Facts Decision Facts

On February 17 2011 the defendants signed a debt confirmation and guarantee agreement with the claimant. The claimant filed Admiralty Action 9/2013 against the defendants, who subsequently filed an application to set aside the action, relying on an arbitration clause in the agreement (the aforesaid application is the subject of this judgment).(1)

In order to contest the defendants' application, the claimant argued before the Supreme Court that the arbitration clause in the agreement had already been rendered inactive during the proceedings arising from General Application 430/2011, which had been filed by the defendants against the claimant before the admiralty action.

The Supreme Court on reaching its decision relied on the following facts:

  • In General Application 430/2011, the defendants had requested the cancellation and/or setting aside and/or revocation of the arbitration clause contained in the agreement between the parties.
  • In Paragraph 8 of the affidavit which supported the general application, the fourth defendant stated that due to the claimant's conduct, the defendants had lost trust in the arbitration. As such, they had requested the revocation of the arbitration clause so that the dispute between the parties could be tried by the district court.
  • On October 23 2013 the claimant in the general application had stated without reservation that it was abandoning its rights of activating the arbitration clause.
  • The defendants had withdrawn the general application in light of the aforementioned statement of the claimant.
  • The district court rejected the general application as settled and noted the claimant's statement.

Decision

The Supreme Court decided that, in light of the above, the arbitration clause had been abandoned with the consent of the claimant and the defendants, and the defendants were therefore estopped from claiming that they had not abandoned their right to activate the arbitration clause. As a result, the defendants' application to set aside Admiralty Action 9/2013 was dismissed.

For further information on this topic please contact Alex Themis at George Z Georgiou & Associates LLC by telephone (+357 22 763 340) or email (alex.themis@gzg.com.cy). The George Z Georgiou & Associates website can be accessed at www.gzg.com.cy.

Endnotes

(1) Supreme Court Judgment of November 11 2016, Admiralty Action 9/2013, Bunkernet Ltd v PNO Shipmanagement Ltd.

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