Expertise in the Execution of Judgments in Cyprus

With years of extensive experience, Economou & Co LLC has developed in-depth expertise in the execution of European judgments in Cyprus. Our legal team has successfully and consistently utilized garnishee proceedings -also known as writs of attachment- to recover outstanding debts efficiently and effectively.

Drawing from this expertise, we have prepared the following guide to provide insights for both Cypriot and foreign legal practitioners. This guide outlines the key legal principles, procedural steps, and strategic considerations involved in the enforcement of court judgments in Cyprus.

Understanding Garnishee Proceedings in Cyprus

Garnishee proceedings are a crucial legal mechanism for the enforcement of judgments in Cyprus, particularly for the recovery of debts through third-party obligations. This process allows a creditor (judgment creditor) to obtain a court order directing a third party (garnishee), such as a bank, to satisfy the judgment debt from the funds or assets held on behalf of the debtor (judgment debtor).

First Step: Recognition

As a first step, the applicant must comply with the simplified procedure for the recognition of judgments between Member States, as established by Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012, on jurisdiction, recognition, and enforcement of judgments in civil and commercial matters (recast) (the "Regulation").

Among other requirements, a party seeking to invoke a judgment issued in one Member State in another Member State must submit:

1. a copy of the judgment that meets the necessary authenticity requirements, and
2. the certificate issued in accordance with Article 53 of the Regulation.

Second Step: Garnishee Order Nisi

The possibility of enforcement through the attachment of property in the hands of a third party is governed by Articles 73 to 81 of the Civil Procedure Law, Cap. 6 (the "Law").

As provided by the Law, garnishee proceedings in Cyprus consist of two stages:

1. the garnishee order nisi (temporary order), and
2. the garnishee order absolute (final order).

At the first stage, upon the application of the judgment creditor, the Court has the authority to issue a garnishee order nisi ex parte. This order is directed to the garnishee, requiring them to appear before the Court to be examined regarding the property they hold that appears to be beneficially owned by the judgment debtor. This legal mechanism allows creditors to freeze bank accounts in Cyprus and secure funds held by third parties before proceeding to full enforcement.

By obtaining a garnishee order nisi in Cyprus, judgment creditors can effectively restrain assets and improve the chances of successful debt recovery.

Third Step: Garnishee order absolute: Enforcing Debt Payment in Cyprus

At the second stage, after hearing the interested parties, the Court will decide whether to order the garnishee to release the frozen funds to satisfy the judgment debt. If granted, the garnishee order absolute in Cyprus compels the third party holding the assets to transfer the amount to the judgment creditor, ensuring enforcement and debt recovery.

Requirements for Garnishee Proceedings in Cyprus

To successfully obtain a garnishee order, the following conditions must be met:

1. The applicant must be a judgment creditor: The applicant must be a party in whose favour a judgment has been issued.
2. The judgment remains unpaid: The judgment debt has not been satisfied in full or in part.
3. The judgment debtor has an interest in the attached property or there is a creditor-debtor relationship between the garnishee and the judgment debtor:

• If the debt will certainly arise in the future (e.g., agreed instalments or rent), a garnishee order can be issued and activated once the debt becomes payable.
• Joint account holders are considered to have an interest in the account.
• Unlike English law, Article 73 of the Civil Procedure Law does not limit garnishee orders to debts but allows orders on other financial rights, assets, and securities.
• All debts can be subject to attachment except government debts (Article 77). However, if a debt is conditional on a future event, it may not be attachable until it becomes due.

4. The Property Must Be Within Jurisdiction: The assets subject to garnishment must be located within Cyprus.

On the third requirement, an important case is Pernas Trading Sdn Bhd v. Senali Construction Works Sdn Bhd & Anor from the High Court of Malaysia, which follows common law principles. The court ruled that once the judgment debtor shows cause, the “The burden is shifted to a garnishee in showing cause to prove what he alleges, that he owed no money at the time of the service of the order to show cause.”

Garnishee Proceedings Are Not Based on Section 9 of Civil Procedure Law

Garnishee proceedings are not initiated on the basis of Section 9 of Civil Procedure Law, which deals with urgent applications filed ex parte.

Consequently, any grounds of opposition made regarding the violation of subsection (2) of Article 9 - failure of the applicant to provide a guarantee- or the violation of subsection (3) of Article 9 -concerning the duration of an ex parte order remaining in effect beyond the time necessary for notification to affected parties- are entirely inapplicable in cases involving garnishee orders. These orders serve the purpose of executing a judgment that has already been obtained against the defendants in the aforementioned litigation.

Multiple Methods of Enforcement

In accordance with Article 14 of the Civil Procedure Law, Cap. 6, the simultaneous promotion of different judgment enforcement measures in Cyprus is permitted. However, the selection and execution of multiple enforcement processes remain subject to court supervision. The Cyprus courts retain discretionary power to halt parallel enforcement measures if deemed oppressive or unnecessary.

Thus, parallel execution of judgments in Cyprus is legally permissible but must be carried out within reasonable limits to prevent excessive hardship on the debtor while ensuring the effective recovery of debts by creditors.

Garnishee Proceedings and Bank Accounts

As stated in Halsbury's Laws of England, 4th Edition, Volume 17, page 329, a current bank account has always been subject to garnishee attachment.

This principle remains relevant in garnishee proceedings in Cyprus, where judgment creditors can seek enforcement against bank balances held in the name of the judgment debtor.

Conclusion: Execution and the credibility of the Judicial System

The execution of court judgments is fundamental to maintaining the credibility and integrity of the judicial system. As established in legal precedent, including National Bank of Greece Α.Ε. v. Constantinou et, the enforcement of judicial decisions is a matter of public interest that directly affects the administration of justice.

As recently emphasized by Justice Santis in Gymnastics Club "The Pancyprians" GSP v. Ulysses Investments Ltd:

"The enforcement of court judgments raises a paramount issue of public interest that critically concerns the administration of justice."

Ensuring compliance with court rulings is not merely a procedural step but a necessary safeguard for upholding the rule of law. The persistent disregard of judgments, particularly by entities operating in bad faith demonstrates a concerning contempt for the legal system. Therefore, securing enforcement measures is not only a legal obligation but also a crucial step toward preserving judicial authority and delivering justice effectively.