On 14 November 2018, the Supreme Court of Cyprus issued its decision in Metaquotes software ltd v xxxxx Dababou Civil Appeal No. E234/2016, which involved a number of practical issues related to the enforcement of disclosure orders (also known as Norwich Pharmacal orders) in Cyprus. One of the points discussed by the Supreme Court was the jurisdiction of the Court to appoint an independent IT expert to support and facilitate through technical expertise the disclosure process.
The Claimant asserted that it was a victim of fraud and conspiracy perpetrated by a number of persons, as a result of which it sustained substantial economic loss. Specifically, the Claimant had invested in an investment company owned by the Defendants, with the ultimate objective of trading in international financial markets. The company offered technologically innovative trading platforms and specialised brokerage software. The Claimant alleged that the company, through a labyrinth of corporate structures, managed to block all and any access to the Claimant’s funds.
The Claimant sought a disclosure Norwich Pharmacal order against the defendant Company as well as other parties who might have innocently facilitated the fraud and they might have been in possession of useful information concerning the fraud. The District Court was satisfied that the conditions for issuing a Norwich Pharmacal order were met. It also observed that this case involved complicated financial transactions accompanied by specialised computer programs, currency exchange software and servers, and, on this ground, it approved the appointment of an independent IT expert for the purpose of supervising electronic disclosure. The defendant appealed on this ground, arguing that there was no jurisdiction of the Court to make such a ruling.
Supreme Court Judgement
The Supreme Court engaged in a thorough analysis of the requirements that need to be met for a disclosure order and stressed that, even if such conditions are met, the Court must exercise its discretionary powers by performing a balancing act between the parties’ conflicting rights. An important and occasionally catalytic consideration is the necessity of the disclosure exercise. Mere convenience or desire of the party seeking disclosure does not suffice.
The Supreme Court agreed that there was remarkable complexity in the transactions under scrutiny and clear difficulty of obtaining and analysing data. It also observed that the evidence suggested that the information was contained in servers, to which the password was known only by the owners of the servers and nobody else. Having regard to the various considerations, the Court held that a Norwich Pharmacal order was justified and that the District Court had jurisdiction (and was indeed right to exercise such jurisdiction) to engage helpful means of identifying necessary information, in order to uncover the identity of the wrongdoers as well as collect evidence to support a potential civil claim.
Case law on disclosure orders is evolving positively, in an effort to address the ever-changing nature and complexity of transactions. They are one of the more important tools in detecting torts committed and eventually permitting the effectiveness of remedies. As a result of this judgment, it is expected that disclosure orders, accompanied by the appointment of an independent IT experts, will become more usual in complex fraud cases.
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