Assignment of rights under Cyprus Law

Introduction 

In Cyprus law, the assignment of contractual rights is governed by equitable principles, as there are no statutory provisions for legal assignments. This framework allows for the transfer of rights from one party to another, with the primary rule being that rights can be assigned, but not obligations. The process of equitable assignment enables the assignee to enforce these rights without formal requirements, provided the intent to assign is clear. However, certain limitations apply, such as restrictions on assigning personal contracts or liabilities, making it essential to navigate these transfers carefully. 

General Principles 

The key points regarding how rights can be transferred between parties can be summarised as follows: 

No Statutory Legal Assignment:

Cyprus law does not recognize “legal assignments” as defined by statute, unlike some other legal systems. Instead, the concept of equitable assignment is applied. 

 Assignability of Rights:

Rights under a contract can generally be assigned unless the contract is of a personal nature. Therefore the general rule is that rights under a contract are assignable unless the contract includes an express or implied prohibition on assignment. 

Debt Assignment:  

 A debt, as a “legal chose in action” (a right to receive money or other benefits), can be assigned. 

No Assignment of Obligations:

Only rights under a contract can be assigned, not obligations or liabilities. If obligations need to be transferred, this must be done through a separate novation agreement. 

No Notice Required:  

An equitable assignment does not require notice to the debtor (the person who owes the obligation), though until notice is given, the debtor may continue to validly discharge the debt by paying the original party (assignor). 

Effective Upon Communication:  

An equitable assignment becomes effective once it is communicated to the assignee, and the assignee becomes entitled to enforce the rights without needing the assignor. 

Civil Wrongs:

Rights to remedies for civil wrongs (such as claims for damages in tort) cannot be assigned. 

In essence, the general principles emphasize that while rights can be freely assigned under Cyprus law (subject to certain conditions), obligations remain personal unless separately agreed upon through a novation.

Recent case law – proper parties to a claim concerning an assignment and public policy 

In the recent Civil Appeals 5/2018, 76/2028 and 77/20218, the Court addressed issues concerning assignment of rights and the involvement of the right parties. Specifically, by adopting the position the UK case Three Rivers District Council and others v. Bank of England (1995) 4 All E.R. 312, the Court highlighted that the assignees must have been properly included in the legal proceedings. The court found that the assignees were not joined in some cases, meaning that those bringing the appeal lacked the necessary locus standi to file the claims.  

Without the inclusion of the assignees, the court ruled that the recognition and enforcement of the UK judgment in Cyprus would contradict public policy.