Cyprus: Courts In Cyprus For Commercial Disputes

Courts in Cyprus – Where to bring your commercial dispute?

Which peculiarities shall be taken into account in terms of resolution of the commercial disputes in Cyprus?

  1. On 1 May, 2004 the Republic of Cyprus became a member of the European Union, therefore there is no need to introduce EC Regulations into the national legislation of Cyprus. From the above date all Regulations of the EU have direct effect within Cyprus as a Member State. The presumption of supremacy of EU over national legislation exists in Cyprus.
  2. Cyprus is a jurisdiction of a common law. It still preserves the various legal doctrines of the United Kingdom (for instance, the right to fair public trial, the right to appeal etc.). The sufficient source of law in Cyprus is the judicial precedent set by the judgments of the Supreme Court of Cyprus which are mandatory for domestic courts in similar cases. Judicial procedures are also very close to the UK tradition.
  3. The judicial system of Cyprus operates based on the principle of an adversarial system, i.e. two or more opposing parties have the primary responsibility of gathering and submitting evidence to a judge, who must be an impartial decision-maker. The Constitution of Cyprus establishes the principle for separation of powers according to which judicial bodies are independent and separate from government bodies.

What are the possible ways available in Cyprus for resolving commercial disputes?

Cyprus can offer the following ways for resolving commercial disputes:

  • Litigation, which is the most popular and widespread method in case of occurrence of a commercial dispute, despite the fact that some disputes may be considered over a long period of time.
  • Arbitration, which has a number of incontestable advantages with respect to related costs and swiftness of consideration.
  • Mediation, which is not very common in Cyprus, though in future this instrument is likely to become more attractive for potential disputants.

What is the court system like in Cyprus? Are judgments subject to appeal in Cyprus?

The system of courts in Cyprus consists of two tiers: first instance courts and the Supreme Court.

First instance courts are represented by district courts, whose remit is to consider commercial disputes and render a decision binding for all the participants of the proceedings. The authority of each level of judges is determined by the value of claim (a dispute in which the amount exceeds €500,000 shall be resolved by a district court President judge). The other courts that belong to the first tier are administrative courts, military, family courts, industrial tribunals, etc.

The second tier of the Cypriot judicial system is the Supreme Court where the first instance judgment can be appealed. The Supreme Court has the authority to uphold, set aside and quash the decisions of district (lower) courts. Its judgments are final and binding for parties to the proceedings, and serve as precedents for the next similar cases, and in this way the long-standing legal tradition of Cyprus as a common law country is maintained. Cases in the Supreme Court are normally heard by the penal of three judges.

Unlike the competent courts of Cyprus within litigation, an award of an arbitral body is final and may not be brought for appeal by the parties to a superior body. This fact may serve as an advantage as business players are unwilling to expect for a final determination of their commercial dispute for a very long time.

Which distinctive peculiarities make Cyprus an appropriate ADR (Alternative Dispute Resolution) forum?

Since the parties to an international contract are free to agree any jurisdiction for the dispute resolution which may arise between them with respect to the contract, they are allowed to select Cyprus as the place of arbitration even in a case where the jurisdiction has no connection with an international contract, its parties and their business. Business entities are also free to agree an applicable law based on the same principle. Litigation in Cyprus is currently characterized by low costs considerably to other EU member states, but also for the long period required for dispute consideration in some cases; this is particularly true for cases involving the foreclosure of property. Due to the recent financial crisis in Cyprus, there are a great number of distressed assets which are the collateral securing the proper performance of loan obligations. Given this background, commercial entities tend to select a quick, cost-saving, flexible and efficient way to resolve their commercial disputes. In addition, this mechanism provides for the appropriate specialization which depends on the field of expertise (especially in construction disputes).

Another sufficient advantage of ADR is the full confidentiality of data in the circumstances of the case and the participants of arbitral proceedings, unlike the litigation method where the court proceedings are usually public.

Parties are also free to select arbitrators, and this option allows confidence in an arbitration body to be increased and to engage the best professionals and experts for the resolution of a controversial issue.

In view of the above, arbitration as the form of ADR is a useful tool in resolution of commercial disputes that meets the requirement of business players from different jurisdictions seeking a reliable mechanism to settle their claims.

What is the procedure to obtain interim relief in Cypriot courts?

With respect to this question it must be noted that interim relief, unlike the rest of civil cases within the Cypriot court system, may be obtained for a few days/weeks. In some cases, due to the urgency of the issue it can be granted even on the same day. Interim relief may have mandatory (to bind a party to act in a certain manner), prohibitory (to compel a party to refrain from acting in a certain manner), restrictive or a freezing nature, etc. It may include injunction, disclosure, freezing, etc. The list of interim reliefs is not exclusive and the particular choice of appropriate relief is subject to the absolute discretion of a court. The main purpose of the interim relief is to protect and preserve the assets in question, to prevent causing an irreparable harm to the property or to bind an opposing party to terminate its misbehavior.

In order to obtain an interim relief an interested party shall submit an application to the court. Depending on the circumstances of each particular case an interested party is normally obliged to notify an opposing party prior to the submission of an application to the court, whereas in some cases it is allowed to make such notification only after an interim relief has been granted by the court. It should be noted that an interim relief may be obtained by a business entity only in connection with the main commercial dispute proceedings.

An interim relief is also a way to accelerate a court process since, especially in commercial disputes, an interim relief will have the ability to put pressure to the defendant/respondent to the point that a settlement is agreed within few weeks from the submission of a litigation case. For more information about interim orders, please click here.

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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