Introduction

In this article, Alexandros A. Papantoniou examines the principles governing variation and discharge of freezing injunctions under Cyprus law, read alongside persuasive common law authorities. The focus is the supervisory, interlocutory nature of the remedy; the allocation of burdens on variation; and practical guidance on living expenses, legal costs, and business-continuity carve-outs, together with disclosure and case-management considerations.

Legal basis and equitable character
Article 32(2) of the Courts of Justice Law, Cap. 14/1960 provides that any interlocutory order “may be made on such terms and conditions as the court deems just, and the court may at any time, upon proof of reasonable cause, cancel or vary any such order.” The jurisdiction is equitable and supervisory. It exists to prevent injustice, not to punish, and it permits tailoring of relief to ensure proportionality and effectiveness.

Interim nature and revisability
In Ikos Cif Ltd (2015) 1 Α.Α.Δ. 421, the Supreme Court affirmed that an order that has been made “absolute” remains interlocutory in character and subsists only until the action’s conclusion. In Avila Management Services Ltd v Frantisek Stepanek (ΑΑΔ 1403), the Court clarified that interim relief is revisitable where circumstances change and that interim determinations do not create res judicata in the strict sense (see also Parico Designs Ltd v Co. Ltd (2002) Α.Α.Δ.; Recnex v Piraeus Bank (Cyprus) Ltd, Civil Appeal 71/11, 16.4.2014). The touchstone remains judicial discretion exercised on the facts.

The test for variation: interests of justice and burden
Compagnie Noga D’Importation et Exportation SA v ANZ Banking Group [2006] EWHC 602 (Comm) is frequently adopted as a practical framework. First, the question is whether the proposed variation is in the interests of justice, measured against the policy of the jurisdiction: preventing evasion of justice by dissipation, not providing the claimant with security. Second, the burden lies on the party seeking the variation because the court has already found a real risk of dissipation. Third, the court assesses the objective consequences of permitting the payment on the prospects of satisfying a future judgment, and it approaches assertions with healthy scepticism, particularly where candour has been imperfect. Fourth, where the defendant seeks to fund a defence or other significant outlay, the court ordinarily expects proof that no other funds or sources should, as a matter of fairness, be used in preference to the frozen assets.

Living and legal expenses
In Vneshprombank LLC v Bedzhamov [2019] EWCA Civ 1992, the Court of Appeal emphasised that the living-expenses proviso is applied with the jurisdiction’s purpose in mind. Reasonable living expenses refer to actual historical lifestyle rather than an abstract objective norm, subject to judicial scrutiny and, where appropriate, ring-fencing of substantial items. Criminal defence costs are not ordinary living expenses (T.D.K. Tape Distributor (U.K.) Ltd v Videochoice Ltd [1986] 1 WLR 141).

Bean on Injunctions (15th ed) reflects the consistent approach in English practice: the order should not operate oppressively or prevent a proper defence of the civil claim (PCW (Underwriting Agencies) Ltd v Dixon [1983] 2 All ER 158; Halifax plc v Chandler [2001] EWCA Civ 1750; Cantor Index Ltd v Lister [2002] C.P. Rep 25). Different considerations arise where the assets are arguably proprietary to the claimant, in which case the defendant must show the absence of alternative resources (Fitzgerald v Williams [1996] QB 657; Marino v FM Capital Partners Ltd [2016] EWCA Civ 1301; Kea Investments Ltd v Watson [2020] EWHC 472 (Ch)).

Ordinary and proper course of business
The standard “ordinary and proper course of business” exception is construed narrowly. It covers routine trading payments and liabilities as they fall due but not changes in investments (JSC BTA Bank v Ablyazov (No. 3) [2010] EWCA Civ 1141). The disposal must be both ordinary and proper, the latter importing acceptable commercial standards (Emmott v Michael Wilson & Partners Ltd [2015] EWCA Civ 1028; Koza Ltd v Akcil [2019] EWCA Civ 891). Where no settled ordinary course exists, the court may authorise specific transactions case by case (Organic Grape Spirit Ltd v Nueva IQT SL [2020] EWCA Civ 999). In post-judgment contexts, the exception may be omitted where immediate enforcement is in view and dissipation risk persists (Mobile Telesystems Finance SA v Nomihold Securities Inc [2011] EWCA Civ 1040; Michael Wilson & Partners Ltd v Emmott [2019] EWCA Civ 219).

