Cyprus: International Arbitration Comparative Guide
1 Legal framework
1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?
The laws that apply to arbitration in Cyprus are as follows:
the Arbitration Law (Cap 4);
the International Commercial Arbitration Law (101/1987) (‘ICA Law'), which is based on the UNCITRAL Model Law of 1985 and applies only to international commercial arbitration;
the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which was ratified in Cyprus by Law 84/1979; and
the Foreign Court Judgments (Recognition, Registration and Enforcement) Law (121(I)/2000).
The only formal requirement provided by law with regard to the validity of an arbitration agreement is included in Section 7 of the ICA Law and Section 2(1) of the Arbitration Law, which provide that an arbitration agreement is valid and enforceable only if it is in writing.
1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
The Arbitration Law applies to domestic arbitration, while the ICA Law applies to international commercial arbitration.
Section 2(4) of the ICA Law defines ‘commercial' arbitration as "an arbitration regarding issues arising from commercial relations, whether contractual or not". Furthermore, arbitration is considered to be ‘international' if:
at the time the arbitration agreement was entered into, the parties had their seats in different states; or
either of the following locations is not situated within the states in which the parties have their place of business:
the place of arbitration if determined in, or pursuant to, the arbitration agreement; or
any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject matter of the dispute is most closely connected; or
the parties have expressly agreed that the subject matter of the arbitration relates to more than one country.
1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?
The ICA Law is based on the original UNCITRAL Model Law on International Commercial Arbitration of 1985 and there are no significant differences between the two.
1.4 Are all provisions of the legislation in your jurisdiction mandatory?
The provisions of the legislation referred to under question 1.1 that relate to the following issues are mandatory:
the validity of the arbitration agreement;
the issue of arbitral awards;
the procedure for recognition and enforcement of awards; and
the powers of the court with regard to arbitration procedures.
1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?
There are no current plans to reform the arbitration laws of Cyprus.
1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
Yes, Cyprus is a party to the New York Convention, which was ratified by Law 84/1979. A condition for reciprocity is provided, meaning that the Cypriot courts must recognise arbitral awards that are issued in other signatory states to the New York Convention.
1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?
Cyprus is also a party to the Convention on the Settlement of Investment and Disputes between States and Nationals in Other States. Furthermore, Cyprus has entered into bilateral investment treaties with several countries.
2 Arbitrability and restrictions on arbitration
2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?
The following matters are considered non-arbitrable:
matters of family law;
matters of criminal law;
disputes concerning minors;
disputes relating to the title to property or real estate; and
insolvency or bankruptcy proceedings.
2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?
No.
3 Arbitration agreement
3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?
The only formal requirement provided by law for an arbitration agreement to be considered valid and enforceable is that it be in writing.
3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?
Pursuant to Section 16(1) of the International Commercial Arbitration Law, an arbitration clause included in a contract is considered a separate agreement from the other terms of the contract. As a result, an arbitration clause may be considered valid even if the contract in which it is included is considered invalid. In essence, Section 16 is a codification of the doctrine of separability of arbitration clauses.
3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
No. If there is no agreement, the arbitrator/tribunal will rule on these issues.
4 Objections to jurisdiction
4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?
A party may object to the jurisdiction of the arbitral tribunal before or at the time of submission of the statement of defence. From a procedural standpoint, the manner in which the objection will be raised will depend on the procedural rules applicable to the arbitration.
4.2 Can a tribunal rule on its own jurisdiction?
The principle of competence-competence is expressly provided for in Section 16 of the International Commercial Arbitration Law (ICA Law), which provides that arbitral tribunals are allowed to rule on their own jurisdiction, including in cases where the existence or validity of the arbitration agreement is challenged.
4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?
Pursuant to Section 16(3) of the ICA Law, if the jurisdiction of the tribunal is challenged, but the arbitral tribunal decides that the dispute falls within its jurisdiction, any party may challenge the decision of the tribunal before the court within 30 days of the date of receipt of the decision.
5 The parties
5.1 Are there any restrictions on who can be a party to an arbitration agreement?
No.
In principle, however, the principle of privity of contract does not allow for third parties which have not consented to submit their dispute to arbitration to be bound by an arbitration agreement which they have not signed. As a result, arbitral tribunals cannot assume jurisdiction over third parties.
5.2 Are the parties under any duties in relation to the arbitration?
There are no statutory provisions on the duties of the parties. However, the International Commercial Arbitration Law provides that the parties have the same rights and duties, and each shall be provided with the opportunity to present its case before the arbitrator.
5.3 Are there any provisions of law which deal with multi-party disputes?
There are no statutory provisions that impose any limitations on multi-party or multi-contract arbitration procedures.
