Arbitration

UNCITRAL Model Law

Is the arbitration law based on the UNCITRAL Model Law?

The law governing domestic arbitrations, Chapter 4, was enacted when Cyprus was a British colony and is, therefore, very similar to the English Arbitration Act 1950.

In 1987, Cyprus adopted UNCITRAL’s Model Law on International Commercial Arbitration, dated 21 June 1985, by enacting the International Commercial Arbitration Law No. 101/87. The legal framework governing international commercial arbitration proceedings is, therefore, almost identical to the UNCITRAL Model Law. In that regard, Law No. 101/87 adopts the Model Law’s guiding footnote with respect to the meaning of the term ‘commercial’.

Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

Both Chapter 4, which applies to domestic arbitrations, and Law No. 101/87, which applies to international commercial arbitrations, provide for an arbitration agreement in ‘writing’.

Law 101/87 defines an ‘arbitration agreement in writing’ as follows:

 

An arbitration agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams, or other means of telecommunication which provide a record of the agreement, or in 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. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract.

 

Chapter 4 does not define the term ‘arbitration agreement in writing’.

Choice of arbitrator

If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

Appointment of an arbitrator

In international commercial arbitrations, pursuant to Law No. 101/87, where the arbitration agreement does not specify the composition of the arbitral tribunal, the arbitral tribunal shall be constituted of three arbitrators.

If there is no specified procedure for the appointment of the arbitral tribunal, the default appointment procedure provided for under article 11(3) of Law No. 101/87 applies as follows:

  • In an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointment, the appointment shall be made, upon request of a party, by the court.
  • In an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he or she shall be appointed, upon request of a party, by the court.

 

Domestic arbitrations, pursuant to Chapter 4, are heard by a single arbitrator, where the arbitration agreement is silent on the matter. Article 10 of Chapter 4 provides that Cypriot courts will intervene in the appointment process if:

  • the parties fail to agree on the appointment of an arbitrator where the arbitration agreement provides for the appointment of a single arbitrator;
  • an arbitrator appointed by the parties refuses to act or is incapable of acting or passes away and the parties fail to appoint another in his or her place;
  • the parties or two arbitrators fail to appoint an umpire or a third arbitrator; and
  • the appointed umpire refuses to act or is incapable of acting or passes away and the parties or the arbitrators fail to appoint another in his or her place.

 

Challenge on the appointment of an arbitrator

In international arbitrations, pursuant to Law No. 101/87, the exemption of an arbitrator may be proposed to the arbitral tribunal only where circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess the qualifications agreed to by the parties. If the arbitrator in question does not resign or the other parties in the arbitration proceedings do not agree with the exemption proposal, the arbitral tribunal rules upon the exemption proposal.

In domestic arbitrations, pursuant to Chapter 4, any party may challenge the appointment of an arbitrator and request his or her dismissal if he or she who fails to act with due speed in pursuing the arbitral proceedings and issuing the arbitral award. Additionally, the court may remove an arbitrator who has acted improperly or has handled the case badly.

Arbitrator options

What are the options when choosing an arbitrator or arbitrators?

There are no provisions in domestic arbitration laws limiting the parties’ options when choosing an arbitrator. Nevertheless, the arbitration agreement may limit the options of the parties in that regard.

Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

Law No. 101/87 incorporates all mandatory provisions of the UNCITRAL Model law in international commercial arbitrations. For example, article 18 requires that the parties are treated with equality and that each party is given an opportunity to present its case; article 24(1) provides for a party with the right to request a hearing; and article 26 provides a party with a right to appoint and question an expert, etc.

Chapter 4 does not contain any mandatory provisions for the arbitral process to be followed, but provides Cypriot courts with an extensive supervisory jurisdiction over domestic arbitrations.

Court intervention

On what grounds can the court intervene during an arbitration?

In international commercial arbitrations, the courts may intervene in the instances prescribed by Law No. 101/87. The main purpose of such an intervention is to ensure the proper conduct of the international arbitration for instance by assisting in the constitution of the tribunal, deciding on the jurisdiction of the tribunal, assisting in the taking of evidence and ruling upon the validity of the arbitral award.

In domestic arbitrations, under Chapter 4, Cypriot courts have extensive supervisory jurisdiction and may intervene, upon the application of one of the parties, for the purpose of issuing, inter alia:

  • orders for the production of documents;
  • orders for submitting evidence by affidavits;
  • orders for the examination on oath of any witness or the examination of a witness outside the jurisdiction;
  • orders for the inspection of property that is the subject matter of the arbitration; and
  • discovery orders.
Interim relief

Do arbitrators have powers to grant interim relief?

Pursuant to article 17 of Law No. 101/87, an arbitral tribunal in an international commercial arbitration may, upon the application of any of the parties, issue any necessary interim measures with regard to the subject matter of the dispute.

A tribunal in domestic arbitration, operating under Chapter 4, has jurisdiction to issue any interim order including an order for the appointment of a receiver.

Award

When and in what form must the award be delivered?

Timing for the award

There is no specific time limit for rendering an award under either Chapter 4 or Law No. 101/87. Nonetheless, there may be contractual limits within which such awards have to be rendered.

 

Form of an award

Pursuant to article 31 of Law No. 87/101, an international commercial arbitration award must state the reasons upon which the award is based, unless the parties have agreed otherwise or the award is an award on agreed terms. Furthermore, the award must be in writing, contain the date and place of the arbitration and be signed by all arbitrators.

Chapter 4 is silent on the form and content of domestic arbitral awards.

Appeal

On what grounds can an award be appealed to the court?

In domestic arbitrations, pursuant to Chapter 4, an award may be set aside by the court where the arbitrator has acted improperly or has handled the case badly or the arbitration proceedings were conducted irregularly or the arbitral award was issued irregularly.

In international commercial arbitrations, pursuant to Law No. 101/87, an award may be set aside on the same grounds as those provided in UNCITRAL Model Law, namely:

  • incapacity of the parties;
  • invalidity of the arbitration agreement;
  • lack of sufficient notice of the proceedings to one of the parties or other denial of a party’s right to present its case (due process);
  • lack of jurisdiction of the tribunal;
  • the tribunal’s constitution or the procedure followed for the arbitration is contrary to the arbitration agreement or the Law No. 101/87;
  • non-arbitrability of the subject matter of the dispute under the laws of Cyprus; or
  • the award is contrary to the public policy of Cyprus.
Enforcement

What procedures exist for enforcement of foreign and domestic awards?

As a contracting party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of the United Nations of 1958 (the New York Convention), Cyprus is bound to enforce awards issued in foreign states that are contracting parties to that convention.

The New York Convention is incorporated in articles 35 and 36 of Law No. 101/87. As per article 35, the party seeking the recognition and enforcement of a foreign award must submit a relevant application supported by an affidavit, attaching the original or a certified copy of the arbitral award and the arbitration agreement as well as the translation of the same in Greek.

In domestic arbitrations, under Chapter 4, an award may, with the leave of the Cypriot court, be enforced in the same manner as a Cyprus judgment or order to the same effect. In that case, a judgment may be entered in the same terms as the terms the award.

Costs

Can a successful party recover its costs?

Overall cost allocation rests with the tribunal, unless the parties agree otherwise. The general rule is that costs follow the event and are usually dealt with by the arbitration award. The costs that are generally recoverable, subject to the arbitration agreement between the parties, are the fees and expenses of the tribunal, the fees and expenses of the arbitral institution, and the parties’ legal and other costs including costs relating to witnesses and the hearing.

Law stated date

Correct on

Give the date on which the above content is accurate.

27 April 2020