Cyprus: Enforcing Foreign Arbitral Awards In Cyprus

The recognition and enforcement of foreign arbitral awards in the Republic of Cyprus is governed by Law 121 (1)/2000 and Law 84/79 which ratifies the New York Convention. In Cyprus, the New York Convention is not applied as a national law, but as an international treaty and as result, Cyprus Courts take into account not only Cypriot but also foreign decisions interpreting the Convention in order to ensure an internationally uniform application of the said Convention.

Although the New York Convention greatly facilitates the enforcement of international arbitral awards and ensures that enforcement and recognition are not denied on substantive grounds, the enforcement procedure is independent of the New York Convention, and follows its own rules and principles, and is purely regulated by national courts, where domestic perceptions and practices prevail. In the enforcement proceedings, the entire arbitral proceedings comes under the scrutiny of the national courts and consequently, the debtor under the arbitral award, have several possibilities to raise not only the limited grounds of objection against enforcement and recognition stated in Article V of the New York Convention, but also to rely on technicalities making the enforcement proceedings long and costly.

Documents required to be produced under Article IV of the New York Convention

Cyprus Courts have interpreted strictly and narrowly the provisions of Article IV of the New York Convention and consequently the debtors, under the foreign arbitral awards have several possibilities to raise objections against the recognition and enforcement.

Article IV, paragraph 1, provides that the party applying for recognition and enforcement of a foreign arbitral award shall produce:

  1. the original duly authenticated arbitral award or a duly certified copy thereof; and
  2. the original or a duly certified copy of the arbitration agreement.

"Authenticated" means that the award must be signed by all the arbitrators and that their signatures must be legalised by the competent authority.

Due to the fact that the formal requirements stated in Article IV, Paragraph 1 of the New York Convention are often disputed with success before Cyprus Courts in enforcement proceedings, it is recommended that the authentication of the signatures of the arbitrators shall be notarised and apostiled.

A certified copy of the arbitration agreement shall also be apostiled. The certification of the copy of the arbitration agreement can be effected by a Notary Public.

Translations

Pursuant to paragraph 2 of Article IV of the New York Convention, the applicant shall produce translations into Greek of the arbitral award and the arbitration agreement which shall be certified by an official or sworn translator or by a diplomatic or consular agent. Certified translations can be done in Cyprus only by the Press and Information Office which has been designated by the Council of Ministers as the competent authority to effect official translations.

Translations effected by lawyers or professional translators have been declared by Cyprus Courts insufficient to meet the requirements of Article IV of the New York Convention. Cyprus Courts have applied the requirements of Article IV of the Convention in a too formalistic way, requiring the production of all documents stipulated in Article IV of the Convention at the time of the filing of the application for recognition and enforcement.

The Cyprus Courts do not allow the Party seeking enforcement to produce the documents listed in Article IV at a later stage.

No review of the merits of the arbitral award

Cyprus Courts have exhibited a pro-convention attitude especially to the Convention's principle that no review on the merits of the arbitral award is allowed.

The main reason for this attitude is that the exhaustive list of grounds for refusal of enforcement enumerated in Article V of the Convention does not include a mistake of fact or law by the arbitrator. Furthermore, under the Convention, the task of the enforcement judge, is limited to the verification whether an objection of the respondent on the basis of the grounds for refusal of Article V is justified and whether the enforcement of the awards would violate the public policy of the law of his country.

The principle of the New York Convention, that the Court may not review the merits of the arbitral award does not mean that it will not look into the award when it is necessary to ascertain whether a ground for refusal of enforcement stated in Article V, is present.

Forum State shall be signatory to the Convention

Cyprus Courts will enforce foreign arbitral awards originated from a Country which is a signatory to the New York Convention.

Foreign arbitral awards issued in countries which are not signatories to the Convention can be enforced in Cyprus either by an action based on the award or on the original cause of action.

Cyprus has accepted the New York Convention with a specific reservation of reciprocity.

Reciprocity is only in relation to the place where the award is made and does not bear any real relation to the nationality of the Parties or whether the nations to which each of the Parties belong have signed or ratified the Convention.

Application of Convention only if disputes are commercial under Cyprus Law.

Cyprus has accepted the New York Convention with the additional reservation that the Convention will apply only to differences arising out of legal relationships whether contractual or not, which are considered as commercial under Cyprus law (see Article 2 of the UNCITRAL MODEL LAW on International Commercial Arbitration which has been adopted in Cyprus by Law 101/87).

Conclusion

In Cyprus, the recognition and enforcement of foreign arbitral awards cannot be considered automatic. Parties should expect that in appropriate cases Cyprus Courts will refuse to recognise and enforce arbitral awards. Nevertheless, the "pro-enforcement bias" persists. The Convention's seven enumerated defences continue to be applied narrowly and the burden of proof remains very much with the Party opposing enforcement. In general, Cyprus Courts have resisted allowing defences beyond those specified in Article V, although arguments based on procedural considerations have met with some success.

As noted at the outset, Cyprus continues to be a favourable jurisdiction for the purposes of recognition and enforcement of foreign arbitral awards.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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