CYPRUS Law and Practice Contributed by: Agathi Zervou and Maya Athanatou, George Z. Georgiou & Associates LLC
1. Fraud Claims 1.1 General Characteristics of Fraud Claims In Cyprus, there is no single, standalone cause of action for civil or commercial fraud. Instead, the legal framework has evolved in a flexible and pragmatic way, allowing courts to address fraudulent conduct through a combination of statutory provisions and common law principles. At its core, fraud in Cyprus involves dishonest con - duct that results in loss. Claims most commonly arise through actions for fraudulent misrepresentation, unlawful means conspiracy and breach of fiduciary duties. In practice, such claims are frequently sup - ported by robust interim measures aimed at preserv - ing assets and securing evidence pending the final resolution of the dispute. Fraudulent Misrepresentation (Deceit) Under Section 36 of the Civil Wrongs Law, Chapter 148, a claimant must establish that the defendant made a false representation of fact, knowing it was false, without believing it to be true or recklessly dis - regarding its truth. The representation must have been made with the intention that the claimant would rely on it. The claimant must then show that they were in fact misled, acted in reliance on the misrepresentation and suffered damage as a result. Section 17 of the Contracts Law, Chapter 149 also recognises misrepresentation in the context of con - tract formation. Under said provision, the term “fraud” encompasses a range of deceptive conduct commit - ted by a party to a contract (with their knowledge or through their agent) with the intention of deceiving the other party or inducing them to enter into the agree - ment. This includes making false statements of fact without belief in their truth, actively concealing mate - rial facts, making promises without any intention of fulfilling them, engaging in any conduct designed to deceive or committing any act or omission that the law expressly classifies as fraudulent. A contract induced by fraud is voidable at the option of the innocent party. The primary remedy is rescis - sion, which sets aside the contract and restores the parties to their pre-contractual position.
Unlawful means conspiracy Unlawful means conspiracy is recognised in Cyprus as a distinct tort under common law. It arises where two or more people take action that is unlawful in itself, with the intention of causing damage to a third party who incurs the intended damage. It is not neces - sary to prove that damage was the main or predomi - nant purpose of the conspirators. It is sufficient that harm to the claimant formed part of their intention. To establish a claim, the claimant must prove: • a combination or co-ordinated action between two or more persons; • the use of unlawful means; • knowledge of the unlawfulness of those means; • an intention to injure the claimant; • an overt act carried out in furtherance of the agree - ment; and • damage. The agreement itself does not need to be formal or expressly stated. What is required is a shared understanding or deliberate co-ordination direct - ed towards a common objective. Furthermore, the notion of “unlawful means” is interpreted broadly and is not confined to criminal conduct. It may include civil wrongs, such as inducing a breach of contract or committing another tort. Breach of Fiduciary Duties A claim for breach of fiduciary duty is available in Cyprus where a person in a position of trust and con - fidence fails to act in the best interests of the person to whom they owe such duties. Recognised catego - ries of fiduciary relationships include those between trustee and beneficiary, agent and principal, direc - tor and company, solicitor and client, and partners. However, the categories are not closed, and fiduciary duties may arise in other commercial relationships, such as joint ventures, where the requisite attributes are present. The core obligation of a fiduciary is one of loyalty. Fiduciaries must act solely in the interests of the per - son to whom they owe duties and must subordinate any personal interests they have. To establish a claim for breach of fiduciary duty, the claimant must prove:
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