Greece
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. They restrain the defendant from disposing of and/or from further encumbering his assets. They are a specific type of provisional relief granted in extremely urgent cases. A freezing order, once granted, will stay in place until the petition for interim relief is heard and decided. The main function of freezing orders is to safeguard the effectiveness of interim relief proceedings in which the provisional attachment of the defendant’s assets is sought. Freezing orders are not to be confused with the freezing effect of the provisional attachment that follows.
In some cases, the request for a freezing order constitutes the main interim relief request. This is done in case a non-monetary claim for specific performance related to certain assets is made. The function of these freezing orders is different. They aim to safeguard the effectiveness of ordinary proceedings in which the claim for specific performance will be entertained and finally decided.
Freezing orders do not have an extraterritorial effect under Greek law. Whether any effect will be given to them thus depends on the effective law in the place of enforcement. A freezing order issued in Greece can be enforced abroad in an EU member state provided that Greek Courts have jurisdiction over the underlying claim.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Depending on the nature and the subject matter of the dispute, an injunction may be ordered in conjunction with a freezing order. Such an injunction in most cases would involve an order to the defendant to refrain from certain conduct. Freezing orders and injunctions however serve different purposes and are not to be confused.
3. Briefly what is the relevant legal test?
When a freezing order is requested in the context of interim relief proceedings, the plaintiff must establish:
(i) that there is an imminent risk of dissipation of the assets; and
(ii) that they have a reasonable prospect of success in the case. Judges, however, focus almost exclusively on the imminent threat requirement. The reason is that the merits of the monetary claim will be scrutinized by the judge who will decide the provisional attachment petition.
The same test applies when a freezing order is requested as the main interim relief sought in relation to a non-monetary claim for specific performance. In that case, however, the judge will look more closely into the merits of the dispute and decide whether there is indeed a reasonable probability that such a claim exists and will succeed.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
When a freezing order is requested in the context of interim relief proceedings the plaintiff files an application with the Court that contains two parts: (a) the main application for interim relief in the form of a provisional attachment, and (b) the application for a freezing order to stay in place until the main request is heard and decided. The freezing order application is tried immediately after the filing of the application with the Court in a separate hearing. The freezing order may be granted ex parte if there are reasonable grounds to believe that the defendant will dispose of his assets immediately after service of process. Normally the judge decides on the basis of documentary evidence alone. No witnesses are examined. The decision is rendered shortly after the hearing in the form of an order. Judges are not required to, and, in practice, never provide reasoning for their decision. The freezing order stays in place until the hearing of the main application for interim relief. The Court that tries this application may keep the freezing order in place or revoke it. Customarily all freezing orders remain in place until the Court’s decision.
When a freezing order is requested as the main interim relief in relation to a non-monetary claim for specific performance the same framework above applies. The application for the freezing order is brought twice, both as an application for a provisional order and as an application for interim relief. If the latter is granted the interim relief granted will stay in place until a decision on the merits of the dispute. This results in a res judicata effect in subsequent ordinary proceedings. The plaintiff that obtained the freezing order is obliged to initiate the main proceedings within a specific timeframe.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Security can be required at the discretion of the judge but in practice it is never ordered.
If the plaintiff is ultimately unsuccessful, he is under no obligation to compensate the defendant.
6. Can it be sought against third parties?
The parties to the freezing order proceedings are always the parties to the underlying claim. A third party against whom the applicant asserts no substantive claims may not be made a party to the proceedings, or, therefore, the freezing order.
The effect of a freezing order is to render any transfer and/or encumbrance of the affected assets invalid vis a vis the creditor. For that reason, any third party making such a transaction may be adversely affected as the transfer may be invalidated. The same applies to financial institutions holding the defendant’s assets. If a financial institution permits the transfer or dissipation of the defendant’s assets despite the freezing order, such payment may be invalidated and the financial institution may be held liable to pay also the creditor.
