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By Delphine Strauss in Nicosia

Published: May 12 2009 03:00 | Last updated: May 12 2009 03:00

A concrete skeleton on the road into the resort town of Kyrenia is all that has become of a plan to build Northern Cyprus's first shopping mall. The empty frame is a testament to a property bubble that has popped - with severe consequences for this tiny economy.

Before 2007, the self-proclaimed Turkish Republic of Northern Cyprus - recognised only by Ankara - was a developers' paradise, as Britons especially poured in to buy holiday homes at comparatively low prices.

As prospects of a settlement receded, people worried less about the fact that up to 78 per cent of property in the north is owned by Greek Cypriots who fled in the 1970s.

After the European Court of Justice ruled in April that courts round the European Union could enforce Greek Cypriot judgments on disputed property, some people wonder whether a market already suffering from oversupply and the British recession can recover. One developer received a call from a Greek Cypriot planning legal action to recover his property the morning after the ECJ decision.

"There is serious disappointment . . . at the perspective of the EU on northern Cyprus," said Fikri Toros, a businessman distributing household goods. His turn-over has shrunk by a third in 18 months along with the developers' fortunes.

Northern Cyprus, blocked from direct trade in EU markets, has few options - and remains desperately dependent on Turkey's sponsorship.

Aside from the direct transfers that sustain generous civil service salaries, Turkish Cypriot casinos rake in cash from mainland tourists banned from gambling at home, and universities thrive on fees from students who have failed to win a place in Turkey.

Hasan Chirakli, a store owner in the old town of Nicosia, tried to export Turkish delight and other foodstuffs through the Republic of Cyprus when restrictions on trade across the Green Line eased in 2004.

His attempts failed, and he is bitter at the slow progress of the latest talks on reunification. "I don't believe they have the intention," Mr Chirakli said. "If it was a couple of businessmen, they'd have solved it in a couple of days."

Copyright The Financial Times Limited 2009

http://www.ft.com/cms/s/0/caa466d8-3e8d ... abdc0.html

[Oracle]

Enforcing Northern Cyprus judgment

Court of Justice of the European Communities

Published May 1, 2009
Apostolides v Orams and Another

The fact that a judgment given in a member state of the European Community concerned land in a part of that state over which the state did not exercise effective control did not mean that the judgment was not subject to recognition and enforcement in other member states.

The Grand Chamber of the Court of Justice of the European Communities so held, inter alia, on a reference by the Court of Appeal for a preliminary ruling under article 234 EC, raising questions of interpretation of (i) provisions of Council Regulation (EC) No 44/2001 of December 22, 2000, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L12/1) and (ii) Protocol No 10 on Cyprus to the Act on the accession to the European Union of, inter alia, the Republic of Cyprus (OJ 2003 L236/955).

The claimant, Meletis Apostolides, was the owner of land in the northern area of Cyprus and had occupied it before the invasion of Cyprus by the Turkish army in 1974, after which he and his family had had to abandon the land and take up residence in the area effectively controlled by the Cypriot Government.

The defendants, David Charles Orams and Linda Elizabeth Orams, an English married couple, claimed to have bought the land in 2002 in good faith and in accordance with the laws of the Turkish Republic of Northern Cyprus, an entity recognised only by the Republic of Turkey. They built a villa on it, which they used as a holiday home.

The claimant, in reliance on Cypriot legislation to the effect that property rights relating to the northern area subsisted in spite of the 1974 invasion and occupation, brought proceedings for, inter alia, the delivery up of the land, its restoration to its original state, and damages for unlawful possession.

The District Court of Nicosia gave a default judgment in favour of the claimant, the defendants not having entered an appearance in time, and subsequently gave a further judgment dismissing the defendants’ application for the first judgment to be set aside, holding that they had not put forward an arguable defence.

In the course of proceedings brought by the claimant in England for recognition and enforcement of the two judgments, under Regulation 44/2001, the Court of Appeal sought a preliminary ruling on issues raised.

