Cyprus an Ideal Centre for International Commercial Arbitration

CONTENTS

A. Introduction

B. Cyprus as a suitable Venue #9;

C. Cyprus Arbitration Law #9;

D. The Cyprus Law on International Commercial Arbitration

E. Convention of the Recognition and

Enforcement of Foreign Arbitral Awards F. Appendix 1: The International Commercial Arbitration Law 1987

Appendix 2: New York Convention 1958 #9;


A. INTRODUCTION

Already a well-established offshore and shipping centre, Cyprus is now ready to become a popular venue for international arbitrations. Its prompt ratification of the Uncitral Model Law on International Commercial Arbitration (the second country to do so after Canada) has added to the Republic's existing advantages and gone a long way towards establishing it as an extremely suitable venue.

Parties to international arbitration seeking a suitable venue have a difficult decision to make. The venue must be both neutral and politically stable and its legal system both sophisticated and effective. No legal obstacle must exist which would jeopardise the conduct of the arbitration and equally importantly, the successful party must be able to obtain legal enforcement in the country where the other party has assets.

Cyprus has all this and more to offer. We hope that this booklet will give the reader a fair idea of the advantages of choosing Cyprus as a venue for international commercial arbitration and will help to explain the working of its laws on such arbitrations.

  1. CYPRUS AS A SUITABLE VENUE

Cyprus' strategic geographic location, excellent commercial infrastructure, political stability, favourable tax incentives, high standard of living and European lifestyle have contributed towards its development as an important financial centre.

Due to its numerous advantages, the island compares favourably with all other similar locations. Many of these benefits are inherent in the nature of the country itself whilst others have been specifically tailored to meet the needs of foreign investors and parties to international arbitrations.

While the range and extent of advantages are vast, the following are the most appealing:

  1. Stability
  2. Though located in the often stormy and turbulent Middle East area, Cyprus is a centre of democracy and stability where businessmen from all nations are able to conduct their affairs in a harmonious and friendly environment. The rule of law is a well-entrenched principle which is endorsed by free elections and a Western parliamentary system. In addition, the authorities' desire to assist foreign businessmen is strengthened by the friendly and enterprising spirit of the Cypriot people themselves.

    Two British bases are maintained on the Island, and there is also a strong presence of United Nations forces consisting of, inter alia, British, Irish, Canadian, German and Scandinavian troops. The result is that there has been no major incident for over twelve years and the stability of the Island is secured.

    2. Geographic Location

    Cyprus is privileged to enjoy what is possibly one of the most strategic geographic locations in the world. The Island is situated at the crossroads of Europe, Asia and Africa and forms a gateway to the oil-rich Arab states and the rest of the Middle East.

    In addition, the Island's time zone is convenient to all other regional centres and this is enhanced by its excellent telecommunication links. It is also within easy flying time of the rest of Europe and the Middle East and the Island's efficient airport facilities (at Larnaca and Paphos) avail daily flights to all major destinations in these areas. Above all visitors from more severe climates will enjoy the excellent weather conditions prevailing in Cyprus.

  3. Respectability

While the policy of the authorities has. been manifestly in favour of assisting and promoting foreign participation in the Cypriot economy, this has not in any way operated to adversely affect their respectability or good standing in the eyes of the international business community or foreign income tax authorities.

Indeed, the authorities have admirably succeeded in maintaining a balance between upholding their respectability while also avoiding the imposition of restrictive and suffocating bureaucratic regulations and restrictions.

  1. Commercial Infrastructure
  2. The commercial infrastructure of Cyprus, which is refined and well developed, lends itself ideally to all forms of business activities. In particular it avails a civilized environment, pleasant working conditions, comfortable accommodation and comparatively low operational costs and living expenses.

    In addition, a wide range of professional services are offered, including UK trained lawyers and a number of international accounting firms. Their advice, which is usually based on extensive experience, may be relied upon with confidence and can be obtained at reasonable rates.

    The English legal system, practice and procedures, which the Island acquired during the time it was a British colony, have continued after independence despite the subsequent promulgation of further legislation. Moreover, although the official languages of the Republic are Greek and Turkish, English is spoken by the majority of the population. It is also a language which is taught extensively in schools and is greatly used in commerce and administration. Business transactions and negotiations will undoubtedly be facilitated through communication and co-operation in a language with which all parties are familiar.

    The Island's telecommunication system compares favourably with the highest international standards and direct dialling telephone connections are available to all world centres. The Cyprus international automatic telex exchange extends to a vast network of countries and efficient facsimile, datel, radiotelegraph, and radiotelephone services are available. The postal service is fast and regular and is supported by numerous courier services. From the two international airports at Larnaca and Paphos, daily flights are available to destinations in Europe, Asia, Africa and the Middle East. Cyprus is one of the new places that have flights to Bagdad and Bahrain.

  3. International Relations

The Cypriot authorities are firmly committed to forging and maintaining strong bonds of friendship with all neighbouring states and with countries further abroad. In addition, the official policy is one of fostering and promoting good relations with all international organisations.

Cyprus is also a member of numerous international associations, including the United Nations, the Council of Europe, the Commonwealth, and the Non-Aligned Movement and has entered into an agreement for a Customs Union with the European Economic Community, which is anticipated to lead to full membership.

The Island's enormous goodwill blends with its other more obvious advantages, to make it one of the most suitable world locations for all business activities.

C. CYPRUS ARBITRATION LAW

Chapter 4 of the codified laws of Cyprus, based on and similar to the U.K. Arbitration Act 1950, is the vehicle used for domestic arbitrations and for a long time was the only existing law on arbitration. As Cyprus began to involve itself in international arbitrations, it was found that this law was suitable, mainly because it allows for extensive intervention by the Courts at all stages of the proceedings. The parties were tempted to use these rights as tactics to delay the proceedings. Parties to international commercial arbitration seek speedy resolutions and under the circumstances would not have chosen Cyprus as the venue for their arbitration. In order to avoid this situation, the law was adapted to make it more suitable for international commercial arbitrations.

