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National arbitration laws
What legislation applies to arbitration in your jurisdiction?
Domestic arbitrations are covered by the Arbitration Law (Cap 4) and international arbitrations are covered by the International Commercial Arbitration Law (Law 101/1987). The Arbitration Law applies to the arbitration of disputes which do not fall within the provisions of the International Commercial Arbitration Law.
Are there any mandatory laws?
The mandatory provisions in the Arbitration Law (Cap 4) include:
- the power of the court to stay legal proceedings;
- the invalidity of a provision in an arbitration agreement that the parties must in any event pay their own costs of the proceedings; and
- the removal of the arbitrator or the challenge of an award on the basis of misconduct by the arbitrator.
Mandatory rules in the International Commercial Arbitration Law are limited to issues relating to the issuance of the arbitral award, the challenge of its validity and its recognition and enforcement by the national courts.
New York Convention
Is your country a signatory to the New York Convention? If so, what is the date of entry into force?
Cyprus is a signatory to the New York Convention. It was ratified on December 29 1980.
Are there any reservations to the general obligations of the convention?
Cyprus applies the convention, on the basis of reciprocity, to the recognition and enforcement of awards made only in the territory of another contracting state. Further, it applies the convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under national law.
Treaties and conventions
What other treaties and conventions in relation to arbitration is your jurisdiction party to?
Cyprus is a party to:
- the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1966; and
- 28 bilateral investment treaties (five of which are not yet in force).
As an EU member state, Cyprus is a party to 73 other investment agreements and 21 investment-related instruments, including the Energy Charter Treaty.
Has your jurisdiction adopted the UNCITRAL Model Law?
Yes, the International Commercial Arbitration Law (Law 101/1987) is based on the UNCITRAL Model Law.
Are there any impending plans to reform the arbitration laws in your jurisdiction?
What are the validity requirements for an arbitration agreement?
The Arbitration Law defines an ‘arbitration agreement’ as a written agreement to submit present or future disputes to arbitration (Article 2).
The International Commercial Arbitration Law provides that an arbitration agreement is valid only if it is in writing, but the writing requirement is broadly defined. An agreement is deemed to be in writing if it is contained in:
- a document signed by the parties;
- the exchange of letters or other means of telecommunication which record such agreement; or
- an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.
Further, reference in a contract to another document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such that the arbitration clause constitutes an integral part of said contract (Article 7).
Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?
Cyprus courts are arbitration friendly and will generally enforce arbitration agreements. Under the Arbitration Law, the courts have the power to stay any legal proceedings commenced in respect of any matter agreed to be referred to arbitration, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the relevant agreement and that the party applying for the stay of the proceedings is ready and willing to do all things necessary for the proper conduct of the arbitration (Article 8).
The International Commercial Arbitration Law provides that where an action is brought in respect of a matter which is the subject of an arbitration agreement, the court will – if one party so requests before filing its first statement on the substance of the dispute – refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed (Article 8).
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?
An agreement of the parties to confer such power on the arbitral tribunal is required for the consolidation of separate arbitral proceedings. A provision for consolidation may be included in the arbitration agreement or agreed by the parties ex post facto.
Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
Article 28 of the International Commercial Arbitration Law provides that the tribunal will decide the dispute in accordance with the law chosen by the parties. If the parties have not chosen the substantive law of the dispute, the tribunal will apply the law determined by the conflict-of-laws rules which it considers applicable.
Are there any provisions on the separability of arbitration agreements?
The principle of separability is included in Article 16(1) of the International Commercial Arbitration Law, which provides that an arbitration clause which forms part of a contract will be treated as an agreement independent of the other terms of the contract. A decision of the tribunal that the contract is null and void will not entail ipso jure the invalidity of the arbitration clause.
Are multiparty agreements recognised?
Multiparty agreements are recognised in Cyprus. However, it is not possible to deal with multiparty disputes without the consent of all parties involved.
Criteria for arbitrators
Are there any restrictions?
Article 12(1) of International Commercial Arbitration Law provides that arbitrators must be independent and impartial.
What can be stipulated about the tribunal in the agreement?
The International Commercial Arbitration Law provides that the parties are free to determine the number of arbitrators and the procedure of appointment (Articles 10 and 11).
Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?
Article 10(2) of the International Commercial Arbitration Law provides that if the parties have not agreed on the number of arbitrators, the tribunal will consist of three arbitrators.
On the other hand, the Arbitration Law provides that arbitration agreements must include a provision that if no other mode of reference is provided, the reference must be to a single arbitrator (unless a contrary intention is expressed in the arbitration agreement).
