titter-worthy lines in the article to go into all in detail (i.e. “Cyprus Courts safeguarding the legal rights of purchasers†for one, plus a Cyprus lawyer maligning a company who issue statements the motive of which is the distasteful “pursuit of clients†COMPLETELY contrary to the motive behind this article, obviously!) but there are a couple of EXTREMELY important lines that have been dropped in to which we should all pay particular attention:
Firstly, with regards to ultimate jurisdiction in where these cases of dodgy loan agreements will be heard, or, at the very least, where judgements handed out in any other jurisdiction will HAVE to be enforced, is Cyprus. Thinking any resolution will be obtained outside of the Cyprus legal system is unrealistic.
Secondly, as stated a million times before by all sorts of people, the banks do not want to repossesses anyone’s Cyprus property (cos it aint worth diddly-squat). Mr Triantafyllides is actually quite frank when he states that the real target of the banks is the mortgagors’ “property in Englandâ€Â.
So, the advice of one particularly friendly ghost is this: I’m afraid that, effectively, I believe the jurisdiction thing is pretty much a definite. If we go to Court in Cyprus, we WILL lose (eventually, after years of fees). If you can afford to continue paying your mortgage (Swiss Franc or otherwise), then please do, or you’ll be giving them an excuse to go after you’re UK property (if you have any) or your Cyprus bank accounts (please read the Depositor Protection terms and conditions, as alluded to a coupla years ago). If you have no UK assets, wait until the bank comes after you then try to come to some form of arrangement. Do NOT engage a Cyprus solicitor until/ unless you absolutely have to. If you don’t ever have to (as you’ve come to an arrangement with your bank), then just don’t. If we deny the system money, we can precipitate its collapse and hopefully some form of justice may rear it’s lovely head over the horizon. Eventually.
Andrew states below that it’s the lawyers who’ve created this fine mess and, by some sheer quirk of fate, it’s they who will ultimately benefit the most from the YEARS of action and counter-action in the Cyprus Courts, for all of which they will be extracting fees. It’s almost as if it’s all been designed on purpose…
Sounds like another sales pitch using half truths and misleading statements (I stop short of saying they’re lies) to snare desperate purchasers. If this man (and his colleagues) genuinely want to do something about the appalling situations in Cyprus he should start by cleaning up what passes for a legal system here in La La Land; but until honesty is introduced and enforced, that’s not going to happen.
@Andrew – You’re absolutely right Andrew. Provincial lawyers, with one or two notable exceptions, have an appalling record of representing the interest of their clients.
Some are in bed (literally) with developers and those buying property stand no chance of proper legal representation.
If I instructed a lawyer to represent me when I bought a property, I would expect him/her to carry out due diligence as if they were purchasing the property for themselves.
All this talk about going after the banks or going after the developers is overlooking the reason why so many people are in this dreadful predicament. It is the Cypriot lawyers who have failed to properly represent and advise their clients in the first instance. It is the Cypriot lawyers who should answer to the courts. Sadly it will be the Cypriot lawyers who benefit the most from this heart attack inducing nightmare.
Denton Mackrell.
Thank you for your measured and cogently prepared contribution to this thread. There’s very little more that can be added to your catalogue of reality.
Mr. Triantafyllides can quote this, that and the other and use spin worthy of former British Prime Minister Blair, but the fact of the matter is that the entire Cypriot legal system is rotten to the core. By far the majority of us know this only too well and have the battle scars to prove it.
If he truly believes that all is well with the system of which he’s an integral part, there’s not much hope.
The author sets out some useful information on the strategies and tactics likely to be beneficial in cases where the banks are involved in claims against property buyers, plus an opinion on jurisdiction. However, I must take issue with some of his almost throwaway assertions about the UK and Cyprus legal systems:
“Incidentally the Cyprus legal system is the same as the English legal system and most judges are English trained. The same applies for a large number of the Lawyers”.
The same? Really? I think he means that in many respects such as structure, procedure and precedents they are similar. However, they are definitely not the same viz. no juries in Cyprus, fraud in Cyprus not being automatically a criminal offence, the extremely long-winded court process with multiple adjournments running into years, etc etc.
What about lawyer regulation? In no way could one equate the transparency and tight regulation of members by the UK’s Law Society and Bar Council with the highly corrupted and opaque Cyprus Bar Association and Disciplinary Board. Together, the latter act more like a medieval trade guild protecting members against accountability and censure than a professional body for protecting clients and the public from the wrongful or negligent acts and omissions of its members. The CBA chairman has publicly rejected the need for transparency, one of the cardinal requirements of good governance.
If a UK Attorney General went on TV and volunteered, nay bragged, that he had corruptly intervened to stop the prosecution of his son and had also done so for various friends in the past, he would have been sacked and prosecuted. Not so in Cyprus! A lawyer with previous driving convictions having the latest conviction quashed as a result of the AG’s intervention would never happen in the UK. Not so in Cyprus!
And the Cyprus judges he claims follow UK standards of jurisprudence? How is it possible for the President of the Supreme Court not to take immediate and firm action when, as happened recently, the Immigration Minister flagrantly ignored a Supreme Court ruling against a deportation order? And why, indeed, did the President not summon the wayward minister and instruct him/her to immediately implement the Supreme Court ruling or face the sack?
Mr Tryantafillides has a job to do and I am sure means well. However, making glib false assertions about the rectitude and effectiveness of the Cyprus legal system does his case a lot of damage. The majority of his potential clients from the UK on this issue know only too well the awful truth about the Cyprus legal system.
This article sounds like a desparate sales pitch. You only have to look at the President’s inaction towards corruption to see their legal stance. It’s very telling that a significant number of Cypriot lawyers trained in England. I can’t think why! The English legal system may not be perfect but it is light years ahead of Cyprus.
I have the very obvious answer to the question why many investors are not taking legal action against the banks. Many investors re-mortgaged on their UK homes to fund the developer deposits, and thus have little to no funds to pay for legal action.
Until law firms start charging less per hour than most people earn in a day, legal action will remain out of reach for a great many people.
Wouldn’t it be great if the statement: “Incidentally the Cyprus legal system is the same as the English legal system and most judges are English trained. The same applies for a large number of the Lawyers” could be genuinely construed as guaranteeing that the Cypriot judicial and litigious integrity was the same as the integrity which would apply within the English legal system?
Many will doubt it.