A Q&A guide to arbitration law and practice in Cyprus.
The country-specific Q&A guide provides a structured overview of the key practical issues concerning arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local law, confidentiality, local courts' willingness to assist arbitration, enforcement of awards and the available remedies, both final and interim.
To compare answers across multiple jurisdictions visit the Arbitration procedures and practice Country Q&A tool.
This Q&A is part of the multi-jurisdictional guide to arbitration. For a full list of jurisdictional Q&As visit www.practicallaw.com/arbitration-guide.
Use of arbitration and recent trends
1. How is commercial arbitration used and what are the recent trends?
Use of commercial arbitration and recent trends
Arbitration is usually used in Cyprus for construction disputes, banking disputes between debtors and coop institutions and international commercial arbitration. It is difficult to evaluate and determine an increase or decrease in the use of arbitration due to the fact that arbitration proceedings are confidential.
The advantages of using arbitration over litigation as a dispute resolution procedure include:
- Flexibility in terms of the procedure followed and freedom of the parties to agree on the procedural rules.
- Freedom of the parties to appoint specialists and/or other experts as arbitrators with expertise in the subject matter of the dispute.
- It is usually less time-consuming and more efficient than court proceedings, due to the increased workload of the local courts.
- Arbitral awards issued in Cyprus can be registered and enforced in foreign jurisdictions as Cyprus is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention) (see Questions 34,/a> and 35).
- There are fewer grounds for appeal than in litigation.
The disadvantages may include:
- It may be more costly, depending on the agreement for the appointment of arbitrators, the arbitrators' fees, the lawyers' fees, the fees needed for logistic matters such as reservation of venues for hearings, recording and transcription services etc.
- Due to the lack of relevant provisions in Arbitration rules, the parties may not be able to apply for the set aside or dismissal of an arbitration proceeding at an early stage due to the claim being frivolous or vexatious or without probability of success.
- Tribunals are less likely to impose sanctions for breach of timeframes by the parties in procedural matters, which may cause delay or abusive tactics.
- Limited grounds of appeal may increase the risk of not being able to overturn or challenge an incorrect or inadequate final judgment.
2. What legislation applies to arbitration? To what extent has your jurisdiction adopted the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law)?
Domestic arbitration is governed by the Arbitration Law 1944 (Cap. 4) (Arbitration Law) (http://cylaw.org/nomoi/enop/non-ind/0_4/full.html).
The International Arbitration in Commercial Matters Law (101/1987) (IACM Law) (http://cylaw.org/nomoi/enop/non-ind/1987_1_101/full.html) applies exclusively to international commercial disputes and is almost identical to the UNCITRAL Model Law. Except for some minor variations, the only addition to the IACM Law is the definition of the term "commercial arbitration". The IACM Law applies solely to arbitrations that are of both an international and commercial nature (section 3(1), IACM Law).
Cyprus is also a party to the New York Convention (ratified in Cyprus by the Ratification Law (84/1979)).
In addition, the Foreign Courts Judgments (Recognition, Registration and Enforcement) Law of 2000 (Law 121(I)/2000) provides for the procedure to be followed by a party wishing to have a foreign award recognised and enforced in Cyprus.
Mandatory legislative provisions
3. Are there any mandatory legislative provisions? What is their effect?
The IACM Law respects the freedom of the parties to the arbitration to agree on all matters relating to the conduct of the international arbitration. Mandatory rules are limited to issues relating to the:
- Court's powers.
- Immunity of arbitrators.
- Issue of the arbitral award, the challenge of its validity and its recognition and enforcement by the national courts.
4. Does the law prohibit any types of disputes from being resolved via arbitration?
In general, where there is an arbitration agreement between the parties, all commercial matters can be referred to and settled by arbitration.
Criminal matters, matrimonial and family matters, disputes concerning minors and disputes with public policy implications are non-arbitrable.
he Arbitration Law does not apply in relation to proceedings of an arbitral tribunal under the Trade Disputes (Conciliation, Arbitration and Inquiry) Law, or in relation to any award that this kind of tribunal issues. In addition, a tribunal has limited powers to make orders which affect the status of a Cyprus company, such as a winding-up order or rectification of a company's register of members, although the substantive dispute may be arbitrable.
5. Does the law of limitation apply to arbitration proceedings?
The laws on limitation of actions applying to civil proceedings in the court also apply to commencing arbitrations, whether these are domestic or international commercial in nature (Article 21, IACM Law and Article 24, Arbitration Law).
6. Which arbitration organisations are commonly used to resolve large commercial disputes?
The most prominent alternative dispute resolution centres established to administer arbitration proceedings in Cyprus are the:
- Cyprus Branch of the Chartered Institute of arbitrators (CIArb) (www.ciarb.org).
- Cyprus Eurasia Dispute Resolution and Arbitration Centre (CEDRAC).
- Cyprus Arbitration and Mediation Centre (CAMC).
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Originally published by Thomson Reuters Practical Law
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.