Challenging the appointment of an arbitrator
Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?
Under Article 12(2) of the International Commercial Arbitration Law, an arbitrator may be challenged where there are circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence or if he or she does not possess qualifications agreed by the parties. Article 13(2) of the International Commercial Arbitration Law provides for challenges to be made within 15 days of becoming aware of the constitution of the tribunal or of circumstances providing grounds for challenge under Article 12 of the law. The challenge is decided by the tribunal and a party wishing to appeal in court against an unsuccessful challenge must do so within 30 days of receiving notice of the decision of the tribunal by which the challenge was rejected. The decision of the court is final.
Article 20 of the Arbitration Law provides that the court may remove an arbitrator who has misconducted himself or herself or the proceedings.
How should an objection to jurisdiction be raised?
Article 16 of the International Commercial Arbitration Law provides that a tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. A challenge in relation to the jurisdiction of the tribunal must be raised no later than the submission of the statement of defence. Further, a challenge on the basis that the tribunal is exceeding the scope of its authority must be raised as soon as the matter in question is raised during the arbitral proceedings. A tribunal may also admit a challenge later in the proceedings if it considers that the delay is justified.
Replacement of an arbitrator
Why and how can an arbitrator be replaced?
Under Article 15 of the International Commercial Arbitration Law, a substitute arbitrator will be appointed in accordance with the original appointment procedure where:
- the mandate of the original arbitrator terminates under Article 13 (successful challenge) or 14 (failure or impossibility to perform his or her duties) of the law;
- the original arbitrator withdraws from office for any other reason; or
- the original arbitrator’s mandate is revoked by agreement of the parties or in any other case.
Powers and obligations
What powers and obligations do arbitrators have?
Under the International Commercial Arbitration Law, arbitral tribunals have the power to:
- rule on the challenge of an arbitrator (Article 13);
- rule on their own jurisdiction (Article 16 );
- order interim measures (Article 17);
- determine the rules of procedure for the arbitration and any matters in relation to the evidence presented in the proceedings, in the absence of agreement by the parties (Article 19);
- determine the seat of the arbitration in the absence of agreement by the parties (Article 20);
- appoint experts, unless otherwise agreed by the parties (Article 26);
- request assistance in taking evidence from the competent court (Article 27);
- determine the law applicable to the substance of the dispute, if the parties have failed to agree on the substantive law (Article 28(2)); and
- order the termination of the arbitral proceedings where the continuation of the proceedings has for any reason become unnecessary or impossible (Article 32(2)(c)).
The International Commercial Arbitration Law also provides that arbitral tribunals must:
- treat the parties with equality and give each party a full opportunity to present its case (Article 18);
- decide the dispute in accordance with the terms of the contract and take into account the usages of the trade applicable to the transaction (Article 28(4)); and
- issue a reasoned decision, unless the parties have agreed otherwise (Article 31(2)).
Liability of arbitrators
Are arbitrators immune from liability?
There are no laws or rules in relation to immunity for arbitrators.
Communicating with the tribunal
How do the parties communicate with the tribunal?
There are no specific provisions in the relevant legislation covering this matter. As a general principle, communications by one party to the tribunal should be communicated to the other party.
Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?
There is no requirement of unanimity in the decisions of the tribunal. Article 29 of the International Commercial Arbitration Law provides that in arbitral proceedings with more than one arbitrator, any decision of the tribunal must be made, unless otherwise agreed by the parties, by a majority of all its members.
Are there any disputes incapable of being referred to arbitration?
Criminal and family law matters are considered to be non-arbitrable, as well as matters which may have public policy implications. The International Commercial Arbitration Law does not specifically state what disputes cannot be resolved by arbitration, but the Arbitration Law provides that where a dispute involves the question of whether any party has been guilty of fraud, the court will – to the extent necessary to enable that question to be determined by the court – have the power to order that the agreement cease to have effect (Article 9(2)).
Can the arbitrability of a dispute be challenged?
An objection as to the arbitrability of a dispute – as a challenge to the jurisdiction of the tribunal – may be considered by the tribunal under Article 16 of the International Commercial Arbitration Law, which provides that the tribunal is competent to determine its own jurisdiction.
Further, non-arbitrability may be raised as a ground in an application to set aside an arbitral award (Article 34 of the International Commercial Arbitration Law) or as an objection in proceedings for the enforcement of the award (Article 36 of the International Commercial Arbitration Law).
Jurisdiction and competence-competence
Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
Under Article 16 of the International Commercial Arbitration Law, the tribunal is competent to determine its own jurisdiction and to rule on matters regarding the validity or existence of the arbitration agreement. A decision on jurisdiction by a tribunal may be appealed to the court within 30 days. The court’s decision is final.