6 Applicable law issues
6.1 How is the law of the arbitration agreement determined in your jurisdiction?
Pursuant to Section 28 of the International Commercial Arbitration Law, the arbitral tribunal will decide on the substance of the dispute based on the law chosen by the parties. If the parties have not agreed on the applicable law, the arbitral tribunal will decide which law is applicable to the particular dispute based on the applicable private international law provisions.
6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?
See question 6.1.
7 Consolidation and third parties
7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?
There are no express provisions with regard to the consolidation of arbitral proceedings in the International Commercial Arbitration Law or the Arbitration Law. However, Section 30 of the Arbitration Law provides that the Civil Procedure Rules are applicable mutatis mutandis to arbitration proceedings. As a result, in domestic arbitrations, the consolidation of arbitral proceedings will be possible if the conditions set out in Order 14 of the Civil Procedure Rules are met.
7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?
There are no statutory provisions that prohibit the joinder of additional parties.
In principle, the principle of privity of contract does not allow third parties to be bound by an arbitration agreement and to participate in arbitration proceedings. As a result, arbitral tribunals cannot assume jurisdiction over third parties.
However, although this has not been tested before the Cypriot courts, third-party companies belonging to the same group as a company which is a signatory to the arbitration agreement may be considered bound by the agreement pursuant to the ‘group of companies' doctrine.
7.3 Does an arbitration agreement bind assignees or other third parties?
See question 7.2.
8 The tribunal
8.1 How is the tribunal appointed?
The parties are free to select the members of the tribunal. However, pursuant to Section 11(3) of the International Commercial Arbitration Law (ICA Law), in the absence of an agreement between the parties on the appointment procedure, the default procedure will be as follows:
If the parties have agreed to arbitration by a three-member tribunal, then each party will appoint one arbitrator and the two appointed arbitrators will appoint the third arbitrator; and
If a single arbitrator will be appointed, but the parties cannot agree on the person to be appointed, then the court will appoint the arbitrator on the application of any of the parties.
8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?
No.
8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?
The Arbitration Law provides that on the application of any of the parties, an arbitrator may be removed by the court if he or she unjustifiably delays the proceedings or the issuance of the award. In that case, the court, on the application of any of the parties, may appoint a new arbitrator or order that the arbitration agreement will cease to apply to the dispute.
Pursuant to the ICA Law, the appointment of an arbitrator may be challenged if there are justifiable reasons to suggest that he or she is not impartial or independent, or that he or she lacks qualifications which were previously agreed upon by the parties.
The parties are free to agree on the procedure for challenging the appointment of an arbitrator. However, if they have not agreed upon the procedure, Section 13 of the ICA Law provides that the challenge must be submitted to the arbitral tribunal within 15 days of the date on which the party became aware of the reasons for the challenge. If the challenge is rejected by the tribunal, an application to review the tribunal's decision may be submitted to the competent court within 30 days of receiving notice of the tribunal's decision. The judgment of the court will be final and not subject to appeal.
8.4 If a challenge is successful, how is the arbitrator replaced?
If the mandate of an arbitrator ceases for any reason, a substitute arbitrator will be appointed in accordance with the rules that applied to his or her original appointment or, if need be, the default procedure for appointment (Section 15 of the ICA Law).
8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?
Arbitrators have a general duty of independence and impartiality. In practice, arbitrators follow the International Bar Association Guidelines on Conflicts of Interest in International Arbitration or the standards adopted by the courts in relation to members of the judiciary.
Pursuant to Section 12 of the ICA Law, an arbitrator must disclose to the parties any fact which could justifiably raise doubts as to his or her impartiality or independence. The arbitrator is bound by this obligation of disclosure for the duration of his or her appointment.
Furthermore, Section 13 of the Arbitration Law provides that on the application of any of the parties, an arbitrator may be removed by the court if he or she unjustifiably delays the proceedings or the issuance of the award.
8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?
(a) Procedure, including evidence?
In international commercial arbitration, the parties are free to agree on and determine the procedural rules applicable to the arbitration. In the absence of agreement between the parties, the tribunal will determine the procedure to be followed and all matters relating to the submission and admissibility of evidence.
Furthermore, pursuant to Section 26 of the ICA Law, unless the parties have agreed otherwise, the tribunal may appoint experts to provide an opinion on the issues raised before the tribunal and may order the parties to provide all relevant information and documents to the appointed expert.
Pursuant to Section 27 of the ICA Law, any party or the tribunal itself may seek the assistance of the Cypriot courts in the collection and submission of evidence.
In domestic arbitrations, the tribunal will apply, mutatis mutandis, the Civil Procedure Rules, which set out the procedural legal framework for civil proceedings. Furthermore, any party may apply to court to issue a summons requiring any person to appear before the tribunal for examination or to produce any document that it would be compelled to produce in a similar court trial (Section 17 of the Arbitration Law).
(b) Interim relief?
