Cyprus acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958) ("the New York Convention"), on 29 December 1980, i.e. almost forty years ago.
Foreign arbitral awards issued by foreign contracting states that have acceded to the New York Convention, as Cyprus did, can be recognised in Cyprus pursuant to the provisions of the Law on International Commercial Arbitration, Law No. 101/1987and the New York Convention.
The procedure for the recognition of a foreign arbitral award in Cyprus starts with the filing of an application by summons by the party seeking recognition ("the applicant"), which must be served on the respondent. The application must be supported by an affidavit and, pursuant to Article IV(1) of the New York Convention, the following documents must be attached to it:
- the duly authenticated original award or a duly certified copy;
- the original agreement confirming that parties undertook to submit to arbitration or a duly certified copy.
Pursuant to Article IV(2) of the New York Convention, if the above two documents are not drafted in Greek (one of the official languages of Cyprus and the working language of the Cyprus Courts), the applicant must also produce a translation of these documents into Greek by an official or a sworn translator or by a diplomatic or consular agent. This provision, led to the issuance of conflicting District Court Judgments (which are of persuasive but not binding nature) and to some confusion as to whether translations by the Press and Information Office ("PIO") of the Republic (the only official body approved by the Cyprus Republic to provide certified translations), which were not accompanied by an affidavit of translation, would satisfy the requirements of the New York Convention. For example in its judgment in the case of Intersputnik International Organization of Space Communications v ALRENA INVESTMENTS LIMITED Application no. 32/2012, dated 19/1/2018 of the District Court of Limassol,the District Court held that the translation of the award by the PIO did not satisfy the provisions of Article IV(2) of the New York Convention as it was not made by a sworn translator since there was no affidavit of translation. It was also stated that the PIO was neither a diplomatic/consular agent nor an official translator and as a result, the application for the recognition was dismissed. This confusion was cleared up last year, with the enactment of the Registration and Regulation of the Provisions of Sworn Translators in the Republic, Law No. 45(Ι)/2019 ("the Sworn Translators Law").
Once the application is served on the respondent, they are given the opportunity to appear and potentially oppose the proceedings initiated for the recognition of the award. If the respondent wishes to oppose the recognition, the Court will direct the respondent to file their written opposition.
The grounds for refusing the recognition of the award are provided in Article V of the New York Convention. The Court may refuse the award's recognition on one of the following grounds:
- some incapacity of the parties or invalidity of the arbitration agreement;
- failure to give proper notice of the appointment of the arbitrator or of the arbitration proceedings to the party against whom the award is invoked or that party was otherwise unable to present his case;
- the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or it contains decisions on matters beyond the scope of the submission to arbitration;
- the composition of the arbitral authority or the arbitral procedure was not according to the parties' agreement or failing such agreement, was not according to the law of the country where the arbitration took place;
- the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
Additionally, further grounds are provided under national law on the basis of section 36(b) of the Law No. 101/1987as follows:
- where the subject matter of the dispute is not capable of settlement by arbitration under the law of Cyprus; or
- the recognition or enforcement of the award is contrary to the public order of Cyprus.
We expect that following the enactment of the Sworn Translators Law as stated above, any opposition grounds in relation to translations will now be accepted by the Courts very sparingly.
It is noted that the applicant can apply for an injunction freezing the assets of the respondent, which are within the jurisdiction of the Cyprus Courts, pending the final determination of the application for the recognition of the foreign award. The application for the injunction is made ex-parte (i.e. without notice given to the respondent) and it is filed simultaneously with the recognition application. The ex-parte application can be heard the same day it is filed or within 1-2 days if the Court is satisfied that there is urgency.
Once the foreign arbitral award is recognised in Cyprus, the applicant can enforce the award in Cyprus by using any of the methods of enforcement of Cyprus Court judgments.
More countries accede to the New York Convention every year, with the latest ones being Cabo Verde and Sudan in 2018, the Maldives and Papua New Guinea in 2019 and the Seychelles, Ethiopia, Palau and Tonga so far in 2020.
The New York Convention has given foreign arbitral awards a distinct advantage over foreign court judgments, since the latter requires some form of reciprocity between the two countries, whether by a bilateral treaty between the two countries, or a multilateral treaty by which both parties are bound (such as the Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters).
With a total of 164 Contracting States as of 12 June 2020 (date of accession of the latest one, Tonga), the New York Convention is rightly regarded as the backbone of international commercial arbitration.
Originally published 24 June, 2020
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