Cyprus illustrations on variation scope
In ABP Holdings Ltd v Kitalides (No. 2) (1994) 1 Α.Α.Δ. 694, the Supreme Court varied only to permit a discrete sum for legal expenses, leaving other claimed payments frozen because they overlapped issues to be tried. In Global Maritime Services Ltd v Bulcom Ltd, the appellate court upheld refusal of carve-outs for salaries and legal fees where the restrained account was a notice account and not used for those payments, and it cautioned against progressive depletion that would defeat the order’s purpose.

Non-disclosure and procedural discipline
As with all without-notice relief, material non-disclosure may justify discharge or adjustment. The principles in Brink’s-Mat Ltd v Elcombe [1988] 3 All ER 188 apply: full and fair disclosure in the affidavit; proper inquiries proportionate to urgency; and fair presentation of both favourable and adverse matters. The jurisdiction is not an invitation to litigate the merits at an interlocutory stage. Applications to vary or discharge should not become mini-trials (Kazakhstan Kagazy plc v Arip [2014] 1 CLC 451). Delay in prosecuting the claim or warehousing proceedings may justify discharge (Lloyds Bowmaker Ltd v Britannia Arrow Holdings Ltd [1988] 1 WLR 1337; Societe Generale v Goldas Kuyumculuk Sanayi Ithalat Ihracat AS [2017] EWHC 667 (Comm)).

Applications by defendant and by claimant
Defendants have liberty to apply for variation or discharge on notice. Security of equivalent value may sometimes lead to consensual discharge (IOT Engineering Projects Ltd v Dangote Fertilizer Ltd [2014] EWCA Civ 1348). Where variation is sought to access funds, the defendant should swear to need, demonstrate the unavailability of other resources, and expect the court to consider economic reality, including access to group or affiliate support where appropriate (Atlas Maritime Co SA v Avalon Maritime Ltd (No. 3) [1991] 4 All ER 783).

Claimants must return to court on material change, prosecute the claim diligently, and reduce scope or quantum if the order is too wide (Commercial Bank of the Near East v ABC and D [1989] 2 Lloyd’s Rep 319; Town and Country Building Society v Daisystar Ltd (1989) 139 N.L.J. 1563; Willetts v Alvey [2010] EWHC 155 (Ch)).

Drafting considerations and evidential practice
Orders should identify any living-expenses allowance by reference to historic spend, exclude exceptional luxury items, and provide for periodic review. Legal-costs provisions commonly set periodic draw limits and may require identification of the paying account without intrusive scrutiny of solicitor–client costs (CRO v REC [2023] EWHC 189 (Comm)). Business-continuity permissions should be specific as to counterparties, invoice types, and caps. To guard against attrition, courts often accept ring-fencing and simple reporting (for example, monthly statements to legal representatives) with liberty to apply on short notice.

Affidavit evidence should address necessity and proportionality; set out a sources-of-funds analysis; explain why alternatives are unavailable; demonstrate the historic function of the particular account proposed for payments; and provide a cash-flow projection showing that any carve-out will not hollow out the injunction before trial.

Author’s comment on Cyprus practice
Cyprus courts treat freezing orders as an elastic supervisory remedy. The domestic framework under Article 32(2) coheres with the English approach in Noga and Bedzhamov: the jurisdiction polices dissipation risk without converting the injunction into de facto security. In practical terms, applications succeed or fail on evidential granularity. Credible run-rate analysis, proof of exhausted alternatives, and narrow, auditable carve-outs are more persuasive than broad assertions of hardship. Where proprietary claims are credibly advanced, the stricter discipline against spending the disputed fund should prevail. Finally, the court’s repeated warning against progressive erosion deserves emphasis: small, unstructured releases can defeat the remedy as surely as overt breaches.