According to Section 17 of the ICA Law, unless the parties have agreed otherwise, arbitral tribunals may order interim relief against any party regarding the subject matter of the dispute and can request any party to provide guarantees for such relief. The arbitral tribunal may order any interim relief (eg, freezing orders, disclosure orders, anti-suit orders).
Furthermore, Section 9 of the ICA Law provides that the Cypriot courts can order interim relief in aid of arbitral proceedings, even before the initiation of the proceedings. However, in that case, the court must be convinced that the initiation of the proceedings is imminent.
(c) Parties which do not comply with its orders?
Breach of an order of an arbitral tribunal does not automatically lead to contempt procedures against obstructive counterparties. However, the parties may seek to apply for an order of the court to assist in the arbitration proceedings or in the enforcement of the award.
(d) Issuing partial final awards?
There are no express provisions that allow for the issue or enforcement of partial awards. However, if a partial award is considered to be ‘binding' on the parties within the meaning of Section 36 of the ICA Law, it will be enforceable.
(e) The remedies it can grant in a final award?
There are no express limitations on the types of remedies that may be ordered by the tribunal. The tribunal can generally provide the same remedies as a national court.
However, a tribunal cannot rule on non-arbitrable issues (see question 2.1) or order any other remedy that is against public policy.
(f) Interest?
Pre-award interest may be included and the tribunal will decide this on the basis of the evidence before it.
Post-award interest is also payable in accordance with Section 22 of the Arbitration Law, which provides that unless the tribunal orders otherwise, the arbitral award will generate interest from the date of issuance of the award at the rate applicable to court judgments.
There is no provision with regard to interest in the ICA Law.
8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?
The courts cannot compel a party to participate in the arbitration. However, given that the Cypriot courts will most likely stay proceedings raised before them if an arbitration agreement is applicable, the non-participating party will risk the issue of a judgment in default against it. Pursuant to Section 25 of the ICA Law, the arbitration proceedings will continue despite the party's absence and the tribunal will rule on the basis of the evidence before it.
8.8 Are arbitrators immune from liability?
Arbitrators are not expressly provided with immunity under Cyprus law. However, common law principles will apply and render them immune, since they are considered to perform a quasi-judicial role. Asa result, an arbitrator will not be liable to the parties for failing to act with reasonable skill or care. In such cases the court may remove the arbitrator and/or set aside the award.
9 The role of the court during an arbitration
9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?
The Arbitration Law and the International Commercial Arbitration Law (ICA Law) provide that if an action is submitted in relation to a matter that is subject to an arbitration agreement, any party may apply to the court for the proceedings to be stayed and the matter to be referred to arbitration. The national courts are very willing to enforce arbitration agreements and order the stay of court proceedings that are pending before them and/or the referral of the dispute to arbitration. The courts will generally order the stay of pending proceedings unless they consider that the agreement is null and void, or inoperative and incapable of being performed.
9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
The Cypriot courts have extensive powers in arbitrations seated in Cyprus. The parties may apply to the Cypriot courts in order to:
appoint an arbitrator in case of disagreement on the person to be appointed (Section 11 of the ICA Law);
challenge the appointment of arbitrators or seek the removal and substitution of an arbitrator (Sections 12–15 of the ICA Law and Section 13 of the Arbitration Law);
request the correction of an arbitral award (Section 33 of the ICA Law); or
set aside an arbitral award (Section 34 of the ICA Law).
9.3 Can the parties exclude the court's powers by agreement?
The provisions set out in question 9.2 are mandatory. Further, any agreement which absolutely restricts a party's right to recourse to justice is void, as per Section 28 of the Contracts Law (Cap 149).
10 Costs
10.1 How will the tribunal approach the issue of costs?
The Arbitration Law and the International Commercial Arbitration Law include no provisions on the allocation or calculation of costs. The Arbitration Law merely provides that a party may ask the tribunal, within 14 days of the issue of the arbitral award, to issue an order on the allocation of costs.
Issues of costs remain at the discretion of the tribunal, but the general rule in civil proceedings is that the losing party will be ordered to bear the costs of the winning party.
With regard to the amount of the costs, the test in civil litigation in Cyprus is that costs and fees must be reasonable, necessary and proportionate for achieving justice or defending the rights of the parties.
10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?
Costs remain at the absolute discretion of the tribunal. Section 23 of the Arbitration Law provides that any clause in the arbitration agreement which stipulates that each party will bear its own costs will be void and unenforceable.
11 Funding
11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?
As there is no legislation that allows third-party funding in civil proceedings, such funding will be considered to fall under the definition of the common law torts of maintenance and champerty, and will therefore be unenforceable.
12 Award
12.1 What procedural and substantive requirements must be met by an award?
Pursuant to Section 31 of the International Commercial Arbitration Law, the award must be issued in writing and be signed by the members of the arbitral tribunal. Further, the award must, in principle, be reasoned, although the parties may agree otherwise. Finally, the award must state the seat of the arbitration and include the date of issue.
