Civil Court issues for the first time freezing injunction in a state aid case The 6th June 2014 was a landmark day for state aid control in Cyprus, as the District Court of Nicosia issued an interim judgment and awarded a freezing injunction for the first time in a Cyprus state aid case, that is Civil Action no. 5141/13, Cypra Limited vs. Attorney General of Cyprus and the Council of Central Slaughterhouse of Kofinou (hereinafter “CSK”). Pursuant to the judgment, the injunction prohibits the Council of CSK from selling, mortgaging, transferring, alienating and/or charging in any manner the immovable property of CSK until the hearing of the case or further order of the Court. The judgment was the latest episode of a state aid saga dating back to 2006. As we have described in a previous EStAL article On 03/01/2010 Cyprus notified to the Commission a restructuring plan. The total restructuring cost amounted to Euro 26,85 mil. out of which Euro 15 mil. would be granted as state aid. As the restructuring plan was under assessment by the Commission, a complaint by Cypra Ltd (hereinafter “Cypra”), a slaughterhouse undertaking that holds more than 50% of the Cyprus slaughterhouse market, was submitted on 20 January 2011. Cypra alleged that CSK was the recipient of several non-notified state aids such as, state tolerance and/or omission to collect default or deferred Social Security and Tax obligations, grant of a Euro 512.000 loan to CSK by the Union of Cyprus Municipalities in December 2007 and write-off of claims of the Cyprus Government against CSK as a result of the triggering of a guarantee for government-backed bonds. Following the complaint, the European Commission decided to initiate a formal investigation procedure regarding the restructuring aid to CSK, as well as four alleged illegal aids Disclosure of CSK’s default obligations to the Republic of Cyprus, Payment of these defaulted obligations to the Republic of Cyprus and any other competent authority, and Prohibition to sell, mortgage, transfer, alienate and/or charge in any manner the property of CSK, until the main trial of the case or further order of the Court. As the application was opposed by the lawyers of the CSK Council the matter was led to trial. In its interim judgment, the learned President of the District Court firstly referred to the existing EU rules applicable to state aid and cited relevant Court of Justice jurisprudence. Further on, he summarized the rules governing the grant of state aid as well as the parallel role of the national Courts. A key point of the judgment was the Court’s statement that although EU law does not grant an actionable right against the recipient of the aid, this right could be sustained pursuant to the general principles of national law for torts (civil wrongs). The Court found that Cypriot law provides the possibility to support an actionable right against the recipient if it is proven that he was involved in the wrongful act in such an extent, that liability could be attributed to him for loss or damage caused by the wrongful act. Cypriot law provides such capability, considering the principle that the notion of civil wrongs could be extended to include new types, as prescribed by the circumstances of each time period. From this perspective, the Court found that prima facie there seems to be an actionable right against SCK’s Council. The Court rejected the argument of CSK’s lawyers, that the parallel jurisdiction of the European Commission or the Cyprus Commissioner for State Aid Control precludes the jurisdiction of the Court. Instead, it ruled that national courts retain the power to order provisional measures and have the duty to impose all appropriate legal measures, including provisional measures, in order to secure the rights of the citizens and the enforcement of the articles of the Treaty for the European Union. The Court took into consideration that CSK has suspended its operations as from the 30th October 2013 and held that an injunction can be made for the additional reason that the balance of convenience weighs in favor of a citizen, meaning Cypra, who complains that free competition is distorted because another undertaking receives favorable treatment by the state. As regards the aftermath of the judgment, it is noteworthy that it was reported in only one press article of a nation-wide newspaper. However, state aid practitioners in Cyprus recognize its importance as it may lead the way for other civil actions, brought by competitors of illegal state aid recipients. As the main hearing of the Civil Action is not expected to start earlier than 2016, the state aid community in Cyprus will keep a close eye on the final outcome of this case and a possible appeal judgment by the Supreme Court.  Decision of the Commission of 6 May 2010 regarding state aid N 60/10, EE C 233 of 28.8.2010, p.3.  Decision of the Commission of 20.04.2011 to initiate a formal investigation procedure regarding Restructuring aid to the Central Slaughterhouse of Kofinos, EE C 165 of 07.06.2011, p.12.