In Zamba v Cyprus Cooperative Bank Ltd (Civil Appeal 92/16 of 6 June 2018) the appellants appealed to the Supreme Court to set aside or annul a first-instance court judgment that had upheld an arbitrator's decision.

Facts

On 26 February 2010 a €242,274 arbitral award (plus interest and expenses) was issued against the appellants and in favour of the respondents. Following this award, the respondents applied by summons to recognise and enforce the arbitral award; however, the appellants opposed this registration. As the first-instance court had approved the application for recognising and enforcing the arbitral award, the appellants filed an appeal before the Supreme Court to set aside or annul this decision.

The appellants raised the following arguments, among others, before the Supreme Court:

  • The application had been filed improperly as the hearing had not been conducted in the same manner as a lawsuit.
  • The arbitration could not proceed because the parties had not agreed to refer the dispute to an arbitrator.
  • The arbitrator had not had the legal authority to issue a mortgage disposal order.

Decision

Regarding the improperly filed application, the Supreme Court asserted that the essential feature of arbitration is to offer a prompt solution to party disputes. Therefore, during the hearing of the request to recognise and enforce the arbitral award, the court had not examined the arbitrator's decision on its merits. Had the court treated this request like a lawsuit and examined the arbitral award on its merits, the mechanism for solving the dispute promptly would have vanished. The Supreme Court therefore dismissed the argument.

With respect to the argument that the arbitration could not proceed without the parties first agreeing to refer to an arbitrator, the Supreme Court highlighted that the issuance of the arbitral award had been based on the Cooperative Companies Act of 1985 to 2007 (Law 22/1985) and the Cooperative Companies Rules 142/87. Article 52(2)(b) of Law 22/1985 provides that arbitration procedures must follow the laws in force at the time that the dispute between the parties is referred to an arbitrator by the commissioner of cooperative services. This referral has the same effect as having the parties agree to proceed with arbitration. Thus, the appellants' second argument was also dismissed.

Regarding the argument that the arbitrator had wrongly issued a mortgage disposal order, the Supreme Court agreed with the appellants because Article 6(8) of the Appendix of the Arbitration Law (Cap 4) does not empower arbitrators to order a performance of contract when the subject matter relates to land or any interest in land.

Considering the above, the appeal partially succeeded. The Supreme Court ruled that only the part of the first-instance court judgment relating to the mortgage disposal order would be set aside and annulled.

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

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