This country-specific Q&A provides an overview to Competition Litigation laws and regulations that may occur in Cyprus.
What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?
A claimant (legal or physical person) can recover by way of a private civil action any loss or damage suffered as a direct result of a breach by an undertaking or associations of undertakings of Articles 3 and/or 6 of the Protection of Competition Law [13(I)/2008] (the “Competition Law”) and/or Articles 101 and 102 of the Treaty on the Functioning of European Union (hereinafter “TFEU”). This is provided by the national law establishing rules for actions for damages as a result of a breach of Cyprus protection of competition law and/or Articles 101 and 102 of the TFEU [Law 113(I)/2017] that has effectively transposed EU Directive 2014/104/EU.
What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?
In order to commence a competition damages claim within the context of a civil action before a competent District Court in Cyprus, the claimant must be able to present and prove a reasoned claim containing available facts and alleged breaches of competition law sufficient to support the plausibility of their claim for damages as a result of a breach by the undertaking or associations of undertakings of the Competition Law.
The procedure as with all civil actions begins with the claimant filing their action with the competent District Court which has jurisdiction to hear claims for such damages (i.e. the Court where the defendant has its residence (for natural persons) or where a legal entity has its registered office). Alternatively, the action may be brought before the District Court of the territory where the alleged breach of the Law or where the loss has occurred.
Once the action is filed in Court, it is also served to the defendant whereby said party may proceed to file its defence within a specific timeframe.
The evidential burden of proof is borne by the claimant; specifically, the claimant must prove one or more infringements of the Competition Law and that such infringement caused them loss and/or damage.
What remedies are available to claimants in competition damages claims?
Pursuant to Law 113(I)/2017, the remedy provided to claimants in competition damages claims is to fully reinstate the claimant to the position he/she was in if the breach had not occurred, by awarding general and/or special damages and/or loss of profit plus payment of interest which from the date the damage was caused.
What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?
4.1. As mentioned above (see question 3), the measure of damages is to reinstate the claimant to the position he/she would have been if the breach had not occurred.
In terms of joint and several liability, the law recognizes that undertakings or associations of undertakings that have breached the Law through joint behaviour, are jointly and severally liable for the harm caused by the infringement of Competition Law.
4.2. Irrespective of the above and without prejudice to the right of full compensation where the infringer is a small or medium-sized enterprise (the “SME”), the infringer shall be liable only to its own direct and indirect purchasers subject to the following conditions:
a. its market share in the relevant market was below 5 % at any time during the infringement of competition law; and
b. the application of the normal rules of joint and several liability would irretrievably jeopardise its economic viability and cause its assets to lose all their value.
The above-mentioned conditions (a) and (b), shall not apply where:
(i) the SME has led the infringement of competition law or has coerced other undertakings to participate therein; or
(ii) the SME has previously been found to have infringed competition law.
4.3. Additionally, by way of derogation to 4.1. above, an immunity recipient is jointly and severally liable as follows:
(a) to its direct or indirect purchasers or providers; and
(b) to other injured parties only where full compensation cannot be obtained from the other undertakings that were involved in the same infringement of competition law.
The amount of contribution of an infringer which has been granted immunity from fines under a leniency programme shall not exceed the amount of the harm it caused to its own direct or indirect purchasers or providers.
Furthermore, to the extent the infringement of competition law caused harm to injured parties other than the direct or indirect purchasers or suppliers of the infringers, the amount of any contribution from an immunity recipient to other infringers shall be determined in the light of its relative responsibility for that harm.
What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?
The limitation period for bringing actions for damages in the context of competition claims, is six years.
The limitation period does not commence before the infringement of competition law has ceased and the claimant knows, or can reasonably be expected to know:
(a) of the behavior and the fact that it constitutes an infringement of competition law;
(b) of the fact that the infringement of competition law caused harm to it; and
(c) the identity of the infringer.