Article 1 of Protocol No 10 provides: “(1) The application of the acquis shall be suspended in those areas of Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control.”

Article 34 of Regulation 44/2001 provides: “(1) A judgment shall not be recognised: (1) if such recognition is manifestly contrary to public policy in the member state in which recognition is sought; (2) where it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so...”

Article 38 provides: “(1) A judgment given in a member state and enforceable in that state shall be enforced in another member state when, on the application of any interested party, it has been declared enforceable there.”

In its judgment the Grand Chamber of the Court of Justice held:

The suspension provided for by article 1(1) of Protocol No 10 was, on its wording, limited to the application of the acquis communautaire in the northern area, whereas the judgments in issue were given by a court sitting in the Government-controlled area.

The fact that the judgments concerned land situated in the northern area did not nullify the obligation to apply Regulation 44/2001 in the Government-controlled area.

Since the dispute in the case was an action between individuals, and did not concern an exercise of public powers, it was a civil and commercial matter to which Regulation 44/2001 applied, by virtue of article 1(1) of the Regulation.

Article 35(1) of the Regulation provided that “a judgment shall not be recognised if it conflicts with”, inter alia, article 22.

Article 22(1), whereby “in proceedings which have as their object rights in rem in immovable property ... the courts of the member state in which the property is situated” had exclusive jurisdiction, contained a mandatory and exhaustive list of the grounds of exclusive international jurisdiction of the member states.

The forum rei sitae rule in article 22(1) concerned the international and not the domestic jurisdiction of the courts of the member states.

Since the land in issue was situated in the Republic of Cyprus, that rule had been observed.

Moreover, the principle prohibiting review of the jurisdiction of the court of the member state of origin, laid down in article 35(3), except in relation to article 35(1), prevented review of the domestic jurisdiction.

Therefore, while the fact that the land was situated in the northern area might have an effect on the domestic jurisdiction of the Cypriot courts, it could not have any effect for the purposes of the Regulation.

Recourse to article 34(1) of the Regulation was only permissible where recognition or enforcement of the judgment would be at variance to an unacceptable degree with the legal order of the state where enforcement was sought, in that it would constitute a manifest breach of a rule of law regarded as fundamental: (Case C-7/ 98 ) Bamberski v Krombach (The Times March 30, 2000; [2001] QB 709, paragraph 37).

Recognition or enforcement could not be refused merely on the ground that there was a discrepancy between the legal rule applied by the court of the state of origin and that which would have been applied by the court of the requested state had it been seised of the dispute.

Since the Court of Appeal had not referred to any fundamental principle in the United Kingdom legal order which would be infringed in the present case by recognition or enforcement of the judgments, such recognition or enforcement could not be refused on the ground that the judgments could not be enforced where the land was situated.

For those and further reasons stated by it the Court ruled:

1 The suspension of the application of the acquis communautaire in those areas of the Republic of Cyprus in which the Government of that member state did not exercise effective control, provided for by article 1(1) of Protocol No 10, did not preclude the application of Regulation 44/2001 to a judgment which was given by a Cypriot court sitting in the area of the island effectively controlled by the Cypriot Government, but concerned land situated in areas not so controlled.

2 Article 35(1) of Regulation 44/2001 did not authorise the court of a member state to refuse recognition or enforcement of a judgment given by the courts of another member state concerning land situated in an area of the latter state over which its government did not exercise effective control.

3 The fact that a judgment given by the courts of a member state, concerning land situated in an area of that state over which its government did not exercise effective control, could not, as a practical matter, be enforced where the land was situated, did not constitute a ground for refusal of recognition or enforcement under article 34(1) of Regulation 44/2001 and it did not mean that such a judgment was unenforceable for the purposes of article 38(1).

4 The recognition or enforcement of a default judgment could not be refused under article 34(2) of Regulation 44/2001 where the defendant was able to commence proceedings to challenge the default judgment and those proceedings enabled him to argue that he had not been served with the document which instituted the proceedings or with the equivalent document in sufficient time and in such a way as to enable him to arrange for his defence.