Hot property

Linda and David Orams bought a piece of land in Turkish-controlled northern Cyprus in 2002, on which they built a holiday retirement home. In 2004 however Mr Apostolides, a Greek Cypriot, claimed in the Greek Cypriot courts in southern Cyprus that he had been dispossessed of the land in question by Turkish troops in 1974, when the island was partitioned and the Greek Cypriots displaced to the south.

The agents who sold the land to the Orams said he acquired it from the Turkish Republic of northern Cyprus '“ an entity which, while recognised by the Republic of Turkey, is not officially recognised by any EU member state.

Mr Apostolides won his case in the Greek Cypriot courts and sought to enforce the ruling in England. Earlier this year, the European Court of Justice pronounced in Case C-420/07 Apostolides v Orams that the Court of Appeal should recognise and give effect to the Greek-Cypriot court's decision ordering the Orams to demolish their £160,000 villa and return the land to the claimant.

The judgment relates to land under Turkish-Cypriot control so getting it enforced could prove difficult. Turkey is not a member of the EU and it refuses to recognise the ECJ judgment '“ in the same way that it refuses to recognise southern Cyprus, the Republic of Cyprus, as an EU member state.

However, this doesn't necessarily leave Mr Apostolides without a remedy. Even if the EU ruling cannot be enforced in northern Cyprus, Mr Apostolides should be able to pursue a claim for compensation in a UK court.

'The fact there might be difficulties in having a judgment enforced can't deprive the judgment of its enforceability; therefore that doesn't prevent other member states from declaring the judgment enforceable. Someone might have monies in another member state and the claimant could try and get assets this way,' says David Foster, partner at Barlow Robbins.

Unwise investments

This probably spells bad news for the Orams but the ramifications of the ruling go beyond any personal loss they may suffer '“ or indeed any personal recompense Mr Apostolides may be able to obtain.

Over the last few years there has been an explosion of people buying property overseas, with northern Cyprus in particular becoming a thriving tourist destination. But John Howell, a partner at International Law Partnership, thinks that many of these investments have been 'simply foolish and idiotic'. Howell says he has 'seen people, beguiled by greed, taking out effectively what were their life savings and investing it '“ not in 'sound' investments, but in extremely high-risk ones.

'I'm horrified by some of the decisions people are taking in respect of their property portfolios, particularly in northern Cyprus,' he says, adding that he has little sympathy for people who bought in Turkish Cyprus, knowing the risks, but hoping that it would all come out right 'and that they would make a killing'.

That's not to say that there aren't some perfectly sensible investments in northern Cyprus '“ land with good title that was gained before the 1974 seizure and that is therefore immune from attack '“ but two-thirds of land titles were gained by foreign investors after this date and, with the Orams ruling setting a precedent for all Greek-Cypriots with a claim to land in northern Cyprus, these are all open to challenge from their original Greek-Cypriot owners.

That leaves around 20,000 foreign investors at risk of losing their homes. 'Those people will not necessarily lose their property, but they are going to have to do something,' says Howell. 'We have been recommending to everyone who owns property in northern Cyprus to get their lawyer to check the deeds and to let you know whether you are under threat or not.'

What about the potential buyer? Is it safe for them to purchase property in northern Cyprus, or not? 'Again,' says Howell, 'if you've got the pre-1974 title it will be good on both sides of the board and, generally speaking, you will be okay, but, if the property doesn't, then don't touch it will a barge pole '“ unless you fancy five years in court!'

David Foster echoes this view, advising extreme caution on the part of potential buyers. 'It is very important that people carry out due diligence on property and titles and make sure a really thorough legal job is done which takes into account the issues that have been raised in Orams.'

Following the judgment, both the British High Commission in Cyprus and the Foreign and Commonwealth Office have issued warnings regarding the purchase of property in northern Cyprus.

Running into the cracks

The shockwaves of Orams stretch even beyond Cypriot shores, opening up questions for property owners and buyers throughout Europe and beyond. 'It's one thing applying the Orams principles to Cyprus, but what about all the other war-torn areas '“ Bosnia for example?' asks Foster. 'The problem with the law often is that it's trying to bring order to what are very ill-ordered situations, in which theft and necessity have triumphed over legality.' With several war-torn countries wishing to join the EU and have the benefit of the legal structure it's got, 'all of this will need to be looked at very carefully. We are really going to have to watch this space.'

It is difficult in all of this to separate the legal questions in the Orams case from the political ones. Property disputes dating back to 1974 have been a major obstacle in efforts to reunite Cyprus. The Orams ruling, set to open the floodgates for claims from dispossessed Greek-Cypriots, can only make tensions worse between the Greek and Turkish parts of Cyprus; and between Turkey and the EU.