This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in the Cyprus.
This Q&A is part of the global guide to Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/
What legislation applies to arbitration in your country? Are there any mandatory laws?
There are two (2) legislative acts applicable to arbitration in Cyprus. Domestic arbitration is regulated by Arbitration Law, Cap.4, as amended. International Commercial arbitration is governed by International Commercial Arbitration Law, Law no 101/1987 as amended.
Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Cyprus is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 1958. The Convention has been ratified by Law no 84/1979. In parallel Cyprus supplemented the Convention by enacting the Cyprus International Commercial Arbitration Law no 101/1987.
The Convention is applicable only for recognition and enforcement of awards issued in the territory of another contracting state.
Cyprus will apply the Convention only to disputes arising out of legal relationships, whether contractual or not, that are considered commercial in nature under the national law.
What other arbitration-related treaties and conventions is your country a party to?
Cyprus is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. In addition Cyprus has signed several Bilateral and multilateral Investment and other Treaties, whereas reference is made to arbitration as an alternative dispute resolution process. Examples of Bilateral Investment Treaties or other multi-party investment treaties that provide regulations for settling disputes have been concluded with a list of countries such as Greece, USA, Israel, China, Syria and Qatar. Other multilateral agreements which relate to investment arbitration and Cyprus is a member, are the Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, the Convention on the Recovery Abroad of Maintenance, the European Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the Convention Establishing the Multilateral Investment Guarantee Agency (MIGA Convention) and the Convention on the Settlement of Investment Disputed between States and Nationals of Other States (ICSID).Cyprus also signed the Energy Charter Treaty.
Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
The Cyprus International Commercial Arbitration Law no 101/1987 as amended is the Cypriot adaptation of the 1985 UNCITRAL Model Law on International Commercial Arbitration, which applies exclusively to international commercial arbitrations (i.e. arbitration between parties who have their place of business in different states that pertains to matters arising from relationships of a commercial nature). All the mandatory provisions contained in the UNICTRAL Model Law were adopted verbatim by Law no101/1987, regulating only international commercial arbitrations.
Are there any impending plans to reform the arbitration laws in your country?
We are not aware of any legislation draft being processed or assessed by the House of Representatives to date.
What arbitral institutions (if any) exist in your country? Have there been any amendments to their rules or are there any being considered?
During the last decade the use of arbitration as a way of resolving disputes became increasingly popular in Cyprus and some arbitral institutions were founded. Such institutions are (a) The Cyprus Arbitration and Mediation Centre (CAMC) (b) the Cyprus Eurasia Dispute Resolution and Arbitration Centre (CEDRAC) and (c) the Cyprus Chamber of Commerce Arbitration Centre.
What are the validity requirements for an arbitration agreement under the laws of your country?
For domestic arbitration, article 2(1) (b) of Arbitration Law Cap. 4 provides that an arbitration agreement is a written agreement to submit present or future disputes to arbitration. No other special requirements exist for its validity.
For international arbitration, section 7 of Law no 101/1987, provides that an agreement to arbitrate may be for present or future disputes and must be in writing. Section 7(3) of the said law provides when such agreement is deemed to be in writing.
For international arbitration for past or future disputes section 7(3) of Law no 101/1987 provides that an agreement to arbitrate may , in order to be valid, must be in writing. According to section 7(3) of the said law an agreement is deemed to be in wring if it is contained in:
(i) a document signed by all parties;
(ii) in exchanged correspondence;
(iii) a telex or telegraph;
(iv) any other means of telecommunication which record the agreement; or
(v) in the form of exchange of Statements of Claim and of Defense where one party does not dispute the other party’s claim that an arbitration agreement exists.
Are arbitration clauses considered separable from the main contract?
Pursuant to section 16(1) of Law no 101/1987:
“the arbitral tribunal has jurisdiction to decide on its jurisdiction and to examine questions relating to the existence or the validity of the arbitration agreement. For the purposes of this paragraph [on the jurisdiction of the arbitral tribunal] the arbitration clause which constitutes an integral part of a contract is considered as distinct from the other conditions of the contract. A decision of the arbitral tribunal which declares the contract void does not make the arbitration clause automatically invalid.”