12.2 Must the award be produced within a certain timeframe?
There is no express timeframe for the issue of the award. However, the Arbitration Law provides that an arbitrator may be removed if he or she unjustifiably delays the issue of the award (Section 13).
13 Enforcement of awards
13.1 Are awards enforced in your jurisdiction? Under what procedure?
An application for recognition and enforcement of an arbitral award must be submitted to the competent Cypriot court. The application must be supported by an authenticated original award or a duly certified copy of the award, and a copy of the arbitration agreement. Furthermore, if the arbitral award is not issued in Greek, the court may also request the submission of an official translation of the award (Section 35 of the International Commercial Arbitration Law (ICA Law)).
The application for recognition and enforcement of the award is made by summons, so respondent will be allowed to submit an objection and state its position to the court on the limited grounds for objection set out in the pertinent legislation.
Recognition and enforcement may be rejected by the court pursuant to Section 36 of the ICA Law, based on any of the following reasons:
A party to the arbitration agreement was incapacitated or the arbitration agreement was not valid under the applicable law chosen by the parties or, in the absence of any agreement thereon, under the laws of Cyprus;
A party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or for any reason was deprived of the opportunity to present its case before the tribunal;
The award deals with a dispute which does not fall within the scope of the arbitration agreement or decides on matters beyond the scope of the arbitration; or
The tribunal was composed or the arbitration procedure was conducted in breach of the agreement of the parties or of the law.
Recognition and enforcement can also be rejected if the court finds that:
the subject matter of the dispute is not arbitrable under the laws of Cyprus; or
the award is incompatible with the public policy of Cyprus.
14 Grounds for challenging an award
14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?
In domestic arbitrations, where the Arbitration Law applies, the parties are entitled to file an appeal with the district courts if an arbitrator has misconducted himself or herself, or if the arbitration or award was improperly procured (Section 20).
In international commercial arbitrations, the parties may request:
the correction of an arbitral award; or
the setting aside of the award on specific grounds.
Pursuant to Section 33 of the International Commercial Arbitration Law (ICA Law), a party may seek the correction of an arbitral award within 30 days of receipt of the award, in order for the tribunal to correct computational or other errors of a similar nature in the award or, if the parties agree, to provide further guidance on the interpretation of a specific part or point of the arbitral award. Further, a party may request the tribunal to make an additional award for claims that, although included in the claims of the party in the arbitration proceedings, were omitted from the award.
A party may apply to a competent court for the setting aside of an arbitral award pursuant to Section 34 of the ICA Law, based on any of the following reasons:
A party to the arbitration agreement was incapacitated or the arbitration agreement was not valid under the applicable law chosen by the parties or, in the absence of any agreement thereon, under the laws of Cyprus;
A party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or for any reason was deprived of the opportunity to present its case before the tribunal;
The award deals with a dispute which does not fall within the scope of the arbitration agreement or decides on matters beyond the scope of the arbitration; or
The tribunal was composed or the arbitration procedure was conducted in breach of the agreement of the parties or of the law.
Recognition and enforcement can also be rejected if the court finds that:
the subject matter of the dispute is not arbitrable under the laws of Cyprus; or
the award is incompatible with the public policy of Cyprus.
Furthermore, Section 20 of the Arbitration Law provides that an award may be set aside by the court if an arbitrator has conducted himself or herself improperly, or if the arbitration was conducted and/or the award was procured improperly.
14.2 Are there are any time limits and/or other requirements to bring a challenge?
An application for the amendment of the award must be submitted within 30 days of the date on which the party was notified of the arbitral award (Section 33 of the ICA Law), and the application to set aside the award must be submitted within three months of the date on which the party was notified of the arbitral award (Section 34 of the ICA Law).
14.3 Are parties permitted to exclude any rights of challenge or appeal?
No, these provisions are mandatory. Any agreement which absolutely restricts a party's right to recourse to justice is void as per Section 28 of Contracts Law (Cap 149).
15 Confidentiality
15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?
There are no express provisions in the International Commercial Arbitration Law or in the Arbitration Law on the confidentiality of the proceedings. Furthermore, the Cypriot courts have provided little guidance on this issue. However, UK case law is generally considered by the Cypriot courts to be of high persuasive authority. As a result, UK case law on the principle of confidentiality of arbitration will provide guidance to the Cypriot courts, especially since the Arbitration Law is based on the English Arbitration Act 1950.
15.2 Are there any exceptions to confidentiality?
As court judgments are published in publicly available databases, if an application is submitted for court assistance in the arbitration proceedings or for the enforcement of an arbitral award, some information about the arbitration proceedings will inevitably reach the public domain.