Introduction – Why recent English developments matter

The Chabra jurisdiction has long been recognised and applied by Cypriot courts, following its origin in TSB Private Bank International SA v Chabra and its subsequent adoption in Cyprus. A detailed overview of its principles and application is set out in our firm’s guide, available Economou & Co LLC here: Chabra Orders.

Given its English origins, developments in English case law remain highly persuasive in Cyprus. The recent decision in Gilbert v Broadoak Private Finance Ltd is therefore of particular importance. While it does not fundamentally alter the principles governing Chabra relief, it provides important clarification - especially in relation to jurisdictional limits and the proper analytical framework.

The core principle revisited

The modern test for the exercise of the Chabra jurisdiction was restated in Gilbert.

The court may grant freezing relief against a third party against whom the claimant asserts no cause of action where there is “good reason to suppose” that assets held in that party’s name would be amenable to a process by which they could be made available to satisfy a judgment against the primary defendant.

Crucially, the jurisdiction is ancillary in nature and is exercised with caution, particularly to avoid injustice to innocent third parties.

This conceptual framework remains intact following Gilbert.

The “good arguable case” threshold

The decision confirms the continued application of the “good reason to suppose” test, equated with a good arguable case:

• More than speculative
• Less than a balance of probabilities

This threshold applies to:

• The connection between the assets and the defendant
• The existence of a legal route to enforcement
• The involvement (or knowledge) of the third party

The ancillary nature of the jurisdiction

A critical point reaffirmed is that Chabra relief is not a standalone remedy. It does not create an independent cause of action against the third party.

Rather, the relief is granted in support of a substantive claim against the primary defendant, with the objective of preserving assets that may ultimately be available to satisfy a judgment.

This distinction is important in practice. Where a claimant has a direct cause of action against the third party, conventional freezing relief may be more appropriate.

The court in Gilbert noted the conceptual confusion that can arise where claimants attempt to rely simultaneously on:

• Chabra jurisdiction; and
• Independent causes of action (e.g. conspiracy or knowing receipt)

A critical development: jurisdictional gateways

The most important development in Gilbert is jurisdictional.

Despite being satisfied that the substantive conditions for Chabra relief were met, the court ultimately discharged the worldwide freezing order on the basis that there was no valid jurisdictional gateway to serve the application on foreign third parties.

In particular, the court held that:

• Chabra relief is ancillary to enforcement, not itself a form of enforcement. As such, it does not fall within jurisdictional gateways relating to enforcement.
• Where the main proceedings have concluded, and the target of the order is a foreign third party, there may be no available jurisdictional gateway to permit service out of the jurisdiction.
• The general power to grant injunctions (section 37 of the Senior Courts Act 1981) is a remedial provision, not a jurisdiction-conferring one.

This aspect of the decision is of considerable practical importance. It demonstrates that even a strong case on the merits will not suffice if the jurisdictional foundation is lacking.

Practical implications for Cyprus

For practitioners in Cyprus, several points emerge.

• First, the availability of Chabra relief cannot be assumed merely because the substantive test is satisfied.
• Secondly, consideration should be given to whether the case is better framed as one involving substantive claims against third parties, rather than relying on Chabra relief.
• Thirdly, Gilbert highlights the need for careful jurisdictional planning in cross-border cases. In particular, where relief is sought against foreign third parties, it is essential to identify at the outset a viable jurisdictional gateway.

Conclusion

The decision in Gilbert v Broadoak Private Finance Ltd clarifies the operation of the Chabra jurisdiction, confirming both its continued flexibility and the importance of a proper jurisdictional basis.

At Economou & Co LLC, we advise on and act in complex cross-border enforcement proceedings where such considerations are central, including applications for interim relief involving third-party asset structures.