In view of this provision, while an arbitration clause may constitute an integral/non-severable part of the contract per se, for the purposes of the arbitral proceedings and the jurisdiction of the tribunal, the tribunal may consider it as a separate agreement and decide on its applicability separately.
According to Cap 4 an arbitration clause is not considered as a separate part to the main contract and any decision of an Arbitral Tribunal that the contract containing the arbitration clause is void, does not affect the validity of the arbitration agreement.
Must be noted however that Cap 4 empowers the domestic courts with the discretion to order the termination of the main contract in cases where one of the parties acted in a fraudulent manner.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
There are no restrictions or any specific requirements whatsoever for establishing a multi-party or multi-contract arbitration agreement. Those cases will proceed with the arbitration as if the dispute concerns a two party agreement.
How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
The applicable law is determined by the parties to the arbitration agreement.
If the parties have not included a choice of law clause in the contract or do not otherwise agree on the applicable substantive law, the arbitral tribunal decides on the question of applicable law according to the terms of the contract and considers the commercial customs pertaining to the transaction.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
Arbitration is not to be used in criminal cases, cases involving family law or in any matter of public policy. Furthermore, Cap. 4 states that in any case that fraud is suspected, the Courts may decide to terminate the arbitration agreement.
In your country, are there any restrictions in the appointment of arbitrators?
According to article 11(1) and 11(2) of Law no 101/1987, the parties are free to select arbitrators.
Are there any default requirements as to the selection of a tribunal?
As stated above, the parties of the arbitration agreement may freely choose the number of arbitrator(s) and the method that is going to be used for that selection. In case the selected method of the parties for appointing the arbitrators fails, there are certain default procedures that take place as per Article11(3) of Law no 01/1987 .
The court is empowered to designate an arbitrator on application by the party concerned, in case the parties of the arbitral agreement do not concur in the appointment of the arbitrator if only one arbitrator is to be designated.
On the other hand, when the arbitration process should be carried by three arbitrators, each party may designate an arbitrator of his choice. Those two arbitrators will then have to choose the third arbitrator. In case of disagreement upon such appointment, the court will decide on that matter and designate the third arbitrator.
Cap 4 provides in section 6 for a default procedure which will be followed when the parties haven’t expressly chose for a different procedure.
Can the local courts intervene in the selection of arbitrators? If so, how?
Both Cap.4 and to Law 1no 01/1987 Law contain provisions that vest to domestic courts with power to intervene in the selection of arbitrators usually following an application by any of the parties, only as a last resort. In any case that (a) the parties or two of the parties cannot concur in any of the procedural matters, (b) an arbitrator appointment is revoked on the grounds of misconduct, failure to act, (c) there are reasonable doubts concerning his/her impartiality then the court can designate another arbitrator to issue an award for the dispute.
Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
Upon application by any of the parties, the court may revoke an arbitrator’s duties for a certain dispute if there is failure to act with all due diligence or expedition to conduct the said arbitration or to issue an award.
In the case of reasonable doubt on the arbitrator’s impartiality or independence the court may remove said arbitrator upon petition of the concerning party.
There is no official data which could support the proposition that there exists an increase of challenges of arbitrators in Cyprus. We can infer however from case law data base currently in place that the challenge of the appointment of arbitrators is something which is not unusual.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
In the case of a truncated tribunal the parties may come upon agreement on the replacement of the arbitrator that refuses or is unable to act in the proceedings. If the parties do not concur on the replacement the Court may decide to designate an arbitrator so the said tribunal continues to have an odd number and issue an award. However, if a truncated tribunal goes forward with issuing an award, that award may be challenged.
Are arbitrators immune from liability?
There are no laws regulating such matter, however, because of the proportionality principle and the common law principles in general, arbitrators have the same rights as judges do.
