CYPRUS Law and Practice Contributed by: Agathi Zervou and Maya Athanatou, George Z. Georgiou & Associates LLC
• the existence of a fiduciary relationship; • breach of the fiduciary duties owed within that relationship; and • loss or damage suffered as a result of the breach (for claims seeking compensation) or profit made by the fiduciary (for claims seeking an account of profits). Several remedies are available for breach of fiduciary duty including equitable compensation, an account of profits gained from the fiduciary’s wrongdoing and proprietary remedies such as tracing any benefit received. In addition, the fiduciary may be liable to disciplinary proceedings from an appropriate regulator or may be disqualified. 1.2 Causes of Action After Receipt of a Bribe The Republic of Cyprus has ratified the Council of Europe Criminal Law Convention on Corruption (Law 23 (III)/2000, as amended by Law 22 (III)/2012) and has implemented EU Council Framework Decision 2003/568/JHA on combating corruption in the pri - vate sector. Under Article 4 of the ratifying legisla - tion, active bribery and passive bribery in the private sector constitute punishable criminal offences. The courts have recognised that bribery poses a serious threat to lawful society, distorts market competition and impedes healthy economic development. Available Causes of Action Where a principal discovers that their agent has received a bribe from a third party, several causes of action may be available under Cypriot law, including the following. • Fraud/deceit (Article 36 Civil Wrongs Law, Chapter 149): A claimant may bring an action in fraud where the bribe was procured through false representa - tions of fact made intentionally and with full knowl - edge that they were untrue, resulting in loss to the claimant. • Misrepresentation: Claims may be brought for damages arising from false or negligent misrepre - sentations that induced the claimant to enter into a transaction or make payments in circumstances connected with the bribery scheme. • Conspiracy to defraud: Where multiple parties co-operate in a scheme to defraud the claimant
through bribery, an action for conspiracy may lie. This was recognised in the Supreme Court deci - sion in Civil Appeals No 14/2014 and 89/2014, where the Court examined allegations that multiple defendants participated in a co-ordinated fraudu - lent scheme. • Unjust enrichment: A claim for the recovery of sums paid without legal basis may be pursued where the claimant can demonstrate that the recipient has been enriched at their expense with - out justification. • Breach of fiduciary duty: An agent who accepts a bribe breaches their fiduciary obligations to their principal. The principal may seek remedies includ - ing disgorgement of the bribe, account of profits and damages for any losses suffered as a result of the breach. A potentially decisive limitation on the availability of these causes of action arises from the common law doctrine of ex turpi causa non oritur actio – no action arises from a disgraceful cause. This principle was applied by the majority of the Supreme Court in Civil Appeals No 14/2014 and 89/2014. Where the claim - ant has participated knowingly in an illegal bribery scheme, the courts will likely apply the ex turpi causa doctrine to deny all relief, even where the claimant has suffered genuine loss through the dishonest conduct of others. Innocent claimants who were unaware of their agent’s receipt of bribes retain full access to all available civil remedies. Remedies Available Cyprus law provides both personal and proprietary remedies to a principal whose agent has received a bribe. The agent is liable to account to the principal, as a constructive trustee, for all monies and benefits received in breach of fiduciary duties. The principal may also claim compensatory damages for any loss caused by the breach. Moreover, in terms of propri - etary remedies, a fiduciary who obtains a benefit in breach of duty may be treated as holding that benefit on constructive trust for the principal. The construc - tive trust may arise automatically when the bribe is received, making the principal the beneficial owner with rights to trace and recover such benefits. The principal may also seek a declaration that the defend - ant holds the asset on constructive trust and an order
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