The limitation period may be suspended if a national competition authority or the European Commission takes action for the purpose of the investigation or its proceedings in respect of an infringement of competition law to which the action for damages relates. The suspension shall end at the earliest one year after the infringement decision has become final or after the proceedings are otherwise terminated.
Which local courts and/or tribunals deal with competition damages claims?
At first instance, the competent Court to hear competition damages claims is the District Court. The Supreme Court of Cyprus can hear appeals from District Court judgments in its appellate jurisdiction. No leave is required to file an appeal.
The Administrative Court also hears competition law related recourses that may be filed by claimants against an infringement decision taken by the Commission for the Protection of Competition in Cyprus (the “CPC”) which has imposed an administrative fine and/or other sanction. Once again, decisions taken by the Administrative Court may be appealed before the Supreme Court.
How does the court determine whether it has jurisdiction over a competition damages claim?
There are currently no specialist Courts for competition law cases in Cyprus. Such claims as aforementioned can be raised within the context of a civil action before the competent District Court. Consequently, jurisdictional matters have not been raised yet.
How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?
The legal basis for competition damages claims derives from national and European Union legislation. Specifically in so far as competition damages are concerned, these are governed by Law 113(I)/2017 which harmonises the provisions of the EU Directive and which enacts regulations for the purposes of coordinating the implementation of the Competition Law by the CPC with the implementation of the Competition Law in damages actions brought before the District Court.
According to Article 50 of the Competition Law, if an issue and/or a practice are not specifically regulated by national legislation, the CPC and the Courts will apply EU Competition Law.
The standard of proof, as in all civil cases, is the balance of probabilities.
To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?
The decision of the CPC finding an infringement of Article 3 and/or 6 of the Competition Law constitutes irrebuttable evidence in that regard. If the decision is from the competition authority of another member state, the decision constitutes rebuttable evidence.
Thus, infringement decisions taken by domestic or foreign competition authorities do bear evidential value and may corroborate the claimant’s case however even if in the end the infringement is proven in Court, the breach itself does not entitle a person to damages ipso facto. The claimant must strictly and particularly prove his/her loss along with a causal link between the loss suffered and the anti-competitive conduct.
Therefore, local Courts are not bound per se by the infringement decisions of competition authorities.
To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?
Typically, a private civil damages action can proceed while a related public enforcement action is pending (i.e. before the CPC). Practically however the Court procedures would only be expedited if there is a relevant decision of the national competition authority or other expert reports concerning infringements of the Competition Law by the defendant.
Furthermore, the timeframe for the completion of Court proceedings, at the moment, is typically over 3 years for claims over €3,000 and a decision of a related public enforcement authority, like for example the CPC, could usually take up to 2 years. Therefore, the public and private procedures are independent of each other and in the case of CPC, a decision could be used as evidence in the concurrent Court proceedings at the hearing stage as evidence in order to prove the infringement of Competition Law and get awarded damages.
What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?
Class actions, even though not expressly disallowed, are not followed in the Cyprus Courts system. The Rules of Civil Procedure provide that, where several persons have the same interest in one cause or matter, one or more of those may be authorised by the Court to sue or defend an action on behalf or for the benefit of all interested persons.
Additionally, pursuant to Order 14 of the Rules of Civil Procedure if multiple actions before the same Court involve common questions of law and/or fact bearing satisfactory importance comparably to the rest of the disputed issues in the actions, they may be consolidated.
Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?
The “passing on” defence exists whereby the defendant in an action for damages can invoke as a defence against a claim for damages the fact that the claimant passed on the whole or part of the overcharge resulting from the infringement of competition law. The burden of proving that the overcharge was passed on shall be on the defendant, who may reasonably require disclosure from the claimant or from third parties.
Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?
Yes, expert evidence is permitted in competition litigation in either oral and/or written form, by any of the parties to the action. For example, an expert witness may be summoned by a party to attend Court for the purposes of testifying, giving evidence and/or producing documents such as reports that they have prepared. Expert witnesses are subject to cross-examination as any other witness would be in relation to their professional opinion and evidence.
