Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

Depending on the project, there are various government departments that might exercise authority or supervise operations. As already mentioned, in relation to the exploration, prospection and exploration of hydrocarbons, the Hydrocarbon Service of the Ministry of Energy, Commerce, Industry and Tourism will be responsible for licensing. Construction projects are licensed by the Town Planning Service and sometimes by the local authority who may request environmental impact assessments. The Cyprus Tourism Organisation is involved with tourist industry projects while the National Betting Authority acted as the licensing authority in relation to matters relating to the casino operations of the integrated casino resort.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

There are no formal registration requirements with any governmental authority, except those that pertain to the issuing of government licences relating to the operations of the project (ie, environmental, health and safety). Finance documents might be subject to stamp duty. Security documents may also need to be registered with the ROC, as already explained.

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

Cypriot courts do recognise contractual provisions requiring submission of disputes to international arbitration, as well as awards by arbitration bodies. Domestic arbitration is governed by the Arbitration Law, Cap. 4; while international commercial disputes are governed by the International Arbitration in Commercial Matters Law of 1987. All the mandatory provisions contained in the UNICTRAL Model Law were adopted by the local legislation, regulating only international commercial arbitrations.

Cyprus is a signatory to the Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention), which has been ratified and implemented in Cyprus. Cyprus is also a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

Matters relating to criminal law, family law or that may have public policy implications are considered to be non-arbitrable. Public policy issues may include foreign commercial contracts that would otherwise be considered illegal under Cyprus law. Also, Cap. 4 provides that when fraud is raised by one of the parties, Cypriot courts have the competence to decide on such matters and to terminate the effects of any arbitration clause included in the agreement of the parties.

There are no types of disputes subject to mandatory domestic arbitration proceedings.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

This will mostly depend on the jurisdiction of the lender. Usually international banking institutions prefer for the law of their jurisdiction to govern the relevant financing agreements.

There are no specific rules that subject agreements to any particular choice of law. The parties are free to agree upon governing law. Even when a security agreement is governed by a foreign law, mandatory Cyprus law provisions will in any case apply, for example, in relation to the registration of charges or perfection of pledges. Typically, security agreements over assets situated in Cyprus are governed by domestic law.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

A foreign party’s submission to the jurisdiction of Cypriot courts, either through a contractual agreement or by the party’s appearance in court proceedings, will be binding and enforceable. Generally, state immunity is recognised and respected by Cypriot courts, provided that such immunity is not consensually waived and that a state is not acting under private or commercial capacity.

A judgment obtained as a result of a party’s submission to a foreign jurisdiction will be legally binding and enforceable in Cyprus, provided that the conditions for the recognition and enforcement of judgments are fulfilled. In particular, civil and commercial judgments of EU member states’ courts are enforceable under the Brussels Regulations (EU Regulation 44/2001 in relation to proceedings instituted before 10 January 2015, EU Recast 1215/2012 in relation to proceedings instated on or after 10 January 2015). Civil and commercial judgments of Iceland, Norway and Switzerland will be enforceable pursuant to the Lugano Convention. Foreign judgments from uncontested claims can also be enforceable pursuant to the provisions of Regulation 805/2004. If a bilateral treaty on recognition and enforcement has been concluded between Cyprus and another state, then the procedure of the Law on Foreign Courts Judgments must be followed in seeking recognition and enforcement of a foreign judgment. Foreign judgments issued by courts of a commonwealth country will be enforceable under the Foreign Judgments Law 1935, Cap.10.