7. What assets are covered by a freezing (or equivalent) order?
All types of transferable assets of the defendant. The term “assets” also includes any and all claims. The Court is not required to identify specific assets in the freezing order. The effect of the freezing order is limited to assets located within the Greek territory.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes, as long as Greek Courts are vested with jurisdiction to make the order.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes. In domestic arbitration proceedings arbitrators lack authority to order interim relief. Sole jurisdiction lies with the state Courts. In international commercial arbitration proceedings seated in Greece both the tribunal and the state Courts may order interim relief, also in the form of a freezing order. That said, any freezing order made by the arbitral tribunal is not immediately enforceable. It has to be imposed by state Courts.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage of the proceedings. Depending on the stage however the competent Court may differ.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Yes, this is at the discretion of the Court. A typical example would be the exception of a bank account of a corporation used for salary payments to its employees. For individuals, it is similarly common for the Court to make an exception for ordinary living expenses by setting a specific value above which the freezing order applies.
12. What happens after a freezing (or equivalent) order is granted?
The effect of a freezing order is that any subsequent transfer/encumbrance is deemed invalid vis a vis the plaintiff. This effect is immediate. It does not presuppose service of process or any kind of notification given to the defendant and/or any third party. The assumption here is that the named defendant is aware or should have been aware of the issuance of the freezing order. Also, third party notification is irrelevant for the legal consequence of invalidity which takes place despite the good faith and/or lack of knowledge of the third party. In case however the freezing order relates to the defendant’s immovable property, vessel or plane, the order shall be registered in the relevant public records (for example, the Greek Cadastre in case it relates to real estate property) in order to be effective against third parties. It is submitted though that registering the interim relief application which contains the application for a freezing order suffices. In practice the plaintiff always serves process on the defendant and any third party that he deems relevant (financial institutions, prospective buyers of property, etc). This is done also in order to establish knowledge and to support a future claim in tort against them in case they do not abide by the freezing order.
13. Who pays the costs of the application for a freezing (or equivalent) order?
Costs are nominal corresponding to the minimum statutory legal fees. In principle the losing party bears the costs.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
The focus of the law is to protect the interest of the creditor. This is evident from what is noted above under 12. The interests of third parties are taken into account only exceptionally, only to some extent and only in relation to immovable property, vessels or planes. The protection put in place is to make the Court order, or, according to other opinion, the petition from which it resulted, public.
15. What are the consequences of breach of a freezing (or equivalent) order?
As noted above any transfer in violation of the freezing order is deemed null and void vis a vis the plaintiff. Breaching a freezing order may also constitute a tort. Third parties, although not directly bound by a freezing order, may be found liable to compensation in tort.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
See above under 15. A fiduciary duty of care is not established. In addition, the third party is not – strictly speaking – personally obliged to comply with the payment order issued in proceedings to which it did not (and could not) take part. That said, knowingly and intentionally aiding a defendant to violate a freezing order to the detriment of the creditor may form the basis of tortious liability such as the obligation not to willfully harm others.
17. Can a freezing (or equivalent) order be enforced abroad?
According to EU Regulation 1215/2012, a freezing order issued in Greece can be enforced abroad in an EU member state only when the Greek Courts have jurisdiction over the underlying claim, otherwise, the effect of such measures should be confined to the territory of Greece.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
In the absence of a bilateral recognition and enforcement treaty providing specifically for the recognition and enforcement of provisional orders or orders for interim relief this is not possible. The reason is that, in the absence of such treaty, domestic Greek law will prevail and, according to the relevant rules of the Greek Code of Civil Procedure, only foreign final Court judgments producing res judicata effect are recognized and declared enforceable in Greece.
Contacts
Dimitris Babiniotis Partner | Head of Dispute Resolution Practice Zepos & Yannopoulos Athens, Greece d.babiniotis@zeya.com www.zeya.com Lito Dokopoulou Senior Associate Zepos & Yannopoulos Athens, Greece l.dokopoulou@zeya.com www.zeya.com
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