Expert evidence can also be submitted into evidence in written form by a party in accordance with the Laws of Evidence. The Court acting on its own initiative can also appoint experts to produce reports although this is not common practice.
The appointed experts must be impartial and independent, and any conflict of interest or potential conflict of interest should be disclosed to the opposing party and failure to do so may erode the value of the expert evidence before the Court. Typically, expert witnesses like health professionals and surveyors, among others, produce specialised reports with their findings on the disputed matter of the action and if these reports have been written before the hearing stage they must be disclosed to the other party during the stage of discovery and inspection of the parties’ documents which will eventually be used as evidence.
Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?
The decision-maker at trial is the judge presiding during the process at the District Court. Evidence can be submitted either orally or in written form as mentioned above (Question 13).
The claimant has the burden of proof and therefore opens their case first by calling witnesses for the purposes of the examination-in-chief. In many cases the examination-in-chief is done through a written statement which the witness is called upon to orally affirm in Court.
The witnesses called by each party are subject to cross-examination by the opposing party Once the cross-examination is competed by the respective parties, the opposing party may re-examine the witness on matters arising out of the cross-examination. The witnesses may also be questioned by the Court at its discretion but, since the system is effectively adversarial question by the judge are limited and for clarification purposes. Once the testimonies are completed and all the evidence submitted before the Court the parties make their final submissions in the form of oral or written argument.
How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?
In general terms, there are no restrictions or timetable set by the relevant legislation or the civil procedure rules. Due to the heavy workload of the District Courts, a claim for damages may last anywhere between 2-5 years.
The decision of the District Court may be appealed at the Supreme Court of Cyprus without leave.
Do leniency recipients receive any benefit in the damages litigation context?
Pursuant to Law 113(I)/2017, the amount of contribution of an infringer which has been granted immunity from fines under a leniency programme shall not exceed the amount of the harm it caused to its own direct or indirect purchasers or suppliers.
To the extent the infringement of Competition Law has caused harm to injured parties other than the direct or indirect purchasers or suppliers of the infringers, the amount of any contribution from an immunity recipient to other infringers shall be determined in the light of its relative responsibility for that harm.
How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?
The Court is empowered under the law to estimate the amount of harm if it is established that a claimant has indeed suffered harm but it is practically impossible or excessively difficult precisely to quantify the harm suffered on the basis of the evidence available. The Court may further request the assistance of the CPC in proceedings relating to an action for damages for the purposes of determining the quantum of such damages.
Law 113(I)/2017 is silent as regards “umbrella effects” and whether these are recognised.
Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?
Yes, a defendant may seek contribution from another defendant to the action the amount of which is determined taking into account their relative responsibility for the harm caused by the infringement of competition law based on the evidence presented before the competent Court.
A defendant may pass on or share liability by claiming against another defendant to the action due to a claim that they are entitled to contribution/indemnity and/or relief/remedy relating to or in connection with the matters raised by the claimant and a relief/remedy that is substantially the same as a relief or remedy claimed by the claimant or in the instance where a question arises between the defendant and the other defendant, which is connected with, and substantially the same as, the issue between the claimant and the defendant.
In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?
Private claims for anti-competitive practices before the District Courts can be resolved with a settlement agreement. According to the Civil Procedure Rules the claimant may at any time before or after the receipt of the defendant’s statement of defence and before taking any step in the proceedings, discontinue wholly or partly its claim against all or any of the defendants, without leave. If the above conditions are met, the discontinuance of the claim is subject to judicial leave which is almost invariably granted.
What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
What procedures, if any, are available to protect confidential or proprietary information disclosed during the court process? What are the rules for disclosure of documents (including documents from the competition authority file or from other third parties)? Are there any exceptions (e.g. on grounds of privilege or confidentiality, or in respect of leniency or settlement materials)?
