A counter-offensive by the providers of CFD products has been halted. The judge in Cyprus refuses permission to take Dutch consumers to court.

fake ads

These are providers of contracts for difference (CFDs) from Cyprus who sell these investment products through fake advertisements about bitcoins and famous people. Last year, several Dutch courts declared themselves competent to hear cases against these parties. The stake is now more than € 8,000,000.

Which judge?

The CFD brokers have stipulated in the fine print of the contract that lawsuits can only be heard by the Court located in Limassol, Cyprus. Dutch judges have put a line through this; it concerns consumer cases that can simply be handled in the Netherlands. The CFD companies do not like this and have started counter proceedings in several cases before the court in Limassol. In those proceedings they claim back the legal costs that they have to incur in the Netherlands. In other cases, they state that there is a negative account balance. This counter-offensive forces the Dutch victims to defend themselves in a procedure in Cyprus. Anyone who does not respond will be (automatically) convicted in absentia. The CFD brokers want to make it as difficult as possible for the victims – who in many cases have lost a lot of money – with opening this second front.

Need permission

In Cyprus there is a rule that the judge must first give permission (leave) before you can summon someone from another country. That permission has been given in more than 30 cases. With this leave, the foreign national is not heard and the court cannot yet know that the foreign national will invoke the lack of jurisdiction of the court. The CFD brokers have reported – or bluffed – that the courts in Cyprus have jurisdiction. Of course they have the advantage that the Dutch victim is not yet able to respond. In these more than 30 cases, the victim was subsequently summoned and we subsequently invoked the lack of jurisdiction of the Cypriot court. In addition, an explanation is given about the Dutch statements that are already there, which have been sent along in translation.

No new leave

The Cypriot court has not yet ruled on jurisdiction in the follow-up procedure, but it is the first time a decision has been made on a newly requested leave. The judge writes in the ruling that he is familiar with the defenses that Dutch consumers have submitted in the other cases that are already pending. The judge then suspends the proceedings – so he does not grant leave – pending the decision of the Dutch judge. He has already ruled that he has jurisdiction, but the judge in Cyprus cannot yet know that, because the opposing party is not called upon to respond during the leave procedure. The judge announces that he will reject the leave as soon as he receives the Dutch verdict. We have now submitted the Dutch certification. This concerns a decision of the District Court of Overijssel .

Blockade new business

The judge in Cyprus hereby confirms that only the Dutch courts can handle the proceedings against the CFD brokers exclusively because it concerns consumer cases. It is also good news that the Cypriot court has carefully studied the defenses filed in other cases and included them in the new leave applications. The start-up of new counter-procedures seems to be effectively blocked: they are intercepted at the gate. A positive decision can be expected in cases in which leave has already been granted.

The translation of the Cypriot verdict can be found here: Judgment Rb Limassol 7 April 2021

published by Marius Hupkes