The current debate in Cyprus regarding new legislation to streamline the procedure for the forced sale of mortgaged property illustrates the role of the courts in reviewing proposed legislation.

The Memorandum of Understanding that Cyprus concluded with its international creditors in 2013 committed the government to introducing a so-called "foreclosure law" - legislation to amend the procedure for the forced sale of mortgaged property to allow for private auctions. The initial target date was end-2013, but the deadline was extended to require legislation to be enacted by mid-2014 and implemented by the end of the year.

The existing system allowed recalcitrant debtors to delay the realisation of mortgaged property for years by means of strategic applications to the courts for orders to cancel auctions, by objecting to the reserve price set by the Land Registry or on a number of procedural grounds, with the result that the average time taken to enforce a mortgage was 10 years, and a determined debtor could extend the delay well beyond that.

Many politicians and others regarded the proposed foreclosure law as draconian, warning that it could have severe social consequences, and sought to insert safeguards, for example, to protect family homes. The providers of international financial support had made it clear that they viewed enactment of the foreclosure law as a precondition for release of the next tranche of funds, and after many delays the House of Representatives passed the foreclosure law on 6 September. However, at the same time it enacted six other laws that would inevitably mitigate its effects.
Article 140 of the constitution allows the President to refer any law or decision passed by the House of Representatives to the Supreme Constitutional Court (since 1964 this jurisdiction has been exercised by the Supreme Court) at any time prior to its promulgation for its opinion on whether the law or decision or any specified provision of it is inconsistent with any provision of the constitution.

If, having heard the arguments on both sides, the Supreme Court decides that the law or decision or any provision in it is inconsistent with any provision of the constitution, the law, decision or provision may not be promulgated.

On advice from the Attorney General's office the President has referred four of the laws passed on 6 September to the Supreme Court for review, and the Supreme Court has undertaken to give the matter priority, recognising its importance.

The President of the Supreme Court has summarised the methods the court applies in assessing the legality of executive and legislative acts as follows:

  • "(a) by examining the alleged inevitable urgency and need to take emergency measures or the alleged exceptional circumstances that impose the need for restriction of enshrined individual rights, taking into account of course the broad powers of the Executive in this field,
  • (b) by reviewing the legitimacy of the extent of those measures, based on the principle of proportionality. The measures should be proportionate to the situation at stake,
  • (c) by exercising judicial review based on the principle of good administration, and
  • (d) on the principle of equality, according to which dissimilar situations are not to be equated and arbitrary differentiations among same situations are not to be made,
  • (e) by applying the principle of expected trust, i.e that the citizen is entitled to expect from the Executive and the Administration that his or her case will be handled in a fair and equitable manner, and
  • (f) by applying the principle that all taxpayers contribute to the tax burdens, in accordance with their capacity (powers)."

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