Regarding the rules on disclosure of documents in competition damages claims, Law 113(I)/2017 provides specific regulations for the following:
(a) Disclosure of Evidence;
it is stipulated that subject to provisions related to (b) and (c), the Court has discretion following the submission of a request by the claimant or defendant, to order said claimant or defendant or third person to disclose relevant evidence that lies in their control. Such disclosure of evidence should be limited to that which is proportionate considering the legitimate interests of the all parties and third parties concerned. Specifically, the Court should consider:
(a)(1) the extent to which the claim or defence is supported by available facts and evidence justifying the request to disclose evidence;
(a)(2) the scope and cost of disclosure, especially for any third parties concerned, including preventing non-specific searches for information which is unlikely to be of relevance for the parties in the procedure;
(a)(3) whether the evidence the disclosure of which is sought contains confidential information, especially concerning any third parties, and what arrangements are in place for protecting such confidential information.
Additionally, within the context of adjudicating a competition damages claim, the Court may order the disclosure of evidence that contains confidential information if it is considered relevant to the action for damages, provided that when such order is made, the Court has at its disposal and may enforce at its discretion, relevant measures to protect such confidential information such as:
(a)(4) storage of confidential information in a specially designed location which is under the responsibility of the Court registrar;
(a)(5) sealing of confidential information in secure and sealed envelopes to which access is restricted to the Court and to the parties who are determined by the Court;
(a)(6) appointment of experts to produce reports in a form which protects confidentiality.
When ordering the disclosure of evidence, the Court must ensure to give full effect to applicable legal professional privilege under Union or national law, and prior to ordering such disclosure that those from whom disclosure is sought are provided with an opportunity to be heard.
(b) Disclosure of evidence included in the file of the competition authority.
In accordance with applying the proportionality test described in (a) above as well as the stipulated considerations, the Court additionally should consider the following:
(b)(1) whether the request has been formulated specifically with regards to the nature, subject matter or contents of documents submitted to a competition authority or to the European Commission, or held in the file thereof of the competition authority or of the European Commission, rather than by a non-specific application concerning documents submitted to a competition authority;
(b)(2) whether the party requesting disclosure is doing so in relation to an action for damages before the Court; and
(b)(3) the need to safeguard the effectiveness of the enforcement of competition law.
The Court may order the disclosure of the following categories of evidence subject to the national competition authority or the European Commission having concluded its proceedings by issuing a decision or otherwise:
(b)(4) information that was prepared by a natural or legal person specifically for the proceedings of a competition authority or of the European Commission;
(b)(5) information that the competition authority or the European Commission has drawn up and sent to the parties in the course of its proceedings; and
(b)(6) settlement submissions that have been withdrawn.
During the adjudication of an action for damages, the Court cannot at any time order a party or a third party to disclose any of the following categories of evidence:
(b)(7) leniency statements; and
(b)(8) settlement submissions,
however, the claimant may present a reasoned request that the Court access the evidence referred to above (b)(7)&(8), for the sole purpose of ensuring that their contents correspond to the definitions in points (b)(1) – (3). During its evaluation, the Court may request the contribution of the competent national competition authority or of the European Commission and the authors of such evidence may be summoned to be heard in Court. In no event should the Court permit other parties or third parties access to that evidence.
If only parts of the evidence requested fall within one of the categories of evidence described in points (b)(7)&(8), the remaining parts thereof shall, depending on the category under which they fall, be released in accordance with the relevant provisions of this section.
The disclosure of evidence in the file of a competition authority or of the European Commission that does not fall into any of the categories listed in this section may be ordered in actions for damages at any time, without prejudice to the provisions of this section.
In the event that a party or a third party is not reasonably able to provide the evidence which is included in the file of the national competition authority or of the European Commission, the Court may request such disclosure of evidence from a competition authority or from the European Commission.
The party which requests the disclosure of evidence included in the file of the competition authority or of the European Commission, is obliged to serve such request to said competition authority or European Commission.
(c) Limits on the use of evidence obtained solely through access to the file of a competition authority.
