Legal Briefing

Cyprus and international commercial arbitration – an overview

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Disputes | 15 October 2019

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Cypriot domestic arbitration proceedings are regulated by Arbitration Law, Cap 4, whereas international commercial arbitration is governed by International Commercial Arbitration Law, Law no 101/1987.

Conventions

Cyprus is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 1958 and to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. In addition, Cyprus has signed several other bilateral and multilateral investment and treaties, where reference is made to arbitration as an alternative dispute resolution process.

Cyprus is also member of the Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters.

The Cyprus International Commercial Arbitration Law no 101/1987 adopts verbatim all mandatory provisions contained in the 1985 UNCITRAL Model Law.

The award

Under the provisions of Law 101/1987, an arbitral award can be recognised and enforced provided an application is submitted to the court accompanied by either the duly authenticated original award or a true copy, an official certified translation if not issued in Greek and the original or true copy of the arbitration agreement. There are only a few grounds on which the Court may refuse to register an arbitral award, provided for in the New York Convention and repeated in the Law 101/1987.

Procedure

Law no 121(I)/2000 introduces the procedure to apply for the registration of an arbitration award. According to article 5(1)(a) of Law 21 (I)/2000:

5(1) The proceedings based on the present law for the registration, recognition or execution of a foreign arbitrary court decision will be the following:

a) The proceedings start by filing in court an application by summons accompanied by an affidavit, according to the civil procedure rules and the right adaptations, in which the applicant will be the competent authority or person that the decision of the foreign court was awarded to, based on the circumstances, and as respondent will be the name of the person that the recognition, registration or execution of the foreign court decision is requested against.

5(2) In the present law, unless there is a different meaning based on the context … ‘court’ means the district court of each district where the respondent resides and, regarding domestic differences, the family court of the district where the respondent resides. In cases where the residence of the respondent is abroad or where there is not an opposing party/disputant in the arbitrary proceedings, court means the district court or the domestic court of the district where the applicant resides.

The key features of the legislation are the obligation of the party seeking the registration to proceed on a ‘by summons’ basis and the place of residence (in that, if the applicant or the respondent are not residents of Cyprus, the court lacks jurisdiction to adjudicate the matter). The timeframe for the recognition and enforcement of an award is anything between three and twelve months. Law 101/1987 states that a foreign award can be recognised and enforced with the same procedure as a domestic one. The only different requirement as stated in article 35(2)(B) of Law 101/1987, is that the petition, the award and the arbitral agreement are translated and certified in the official language(s) of the Republic.

There are no limits imposed by law on the available remedies, giving the tribunal freedom to act as it seems appropriate. However, the remedies should not be contrary to public policy or with remedies that only courts can enforce. Moreover the court shall have the power, at the request of one of the parties, to order protective interim measures, either before the commencement of or during the arbitration proceedings.

Article 34 of Law 101/1987 includes an exhaustive list of the grounds on which arbitration proceedings or awards may be challenged. The litigant requesting the annulment of the award, must file an application to that end within three months from the date of notification of the concerning party.

The grounds for the challenge are:

1. The party that applies for the annulment proves that:

a) The arbitration agreement is not valid under the law to which the parties subjected it to or under Cypriot law.

b) the notice that was given was not valid and the party could not participate in the appointment of the arbitrator, the proceedings in general and thus could not make their case.

c) The award refers to a dispute that is not included in the agreement or contains decision beyond the scope of said agreement.

d) The composition of the tribunal or the proceedings of the arbitration are contrary to the arbitration agreement or the law.

2. The court is of the opinion that:

a) The dispute is not arbitrable.

b) The arbitral award is in conflict with the public policy of the Republic.

The court shall accept state immunity as a defence under certain circumstances that involve public policy.

Arbitration over the years

Over the last few years arbitration became a highly used method for dispute resolution and there is an ongoing effort to encourage its use. That is why many institutions and centres have been established lately in our country (for example, the Cyprus Arbitration and Mediation Centre (CAMC) and the Cyprus Eurasia Dispute Resolution and Arbitration Center (CEDRAC)).

In order for Cyprus to be in line with the EU Directive 2008/52/EC concerning mediation in civil and commercial matters, Law 159(I)/2012 has been enacted. This law concerns civil disputes as well as commercial disputes and is an attempt to modulate the whole mediation process by defining the mediator’s duties, any procedural matters and the court’s role in these proceedings.

The use of mediation as an extrajudicial resolution of disputes has increased over the years in our country since it is a cost effective and faster solution for the concerning parties.

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