Is the principle of competence-competence recognised in your country?
According to article 16 of Law 101/1987 the principle of competence-competence is recognized in Cyprus.
What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
In the case that a party commences litigation in breach of an international arbitration agreement, the court is obliged, as stated in the Law 101/1987 article 8 (1) on the application of either party to stay any litigation procedure and refer the dispute to arbitration unless the court deems the agreement void or incapable of being enforced.
If both parties submit to the jurisdiction of the court, then the court may ignore the arbitration agreement and continue with litigation. In the case of domestic arbitration under Cap.4 the matters are different. It is a matter of discretion.The arbitration agreement does not oust the jurisdiction of the court and the latter may continue the litigation despite the arbitration agreement .
How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
Given that the parties have not agreed otherwise, the notification of the Reference to Arbitration consists the commencement of the proceedings. The limitation periods applicable to arbitration are the same as before the Civil Courts. Once the arbitration proceeding is initiated, the limitation period lapse. However, the court may order that the period between the initiation of the arbitration proceedings and the issue of the order for setting aside the award or the arbitration agreement ceases to apply to the dispute, is excluded from the limitation period, if these events take place.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate?
When a respondent fails to participate in the arbitration, whether that is a failure to appear or failure to submit defense, evidence and documents, the procedure continues by default and the arbitrator will issue an award based on the material placed before it.
The arbitration proceedings must be consensual between the parties and a written agreement is needed. The Court may only issue a summons to examine an individual or to be presented with any documents that concerns the arbitration process.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
State immunity can be invoked during arbitration proceedings by the respondent state and it is the Tribunal who will decide on the motion in question. However, state immunity does not apply in actions of foreign states which are of financial and commercial nature, and which could also be conducted by a natural person (jure gestionis).
In what instances can third parties or non-signatories be bound by an arbitration agreement or award? Can local courts order third parties to participate in arbitration proceedings in your country?
The legislation in Cyprus does not bound any third parties or non-signatories by an arbitration agreement or award and such measures are not applied in Cypriot Courts. However, Cap. 4 states that third parties can be instructed by the Court to present documents concerning the dispute and be ordered to be examined under oath.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
There are various interim measures that are available in Cyprus and may be applied by our local courts that are regulated by Cap.4, such as safeguarding the subject matter of the arbitration or blocking the amount or the property in dispute.
Law no 101/1987 that regulates International arbitration proceedings empowers the court to issue interim injunctions in aid of the arbitration. Cyprus courts are demonstrating a strong willingness to issue all forms of interim injunctions in aid of upcoming and/or ongoing arbitration proceedings including mareva injunctions and all sorts of freezing injunctions .
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
Cap. 4 and Law 101/1987 have clauses that regulate evidentiary matters in the arbitrational proceedings. The local Courts have a fundamental role in obtaining evidence and their protection. They may order parties to disclose documents concerning the dispute or command a third party to be examined for evidentiary matters. The Court may also assist the parties to obtain evidence upon their request.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
The arbitrator, as it is stated in Cap. 4 and Law no 101/1987, must be unbiased in each dispute and procedural matters should be kept brief. It is common in Cyprus for arbitrators to be lawyers and in such a case, those individuals are also bound by the Code of Ethics and Conduct for Advocates.
How are the costs of arbitration proceedings estimated and allocated?
The way the cost of arbitration proceedings are estimated and allocated, is a matter of the tribunal since there are no laws that regulate such issue.
Can pre- and post-award interest be included on the principal claim and costs incurred?
The arbitral tribunal may include pre- and post-award interest on the principal claim as it sees fit and deems appropriate, under the terms of the agreement that the parties are part of and under which the dispute arose.
What legal requirements are there in your country for the recognition of an award?
Under the provisions of the Law 101/1987, an arbitral award can be recognised and enforced as soon as a relevant 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 language and the original or true copy of the arbitration agreement. There are only specific reasons for which the Court may refuse to register an arbitral award, provided for in the New York Convention and repeated in the Law 101/1987.