There is no similar provision in the Arbitration Law (Cap 4), although the competence of the tribunal to rule on its own jurisdiction is recognised by case law.
Starting an arbitration proceeding
What is needed to commence arbitration?
Under the International Commercial Arbitration Law, arbitral proceedings commence on the date on which the request for referral of the dispute to arbitration is communicated to the respondent, unless the parties have agreed otherwise (Article 21).
The Arbitration Law provides that an arbitration will be deemed to be commenced when one party to the arbitration agreement serves on the other party a notice requiring the other party to appoint an arbitrator or, where the arbitrator is designated in the arbitration agreement, to submit the dispute to the designated arbitrator (Article 24(3)).
Are there any limitation periods for the commencement of arbitration?
The laws on limitation of actions apply to arbitrations under both the Arbitration Law (Article 24) and the International Commercial Arbitration Law (Article 21), as they apply to proceedings in the courts. For contractual claims, the limitation period is six years.
Are there any procedural rules that arbitrators must follow?
Article 19 of the International Commercial Arbitration Law provides that the parties are free to agree on the procedure to be followed by the arbitral tribunal. In the absence of such an agreement, the tribunal may conduct the arbitration in such manner as it considers appropriate.
The Arbitration Law provides that in the absence of an express intention to the contrary in the arbitration agreement, a number of implied terms set out in the first schedule of the law are deemed to be part of the arbitration agreement. These include a provision that the parties, subject to any legal objection, submit themselves to examination by the arbitrators and present before the arbitrators all books, contracts, accounts and documents in their possession or under their control, which may be requested during the proceedings.
Are dissenting opinions permitted under the law of your jurisdiction?
Dissenting opinions are permitted. Article 29 of the International Commercial Arbitration Law provides that in arbitral proceedings with more than one arbitrator, any decision of the tribunal must be made by a majority of its members, unless otherwise agreed by the parties.
Can local courts intervene in proceedings?
Provisions about the extent to which local courts may intervene in arbitral proceedings are included in both the International Commercial Arbitration Law and the Arbitration Law.
The International Commercial Arbitration Law provides that the court may:
- refer a dispute to arbitration where an action is brought in a matter which is the subject of an arbitration agreement (Article 8);
- grant interim conservative measures before or during the arbitration proceedings (Article 9); and
- review a ruling by the tribunal on its jurisdiction (Article 16) or a ruling rejecting a challenge to an arbitrator (Article 13).
Under the Arbitration Law, the court may order a stay of proceedings commenced in respect of any matter agreed to be referred to arbitration (Article 8). Further, under Article 26 of the Arbitration Law, the court has the power to issue orders in respect of any of the matters set out in the second schedule of the law, including:
- security for costs;
- discovery of documents and interrogatories;
- examination on oath of any witness before an officer of the court;
- interim injunctions; and
- the appointment of a receiver.
Can the local courts assist in choosing arbitrators?
The International Commercial Arbitration Law contains provisions for the appointment of an arbitrator by the court where a party fails to appoint an arbitrator or where the two arbitrators fail to agree on the third arbitrator. In an arbitration by a sole arbitrator, if the parties are unable to agree on the arbitrator, one will be appointed by the court on request of a party. Similarly, the court may appoint the third arbitrator where the parties or the two party-appointed arbitrators have failed to agree on the appointment of the third arbitrator (Article 11). Similar provisions are included in the Arbitration Law (Article 10).
What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?
A respondent cannot be compelled to arbitrate in the absence of an arbitration agreement or if it has not consented to arbitration. Where there is an arbitration agreement, the International Commercial Arbitration Law provides that the tribunal may continue with the arbitration proceedings if the respondent fails to participate. Under Article 25 of the International Commercial Arbitration Law, the tribunal will continue the proceedings if the respondent fails to submit its statement of defence, without treating such failure in itself as an admission of the claimant’s allegations. The tribunal has similar powers if any party fails to appear at the hearing or produce documentary evidence.
Article 27 of the International Commercial Arbitration Law provides that the tribunal or a party with the approval of the tribunal may request assistance from the court in taking evidence and the court may execute the request within its competence and according to its rules on taking evidence.
Under the Arbitration Law, any party to the arbitration agreement may apply to the court for the issue of a summons requiring any person to attend for examination or to produce any document, but no person can be compelled to produce any such document if he or she could not be compelled to do so at the trial of an action by the court (Article 17).
