Background

Economou & Co LLC successfully opposed an application seeking to dismiss or stay proceedings before the District Court of Limassol on jurisdictional grounds.

The dispute concerned a cross-border loan claim. The defendant argued that the Cyprus proceedings should be stayed because the relevant loan agreement contained a jurisdiction clause referring disputes to the courts of Moscow. The defendant further argued that Russia was the more appropriate forum for the dispute.

The District Court of Limassol rejected the application and held that the Cyprus courts had jurisdiction to hear the claim.

Court’s Rationale

The Court accepted that, since the defendant was domiciled in Cyprus, the general jurisdictional rule under Article 4 of Regulation (EU) 1215/2012 (the “EU Regulation”) applied. In particular, the Court held that the Cyprus courts have jurisdiction on the basis of the defendant’s domicile in Cyprus.

The Court also considered Article 26 of the EU Regulation, which allows a court of a Member State to assume jurisdiction where a defendant enters an appearance, unless that appearance is made specifically to contest jurisdiction.

Here, the defendant had entered an unconditional appearance in the Cyprus proceedings and had not challenged jurisdiction at the outset. The Court held that this conduct amounted to acceptance of the jurisdiction of the Cyprus courts.

The Court further rejected the defendant’s forum non conveniens argument. Applying the rationale of the Court of Justice of the European Union in Owusu v Jackson and Others Case C-281/02 and the Cyprus authorities adopting it, the Court reaffirmed that where jurisdiction is founded on Article 4 of the EU Regulation, the Cyprus courts cannot stay proceedings on the basis that the courts of a non-EU state may be a more appropriate forum.

Key Takeaway

This decision provides an important reminder that, where a defendant is domiciled in Cyprus, the Cyprus courts have a firm jurisdictional basis under Article 4 of Regulation (EU) 1215/2012.

It also confirms that forum non conveniens cannot be relied upon to divert proceedings from Cyprus to a non-EU forum where jurisdiction is properly founded under the Regulation.