What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
The timeframe for the recognition and enforcement of an award is anything between 3 and 12 months. The procedure for the recognition and enforcement of an award is as stated in question 29. There is no other applicable law for that matter to be decided on an ex parte basis.
Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
The Law 101/1987 states that a foreign award can be recognized and enforced with the same procedure as a domestic one. The only different requirement as it is stated in article 35(2)(B) of said law, is that the petition, the award and the arbitral agreement are translated and certified in the official language(s) of the Republic.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
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 clash with public policy or with remedies that only Courts can enforce.
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
Article 34 of Law 101/1987)includes an exhaustive list of the grounds that arbitration proceeding or awards may be challenged. The litigant requesting the annulment of the award, must be file an application before the Court 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 the Cypriot laws
(b) the notice that was given to him was not valid and could not participate in the appointment of the arbitrator, the proceedings in general and thus he could not make his 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 in contrast of the arbitration agreement or the Law.
2. The Court deems that:
(a) the dispute is not arbitrable
(b)the arbitral award is in conflict with the public policy of the Republic
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
As a general principle of Cyprus law any clause that prohibits any party to litigate is illegal and such clause must be ignored.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
The Court shall accept state immunity as a defense under certain circumstances which involve only public policy reasons and/or acts of state that are of no financial nature . (acta imperii)
To what extent might a third party challenge the recognition of an award?
Usually, third parties cannot intervene with the procedure for the recognition of the award since they were not part of the arbitration agreement or the dispute. However, the party in favor of which the decision was given, may add a third party as a Respondent on the petition for recognition of the said award. The third party may oppose to that petition and demand the awards recognition to be condemned by the court since such recognition would have a negative effect upon their interest.
Although the possibility of a third party challenging the recognition of the award is possible, there are no court decisions granting such request.
Have there been any significant developments with regard to third party funding in your jurisdiction recently?
Not applicable in Cyprus.
Is emergency arbitrator relief available in your country? Is this frequently used?
Not applicable in Cyprus.
Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
The Cyprus Eurasia Dispute Resolution and Arbitration Center (CEDRAC), has established an expedited procedure for claims and counterclaims that do not go over €10.000.000 and is consisted of only one hearing for witness examination and any arguments. The arbitrator has a time limit for the issue of the award and its reasons are in summary form. Such procedure is certainly preferred since it is an even faster solution for the concerning parties but its frequency of use is not known to us.
Have there been any mass (arbitration) claims in your jurisdiction?
There are no developments on this matter in Cyprus since it is not in use or specifically allowed.
Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
The arbitral institutions that are established in Cyprus have their own policies and their own code of conduct. Therefore, it is not to our knowledge whether special measures are taken to promote transparency in arbitration procedures.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
Over the last years arbitration became a highly used method for dispute resolving and there is an ongoing effort to encourage its use. That is why many institutions/centers are being established in our country. For example, the Cyprus Arbitration and Mediation Centre (CAMC) and the Cyprus Eurasia Dispute Resolution and Arbitration Center (CEDRAC), the primary centers for dispute settlement in Cyprus, have personnel with a diverse background such as nationality, age etc.
Have there been any developments regarding mediation in your jurisdiction?
In order for Cyprus to be in line with the EU Directive 2008/52/EC concerning certain aspects of mediation in civil and commercial matters, the 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.
Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
Relevant is the decision of the Supreme Court in the case INTERSPUTNIK INTERNATIONAL ORGANIZATION OF SPACE COMMUNICATIONS (298/2013) dated 7/4/2017. The Supreme Court overruled the judgment of the District Court, by deciding that the setting aside of an arbitration award for not presenting the original and/or copy of the original award was erroneous. The Supreme Court explained the meaning of “the duly authenticated original award” by stating "..The authentication of a document is the formality by which the signature thereon is attested to be genuine. The certification of a copy is the formality by which the copy is attested to be true copy of the original."
Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?
Corruption is not an issue in our jurisdiction.