The economic situation has affected the immovable property market and in particular foreign investors of holiday homes in Cyprus who acquired them through housing loans. They find themselves unable to pay the loan instalments and the banks are taking legal steps against them for the recovery of the loans.
The issue which arises is whether the steps taken by the banks before the Courts in Cyprus are legal, in accordance with the relevant regulations and the law. One can answer this by distinguishing a writ of summons to be taken solely against persons residing abroad and a writ against persons residing in Cyprus and abroad. When the defendants reside abroad, there is a prerequisite for the banks as plaintiffs to file an application for leave or order of the Court allowing the sealing of the writ. The reason is that the relevant regulation is mandatory and provides that no writ of summons for service out of Cyprus or of which notice is to be given out of Cyprus, shall be sealed without the leave of the Court or a Judge. If no leave or order is obtained, such writ of action can be set aside.
On the other hand, where the defendants in a writ of summons reside in Cyprus and abroad, the writ can be filed and sealed without leave of the Court. However, such a writ must be sealed with a notification that it is not for service out of the jurisdiction without an order. Where such a writ is filed and sealed without leave, the banks have to effect the service upon the defendants in Cyprus. Thereafter, they must apply to the Court for leave to issue a concurrent writ, to have it served out of the jurisdiction and to serve it to the defendant residing abroad by substituted service through the procedure provided in the Council Regulation (EC No 44/2001) or in any other manner the Court may order.
According to the law, the bank, in order to obtain the aforesaid orders validly, must effect the service to the defendant residing within the jurisdiction and thereafter, it must apply to the Court to prove that the defendant residing abroad is a necessary and proper party to the action. The Court has the discretion either to issue the order or not, depending on the facts of the case and the material placed before it.
The Court may order that a writ of summons will be served out of Cyprus whenever it appears that the cause of action has arisen on any breach or alleged breach in Cyprus of any contract wherever made or in respect of any property subject to the Cyprus laws. The service of the writ out of jurisdiction can also be ordered whenever the cause of action has arisen in Cyprus and the action is one that cannot be tried elsewhere or it can more conveniently tried in Cyprus than elsewhere.
It appears that in certain cases the procedure provided in the law is not strictly adhered to and any interested party must be aware of it in order to take the proper steps to set aside either the writ or its service. Non-compliance with any of the rules may render any of the proceedings as void or irregular, depending on the omission. If the proceeding is not in compliance with the law, it will be set aside as void; if the omission is contrary to a regulation, the proceeding is considered irregular and can be remedied.
It should be noted that the writ is closely connected with the jurisdiction of the Court, whereas through the order of service of the writ abroad, the jurisdiction of the Court is enlarged to cover persons residing out of its jurisdiction. The issue is also relevant to the constitutional right of every person to know the reasons he is sued and therefore, the regulations and the law regarding service of legal documents must be applied.
George Coucounis is an experienced lawyer practicing in Larnaca, Cyprus.
Educated at University College (London) and Thessaloniki University (Greece), George is fluent in English and has been practicing law in Cyprus since 1982.