Sunshine venue for claims

There are good reasons that claimants in the Cyprus properties row should litigate on the island, not in the UK

A recent article (TheLawyer.com/cyprus) raised, but left undiscussed, a number of points that I, as one of the barristers arguing the case in question [on behalf of Spanish firm Judicare], would like to address.

Legal action by UK buyers who bought properties in Cyprus and, as a result, are bound by Swiss franc loan agreements, is now coming to a head, with provisional court dates set for October. I believe UK buyers are better pursuing their rights in Cyprus than in the UK.

Our position is to pursue the banks due to the validity of the loan agreements the clients entered into to purchase the properties. These clients are facing claims from the banks for hundreds of thousands of pounds in each case and, if successful, this enormous financial burden will be removed. 

Simply going after the agreements with the developers means that purchasers would end up with a claim against the developer of thousands (paid as down payment). Damages will not be able to be recovered since in most cases the properties purchased have not been paid for (since there has been a default on the loan agreements by the buyers) and so the properties will be claimed by the banks.

In conjunction with the above, the banks are already proceeding in Cypriot courts against purchasers for non-payment of loans. If these subsequent writs of summons served on UK clients are left undefended, the Cyprus court will issue a judgment in default against the purchasers and the banks will then seek to have it registered in England and executed against their properties in England. So the court actions against purchasers in Cyprus courts have to be defended. This means retaining a lawyer in Cyprus to represent the purchaser.

We prefer to take the offensive and take the bank to court. Any out-of-court settlement can then be negotiated from a position of strength.

English courts may or may not have jurisdiction to hear these cases. 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, meaning additional legal costs.

Even if English courts have jurisdiction this is parallel to – not instead of – that of the Cyprus courts. Purchasers will still find themselves defending actions brought against them by banks in Cyprus courts and incurring double legal costs.

Moreover, if clients obtain a judgment in English courts against the bank they can only enforce it by going to the Cyprus court to register it, again incurring additional expense.

Even if costs are lowered in the UK by bringing a group court action in England, purchasers will still have to pay the costs of defending cases in the Cypriot court proceedings brought by the bank.

A further issue raised is that of court actions by purchasers being time-barred. Under Cyprus law the six years does not start until the bank sends its demand letter. This is one more reason why purchasers should litigate in Cyprus. Court proceedings in England will still leave them open to proceedings against them in Cyprus with no six-year time limit and all the negatives above.