In what instances can third parties be bound by an arbitration agreement or award?
A third party cannot be bound by an arbitration agreement if it is not a party to the agreement or has not consented to arbitration. However, under Article 8 of the Arbitration Law, the court may stay legal proceedings where any person claiming through or under a party to an arbitration agreement commences legal proceedings in respect of any matter agreed to be referred to arbitration.
Awards are not binding on third parties. However, depending on the circumstances of a case, arbitral awards may have an effect on third parties.
Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?
Under the International Commercial Arbitration Law, the arbitral tribunal will determine the language of the proceedings (Article 22) and the place of arbitration (Article 20), in the absence of any agreement by the parties.
How is evidence obtained by the tribunal?
Article 19 of the International Commercial Arbitration Law provides that in the absence of any agreement by the parties, the arbitral tribunal may conduct the arbitration – including any matter related to the evidence admitted before it – in such manner as it considers appropriate.
What kinds of evidence are acceptable?
Under the International Commercial Arbitration Law, a tribunal is free to determine the admissibility, relevance, materiality and weight of any evidence (Article 19). Documentary and witness evidence is usually presented, as well as expert evidence where necessary.
Is confidentiality ensured?
Neither the International Commercial Arbitration Law nor the Arbitration Law contains any express provisions ensuring confidentiality of arbitral proceedings. Despite the absence of such provisions, the parties may agree that the arbitration proceedings will remain private and confidential, which is normally the case. However, the ability to keep arbitration proceedings private and confidential is limited by the fact that court proceedings relating to the arbitration may take place (eg, applications for interim injunctions or proceedings to set aside the award), in which case information about the arbitration may become a matter of public record (eg, through published court decisions or court hearings open to the public).
Can information in arbitral proceedings be disclosed in subsequent proceedings?
There are no explicit legislative provisions governing this issue. Confidentiality may be lost in court proceedings relating to the arbitration (eg, applications for interim injunctions or proceedings to set aside the award).
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
Advocates in Cyprus are bound by the Advocates Law (Cap 2) and the Code of Conduct of the Cyprus Bar Association. These provisions apply to the members of the Cyprus Bar Association and European lawyers practising in Cyprus under the relevant EU directives, but do not apply to other professionals involved in any arbitration proceedings in Cyprus.
Estimation & allocation
How are the costs of arbitration proceedings estimated and allocated?
Arbitral tribunals have the power to award costs and the principle that costs should be awarded to the successful party is recognised and normally applied in Cyprus.
Under the Arbitration Law, any provision in an arbitration agreement to the effect that the parties will in any event pay their own costs in the arbitration proceedings, or any part thereof, is void. However, this provision does not apply when it is part of an agreement to submit to arbitration a dispute which has arisen before such agreement has been made (Article 23).
Security for costs
Can the national court or tribunal order security for costs under the law in your jurisdiction?
Under the International Commercial Arbitration Law, both the tribunal (Article 17) and the court (Article 9) have the power to order security for costs.
Security for costs is also included in the list of matters for which the court may issue an order under Article 26 of the Arbitration Law.
What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?
Article 31 of the International Commercial Arbitration Law provides that the award must be made in writing and signed by the arbitrator or arbitrators. The award must state the date and place of arbitration as well as the reasons on which it is based, unless the parties have agreed that no reasons are to be given.
Timeframe for delivery
Are there any time limits on delivery of the award?
There are no time limits in the International Commercial Arbitration Law for the delivery of the award.
Article 13(1) of the Arbitration Law provides that the court may, on the application of any party to the arbitration, remove an arbitrator who fails to use all reasonable speed in commencing and proceeding with the arbitration and issuing an award.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?
An arbitral tribunal can award a wide range of remedies. Exceptions include:
- orders for the winding up of a Cyprus company;
- cases in which a remedy would affect the registration of rights over immovable property situated in Cyprus; and
- cases in which other public policy reasons dictate that the requested remedy can be granted only by the court.
What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?
Article 17 of the International Commercial Arbitration Law provides that unless otherwise agreed by the parties, the tribunal may, at the request of a party, order any party to take such interim measure of protection as the tribunal considers necessary.
The courts may also grant interim measures of protection in aid of arbitration, before or during arbitral proceedings, under Article 9 of the International Commercial Arbitration Law. Interim measures granted by the courts include freezing injunctions, the appointment of a receiver and generally the full range of injunctions and protective measures that courts may grant in civil proceedings.
Similar powers are given to the courts under the Arbitration Law.
Can interest be awarded?
The International Commercial Arbitration Law contains no provisions in relation to interest. However the parties may agree on the tribunal’s power to award interest.