Evidence in the categories listed in points (b)(7)&(8) which are received by a person exclusively via access to the file of the national competition authority or of the European Commission, are deemed inadmissible in actions for damages.
Evidence in the categories listed in points (b)(4) or (5) or (6) above, which are received by a person exclusively via access to the file of the national competition authority or of the European Commission, are deemed inadmissible in actions for damages until the competition authority or the European Commission has closed its proceedings by adopting a decision or otherwise.
Evidence which is received by a person exclusively via access to the file of the national competition authority or of the European Commission and which does not fall within the categories listed in points (b)(4)-(8), can be used in an action for damages only by that person or by a natural or legal person that succeeded to that person’s rights, including a person that acquired that person’s claim.
Documents submitted as evidence are only accessible by the parties to the procedure regardless of the fact that the cases are heard in open court. However, documents submitted as evidence containing sensitive information may not be accessible by the opposing party to the case if the documents are protected by privilege and it is stated as such during the discovery of documents stage.
Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?
The Civil Procedure Rules provide that the costs of civil proceedings shall be at the Court’s discretion. However, the general principle is that costs follow the result of the action, which means that the unsuccessful party will be ordered to pay the legal costs of the other party. There are rare exceptions to this rule.
Legal fees and expenses are regulated partly by the subsidiary legislation issued by the Cyprus Supreme Court. The expenses are divided into real “out-of-pocket” expenses and legal fees. Both depend on the Court scales which are determined on the basis of the value of the claim in the action. Despite the above, lawyers could agree on different fees with their clients.
Accordingly, the Court will direct the costs to be assessed by the Registrar of the Court. Court fees comprise part of the disbursements which are included in legal costs. For contentious matters, a lawyer may make a written agreement with his client fixing the amount of payment for the whole or any part of his costs and disbursements. Where there is such an agreement, the costs are not subject to taxation by the Registrar of the Court. Where fees for litigious matters are not fixed by agreement, they are controlled by the Rules of Court. If a client is dissatisfied with the bill rendered by their lawyer, they must apply to the Registrar of the Court for taxation of the bill.
The possibility for a defendant to apply for security of costs, is regulated by Order 60 of the Civil Procedure Rules. The issuance of a security of costs order is at the discretion of the competent Court, which must be satisfied that there is reasonable concern that, if the claim fails, the claimant will not pay the defendant’s costs. There are two conditions that must be satisfied to obtain security for costs:
a) The claimant must be ordinarily resident out of Cyprus and/or the European Union.
b) The claimant must not have sufficient assets within the jurisdiction to satisfy any order that may be made against him to pay the defendant’s costs.
Concerning the amount of security that may be ordered it is the amount of the costs which is expected to be incurred in defending the action.
Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?
Strictly speaking, funding of competition law claims by a non-litigant is not prohibited. However, the general practice is that funding of litigation is borne by the parties to the proceedings and there have not been any known cases where litigation proceedings were funded by a third party.
Contingency fees are not permissible in Cyprus. However, the litigation costs can be agreed between the lawyer and the client before the commencement of proceedings. The agreement may be for a fixed amount or that the costs will be calculated on the basis of fixed cost scales in accordance with the relevant subsidiary legislation. In the latter case, the legal fees would depend on the amount of the claim.
What, in your opinion, are the main obstacles to litigating competition damages claims?
The main obstacle to litigating competition damages claims is the slow judicial process. Based on the procedures as set out in the Civil Procedure Rules, claims below €3,000 can be concluded within 1-2 years whilst claims over €3,000 could take up to 5 years or more for a judgment to be issued. Alternatively, due to the time delay and legal costs parties are deterred and may seek remedies at the CPC process instead.
What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?
One of the most anticipated developments as regards competition litigation is the formation of a separate specialist Commercial Court in Cyprus which shall be competent to hear cases from a certain value upwards. Furthermore, the implementation of the electronic justice project court-wide and the revision of the Civil Procedure Rules which date back several decades are expected to have a meaningful impact in expediting the judicial process.