Cyprus Court Sets Aside Orders for Service Outside the Jurisdiction in Transneft case – proceedings considered terminated

By Dr Pavlos Neofytou Kourtellos & Dr Marina Himoni

Introduction

In a recent decision of the Nicosia District Court (Karydis v. PJSC Transneft & PJSC Sberbank, Action 2019/23, judgment of 29 September 2025), the Court annulled a series of interim orders permitting service outside the jurisdiction, substituted service, and related procedural steps in a claim brought against two major Russian state-controlled entities. The case raises important issues concerning compliance with procedural rules in Cyprus, the limits of judicial discretion in cross-border litigation, and the principle of judicial comity in the context of strained geopolitical relations.

Background

The proceedings arose out of the liquidation of Omirico Ltd, a Cypriot company. The liquidator alleged that the Company held deposits of approximately USD 154 million with Sberbank (Defendant 2) in Russia, which were subsequently confiscated by the Russian authorities. It was argued that this confiscation was orchestrated by the Defendants in conspiracy, to deprive the Company and its creditors of its assets, under the guise of combating unlawful activities.

The Plaintiffs, including the liquidator, obtained ex parte interim relief from the Cypriot courts, including worldwide freezing orders (Mareva injunctions). To pursue the action, they sought and obtained leave for service of proceedings outside the jurisdiction, and subsequently for substituted service through Kazakhstan.

The Mareva injunction has been earlier dismissed by the Supreme Court of Cyprus following a Certiorari motion filed by our law firm for, inter alia, breach of the natural justice principle.

The Defendants’ Application

On behalf of Defendant 1 (PJSC Transneft) we have applied to annul the orders, arguing that:

• The Plaintiffs failed to seek leave for sealing of the writ of summons prior to requesting service abroad, depriving the Court of jurisdiction.
• The orders for service and substituted service violated the Hague Service Convention and the bilateral treaty between Cyprus and Russian Federation.
• The Plaintiffs failed to make full and frank disclosure on their ex parte applications, misleading the Court.
• The proceedings amounted to an abuse of process, given parallel litigation and anti-suit injunctions obtained in Russia.

The Court’s Reasoning

The Court agreed with the Applicants and stressed several points of principle:

1. Sealing of the Writ is Fundamental

The Court reiterated that no writ of summons may be served abroad without prior leave for sealing. This requirement is not a formality but a jurisdictional safeguard. Since no order for sealing had been sought or granted, the writ was legally non-existent at the time leave for service was given.

2. Defects Cannot Be Cured by Correction Orders

The subsequent attempt to “correct” the order by adding the words “sealing” and “filing” could not validate an order that had never been sought. An inexistent order cannot be corrected.

3. Failure to Specify Method of Service

The order granting service outside the jurisdiction did not specify the method of service. In light of Russia’s reservations under Article 10 of the Hague Service Convention, only service through state channels is permissible. Substituted service via private courier in Kazakhstan was therefore defective.

4. Duty of Full and Frank Disclosure

The Plaintiffs failed to disclose critical facts that would have affected the Court’s exercise of discretion. The Court emphasised that concealment or suppression of facts in ex parte proceedings is intolerable.

5. Judicial Comity

The Court noted the Plaintiffs’ complaints about Russian proceedings but held that such issues were irrelevant at this stage. The question was whether the Cypriot Court had jurisdiction in the first place — which it did not, due to fundamental procedural defects.

Outcome

The Court annulled all orders permitting service outside the jurisdiction, the correction order, and the substituted service order. As a result, there was no valid writ of summons before the Court, and the proceedings were terminated. Costs were awarded in favour of the Defendants.

Commentary

This decision highlights the strict approach of the Cypriot courts towards compliance with procedural requirements in cross-border litigation. Even in cases involving large sums and alleged state interference, the courts will not relax the rules on sealing, service, and disclosure.

For litigants, the judgment is a reminder that:

• Sealing of the writ is a jurisdictional prerequisite.
• Mode of service must comply strictly with the Hague Convention and bilateral treaties.
• Ex parte applications demand the highest standard of candour.
• Jurisdictional defects are fatal and cannot be cured by subsequent amendments.

In an era of heightened geopolitical tension and sanctions, litigants must tread carefully when seeking to engage Cypriot courts in disputes involving foreign sovereign interests.