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Landmark Judgment in €1 Billion Dispute

The Limassol District Court has issued a Norwich Pharmacal and freezing order in proceedings initiated by a major insolvent bank. The Applicant alleged massive misappropriations through Cypriot and other foreign companies controlled by the Respondent’s corporate group, with losses amounting to approximately €1 billion.

Economou & Co LLC acted for the successful Applicant.

Key Findings:

  • Enables the applicant to trace and recover assets allegedly misappropriated through a complex international fraud scheme.

  • Reaffirms that third-party institutions, such as banks, may be ordered to disclose information crucial for pursuing claims.

  • The order was granted despite the bank’s extensive objections, including arguments based on delay, banking secrecy, and data protection.

  • The Court emphasized that public interest overrides bank–client confidentiality and data protection concerns, particularly in serious fraud cases:

    • “…just as in the case of the bank–client confidential relationship, the public interest overrides the protection of personal data, particularly in cases such as the present one, where allegations are made of the misappropriation of funds through a fraudulent scheme.”

  • The Court found a real risk of dissipation in issuing a freezing order, particularly given the ease of cross-border transfers through corporate vehicles, by stating the following:

    • “The ease with which funds can be transferred today from one account to another, even outside the jurisdiction, with a simple electronic instruction, makes the risk of dissipation a real one”

  • The decision strengthens Cypriot jurisprudence supporting interim relief in complex, multi-jurisdictional fraud and asset recovery cases.

    • Conclusion:

    This judgment reinforces the ability of claimants in complex fraud cases to obtain meaningful interim relief before Cypriot courts, even against third-party financial institutions. It highlights the Cypriot judiciary’s commitment to transparency, effective asset protection, and cross-border cooperation in combating financial misappropriation.

    Content supplied by ECONOMOU & CO LLC