THE ORAMS CASE; A DEFINITIVE ANALYSIS OF THE SAFETY OF PURCHASING REAL ESTATE IN NORTH CYPRUS
The most common concern of foreigners when purchasing real estate in North Cyprus is the perceived risk of buying property built on land with TRNC deeds. It is the opinion of the writer that there is no tangible risk of losing such property to the pre-1974 owner. As such, these deeds can be considered safe.
Any moral arguments by the Greek Cypriot authorities for the return of such land to its pre-1974 owners dissipated with their opposition to the Annan plan, which would have provided a comprehensive settlement of inter-communal property disputes. On 24th April 2004 the plan was overwhelmingly rejected by the Greek Cypriots and overwhelmingly accepted by the Turkish Cypriots. This was despite unanimous international support for the plan, including from Greece.
With the rejection of a political solution it falls to be considered whether Greek Cypriots who owned TRNC title land pre-1974 have legal redress against a purchaser who buys such real estate today.
Much has been made of the Orams case. Contrary to the impression given by many, the case does not involve English people being pursued in the English Courts. It involves an English couple residing in North Cyprus being sued in a court in South Cyprus. Mr Aposolides, the pre-1974 owner and the party bringing the action against Mr and Mrs Orams, has threatened that if successful in obtaining judgment in South Cyprus he will seek to enforce it against assets owned by the Orams in England.
In the writer's opinion there is no realistic chance of a judgment from South Cyprus (even if it is obtained) being successfully enforced in either North Cyprus or England.
A judgment obtained in South Cyprus cannot be enforced in North Cyprus. This is because the Turkish Republic of Northern Cyprus has a separate legal system over which the South has no jurisdiction. This approach was supported in the English High Court case of Emin v Yeldag [2002] 1 FLR 956 (following the Court of Appeal judgment of Lord Denning MR in Hesperides Hotels Ltd v Agean Turkish Holidays Ltd 1978 Q.B. 205). In the Emin case the Attorney General and the Secretary of State for Foreign and Commonwealth Affairs on behalf of the present British Government submitted the English Courts should respect the acts of the TRNC authorities in relation to private rights. Mr Justice Sumner concluded Cyprus was a single country with two territories each with its own system of law.
The EU also tacitly recognises Cyprus is a single country with two territories each with its own system of law. Although North Cyprus is part of the European Community, European Laws (known as the 'Acquis Communautaire') are suspended there pursuant to Article 1 Protocol 10 of the Act of Accession 2003 pursuant to which Cyprus joined the EU. The EU imposed this suspension on the basis the geographical area comprising of the TRNC is outside the effective control of the Republic of Cyprus. Unless North Cyprus is deemed to be an area of complete lawlessness, if it accepts the South has no control over the North the EU at the same time must acknowledge the North has a separate and distinct legal system from the South.
The fact the TRNC is a political entity not internationally recognised as a state is irrelevant. Simply because an authority with effective control of a geographical area lacks international recognition or legitimacy for such control does not mean the system of law governing the area will not be respected by the international community. This is the international approach in relation to Taiwan, the Israeli controlled areas of the West Bank and Gaza and Pakistani controlled Kashmir.
Furthermore, Mr and Mrs Orams should feel safe in the knowledge that any judgment Mr Aposolides secures in South Cyprus relating to their property in North Cyprus cannot be enforced against their assets in England. The only theoretical means of achieving this is by European Council Regulation No. 44/2001. Under Article 38 (1) of E.C. Regulation 44/2001a judgment obtained in the South can only be enforced in the English Courts if it is enforceable in Cyprus. For the above reasons it is impossible to enforce judgments obtained in South Cyprus in the North because the North has a distinct and separate legal system.
Even if the English Court were to entertain the substance of an application by Mr Aposolides to enforce any judgment he obtains in South Cyprus in England, it is unlikely the English Court would exercise its discretion to allow such an application to succeed. Pursuant to Article 34 of E.C. Regulation 44/2001 the English Court can refuse to recognise a judgment made in Cyprus on the basis such recognition is manifestly contrary to public policy in England.
There are strong public policy arguments against recognition should Mr Aposolides successfully secure judgment against Mr and Mrs Orams. If nothing else it would expose a significant section of British society of Turkish Cypriot heritage numbering over 100,000 to the threat of enforcement of judgments made applying laws over which the community (even in Cyprus) has little or no say. It would also be discriminatory in that a Turkish Cypriot could not enforce a similar judgment obtained in a court in North Cyprus against a Greek Cypriot occupier of his land in South Cyprus.
Furthermore, individual actions such as that brought by Mr Aposolides undermine British foreign policy. Such actions are contrary to the concept of a comprehensive inter-communal political settlement to property disputes in Cyprus as envisaged by the Annan Plan. Only a comprehensive political settlement can bring with it the checks and balances as well as compromises both between the communities and between individuals within each community that are required for a sustainable settlement.
The foreign and diplomatic policy of the British Government is unreservedly committed to a comprehensive settlement on the basis of the Annan Plan. The Attorney General and the Secretary of State for Foreign and Commonwealth Affairs will undoubtedly intervene to make this view known in any English proceedings to recognise any judgment Mr Aposolides may successfully obtain in South Cyprus.
Finally, one must consider the risk of a pre-1974 owner bringing a claim before the European Court of Human Rights. Cases that have come before the European Court such as Loizidou v Turkey [1996] 23 EHRR 513 do not concern present owners of real estate with TRNC title deeds. Such actions are brought against the Turkish state. Any claim for damages lies against Turkey.
European Court remedies will almost certainly not encompass enforcing a right to return of property. Therefore the proprietary rights of present owners are unaffected. The European Court provides remedies using the principle of 'just satisfaction'. The remedy is almost invariably restricted to an award of damages despite Mrs Loizidou’s ongoing attempts to secure possession of land she owned in North Cyprus pre-1974.