Article 22 of the Arbitration Law provides that a sum directed to be paid by an award will, unless the award directs otherwise, carry interest as from the date of the award and at the same rate as a judgment debt.
At what rate?
The interest rate of a judgment debt which may be applicable under Article 22 of the Arbitration Law is currently 3.5% a year.
Is the award final and binding?
Subject to the provisions governing the court’s setting aside of an award, an award made by a tribunal pursuant to an arbitration agreement is final and binding.
What if there are any mistakes?
Article 33 of the International Commercial Arbitration Law provides that mistakes in computation or any clerical or typographical mistakes may be corrected by the tribunal either on its own initiative or following a request by a party, provided that such a request is made within 30 days of receipt of the award (unless a different timeframe has been agreed by the parties). Further, the tribunal may give an interpretation of a specific point or part of the award or issue an additional award as to claims included in the proceedings but omitted from the award.
Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
The International Commercial Arbitration Law does not provide for a right of appeal. Article 34 of the law provides that recourse to a court against an arbitral award may be made only by an application to set aside the award.
What is the procedure for challenging awards?
Under the International Commercial Arbitration Law, arbitral awards may be challenged only by an application to set aside the award, which must be filed within three months of the date on which the award was received by the parties. Similarly, an application to set aside is used to challenge awards under the Arbitration Law.
On what grounds can parties appeal an award?
Under Article 34 of the International Commercial Arbitration Law, the court may set aside an award where:
- a party to the arbitration agreement was under some incapacity or the agreement is not valid under the law to which the parties have subjected it (or, failing any indication thereon, under the law of Cyprus);
- the party seeking to set aside the award was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case;
- the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration;
- the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement conflicted with a provision of the International Commercial Arbitration Law from which the parties cannot derogate or, failing such agreement, was not in accordance with the International Commercial Arbitration Law;
- the subject of the dispute is not capable of settlement by arbitration under the law of Cyprus; or
- the award conflicts with the public policy of Cyprus.
Article 20 of the Arbitration Law provides that the court may set aside an award where an arbitrator has misconducted himself or herself or the proceedings, or where an arbitration or award has been procured improperly.
What steps can be taken to enforce the award if there is a failure to comply?
Under Article 35 of the International Commercial Arbitration Law, an award – irrespective of the country in which it was issued – will be recognised as binding. The successful party may apply to the court for an order for the execution of the award. The measures of execution that are available for judgments in civil proceedings are available for the enforcement of the award.
Can awards be enforced in local courts?
Yes, both domestic and foreign awards can be enforced in the courts of Cyprus.
How enforceable is the award internationally?
Awards issued in Cyprus are enforceable internationally under the New York Convention. Whether an award will be enforceable in a country which is not a party to the New York Convention will depend on the domestic law of that country.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
The principle of state immunity is recognised and applied by Cypriot courts. The assets of a foreign state enjoy immunity from enforcement in Cyprus. Exceptions include cases in which immunity is waived and possibly enforcement against commercial assets.
Are there any other bases on which an award may be challenged, and if so, by what?
The courts may refuse to enforce an arbitration award under Article V of the New York Convention or Article 36 of the International Commercial Arbitration Law.
How enforceable are foreign arbitral awards in your jurisdiction?
Cypriot courts are arbitration friendly and foreign arbitral awards are enforceable under the New York Convention. The Foreign Court Judgments (Recognition, Registration and Enforcement) Law 2000 (Law 121(I)/2000) provides the procedural steps to be followed by a party wishing to have a foreign award recognised and enforced in Cyprus. The successful party in the arbitration may apply to the court for an order for the execution of the award. If the court grants the requested order, the measures of execution that are available for judgments in civil proceedings will be available for the enforcement of the award.
Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
Article 36 of the International Commercial Arbitration Law provides that recognition or enforcement of a foreign arbitral award may be refused if the award has been set aside by a court in the country in which it was made or under the law of such country. This issue has not yet been tested in the courts of Cyprus.
Rules and restrictions
Are there rules or restrictions on third-party funders?
The principles of champerty and maintenance generally prohibit third-party funding in litigation. The position is not clear in relation to arbitration. No legislation or rules cover third-party funding in arbitration proceedings.
Class-action or group arbitration
Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?
Class actions are not allowed in Cyprus in litigation or arbitration.
Are there any hot topics or trends emerging in arbitration in your jurisdiction?
Investor-state arbitration is currently a hot topic in Cyprus following three cases brought against the Republic of Cyprus for decisions taken in relation to two banks in 2013 and 2014. All three cases are pending.