Under the Law on International Commercial Arbitration of 1987 (101/1987), the recognition and enforcement of foreign arbitral awards in Cyprus are governed by specific terms and conditions designed to ensure compliance with both local legal standards and international obligations.
Definition of Commercial Matters
In the context of the Law on International Commercial Arbitration, commercial matters refer to disputes arising from transactions related to goods and services, contracts, investments, trade, and other business activities.The list provided under the law is broad and non-exhaustive and encompases all types of commercial disputes. A matter is considered international if it involves parties that have their business establishments in different countries at the time of the execution of the arbitration agreement or if the subject of the dispute pertains to operations that cross national borders. Also if the seat or place of arbitration is in a foreign jurisdiction.
Grounds for Rejection of Recognition or Enforcement
According to Article 36 of the law, an application for the recognition or enforcement of a foreign arbitral award may be rejected on several grounds, regardless of the jurisdiction in which the award was made. These grounds include:
- Lack of Capacity: If any party to the arbitration agreement was not legally capable of entering into the arbitration or if the arbitration agreement itself is deemed invalid under the applicable law.
- Insufficient Notification: The party opposing the enforcement may claim they were not properly notified of the appointment of the arbitrator or of the arbitration proceedings, which deprived them of the opportunity to present their case.
- Exceeding Scope: The award pertains to disputes not covered by the arbitration agreement or includes decisions about matters that fall outside the agreement's limits. If such decisions can be separated from referenced issues within the arbitration agreement, only the relevant parts may be recognised and enforced.
- Procedural Violations: If the composition of the arbitral tribunal or the procedures followed violated a relevant agreement between the parties or the applicable law of the jurisdiction where the arbitration occurred.
- Non-Binding Status: If the arbitral award has not yet become binding on the parties or has been annulled or suspended by a competent court in the jurisdiction where it was issued.
- Arbitrability: If the subject matter of the dispute is not arbitrable under the laws of the Republic of Cyprus.
- Public Policy Concerns: If recognising or enforcing the award is contrary to public policy in Cyprus.
Procedures for Challenging Enforcement
If an application for annulment or suspension of the arbitral award has been submitted, the court may exercise its discretion to stay the enforcement. Parties opposing recognition or enforcement must provide substantial evidence to justify their claims.
Conclusion
The provisions outlined in the Law on International Commercial Arbitration emphasise the need for a fair and structured approach to the recognition and enforcement of foreign arbitral awards in Cyprus. While the law provides clear grounds for challenging such awards, it also establishes a framework that seeks to protect the interests of all parties involved. Legal practitioners and stakeholders should be well-informed about these regulations to facilitate smoother arbitration processes and ensure compliance with both local and international standards.
Understanding these legal definitions and provisions enables parties to navigate the complexities associated with enforcing foreign arbitral awards more effectively. This understanding contributes significantly to the development of a robust framework for international commercial arbitration in Cyprus.
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.