It was convenient that at the stage when the Cyprus legislature had to consider the manner in which it was to adapt the 16w, the United Nations Commission of International Trade Law (UNCITRAL) adopted a model law on International Commercial Arbitration. Cyprus decided to adopt this law with only minor amendments. It has not replaced Cap. 4 but runs parallel thereto.

  1. THE CYPRUS LAW ON INTERNATIONAL COMMERCIAL ARBITRATION

Applicable only to international commercial arbitration, the law clearly defines the words "international arbitration" as an arbitration between two parties who have their place of business in different states.

The word "commercial" is defined as referring to matters "arising from relationships of a commercial nature" allowing for a wide interpretation.

The most important aspect of this law is the fact that the intervention of the courts is minimised. Only in those instances specifically mentioned by the law are the courts entitled to intervene. These are briefly:

Prior to delivery of the award:

(a) the court shall appoint an arbitrator/s if one of the parties or the party- appointed arbitrators fail to do so

(b) if the tribunal dismisses a challenge against an arbitrator, the Court shall deal with the challenge

(c) the court shall decide on the termination of an arbitrator's mandate if he fails to discharge his duties or is guilty of undue delay in doing so

(d) the court may review a ruling of the tribunal that it has jurisdiction to deal with the matter.

These are similar to the powers given to a Court under Cap. 4. However, unlike under Cap. 4, these decisions are not subject to appeal.

After the delivery of an award, the court may set aside an award or refuse recognition or enforcement on the grounds of:

(a) incapacity of the parties

(b) invalidity of the arbitration agreement

  1. lack of proper notice or denial of a party's right to present his case
  2. lack of jurisdiction of the tribunal

(e) defective composition of the tribunal

(f) if the subject matter of the dispute is not capable of settlement by arbitration under the law of Cyprus

(g) if the award is contrary to the public order of the Republic of Cyprus.

Failing such grounds, the award is binding on the parties and cannot be the subject of an appeal. It is important therefore to distinguish between the power to set aside an award which can only be exercised on the basis of one or more of the above grounds and a general power of appeal (whether for error of law or otherwise) which simply does not exist.

Another important factor is what has been called Party Autonomy. The par- ties are given complete power to decide on the procedure and a variety of other matters relating to the arbitration. Only if no agreement is reached are alternative provisions made.

The law which applies to the dispute is the one chosen by the parties. If none is chosen, the tribunal decides on which law to apply.

The Cyprus law provides that time shall run against the parties to international commercial arbitrations which, in matters of limitation, shall be governed by the same provisions as those applicable to domestic arbitrations (section 21).

E. CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

It is of course essential that once an award is made, the successful party is able to enforce it in the country in which the losing party has assets.

The above convention was passed in New York on the 10th June 1958 and signed by Cyprus on the 29th December 1980. It was incorporated in Law 101/87 which repeats the main provisions of the Convention. (See especially Section 36).

It applies to the recognition and enforcement of awards made in the territory of a state other than the state where such recognition is sought and provides in Article III:

"Each contracting state shall recognise arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon".

As a contracting state therefore Cyprus is bound to enforce awards made in foreign states. Whether such foreign states will enforce awards made in Cyprus is dependent on whether they are signatories to the convention. A list of these countries follows.

STATE RATIFICATION

Algeria 7 February 1989

Antigua and Barbuda 2 February 1989

Argentina 14 March 1989

Australia 26 March 1975

Austria 2 May 1961

Bahrain 6 April 1988

Belgium 18 August 1975

Benin 16 May 1974

Botswana 20 December 1971

Bulgaria 10 October 1961

Burkina Iaso 23 March 1987

Byclorussian SSR 15 November 1960

Cameroon 19 February 1988

Canada 12 May 1986

General African Empire 15 October 1962

Chile 4 September 1975

China 22 January 1987

Columbia 25 September 1979

Costa Rica 26 October 1987

Carba 30 December 1974

Cyprus 29 December 1989

Czechoslovakia 10 July 1959

Democratic Kampuchea 5 January 1960

Denmark 22 December 1972

Djibona 14 June 1983

Dominica 28 October 1988

Escuador 3 January 1962

Egypt 9 March 1959

Finland 19 January 1962

France 26 June 1959

German DR 20 February 1975

Germany, FR of 30 June 1961

Ghana 9 April 1968

Greece 16 July 1962

Guatemala 21 March 1984

Haiti 5 December 1983

Holy See 14 May 1975

Hungary 5 March 1962

India 13 July 1960

Indonesia 7 October 1981

Ireland (Rep.) 12 May 1981

Israel 5 January 1959

Italy 31 January 1969

Japan 20 June 1961

Jordan 15 November 1979

Kenya 10 February 1989

Kuwait 28 April 1978

Lesotho 13 June 1989

Luxembourg 9 September 1983

Madagascar 16 July 1962

Mexico 14 April 1971

Monaco 2 June 1982

Morocco 12 February 1959

Netherlands 24 April 1964

New Zealand 6 January 1983

Niger 14 October 1964

Nigeria 17 March 1970

Norway 14 March 1961

Panama 10 October 1984

Pera 7 July 1988

Philippines 6 July 1967

Poland 3 October 1961

Rep. of Korea 8 February 1973

Romania 13 September 1961

San Marino 17 May 1979

Singapore 21 August 1986

South Africa 3 May 1976

Spain 12 May 1977

Sri Lanka 9 April 1962

Sweden 28 January 1972

Switzerland I June 1965

Syrian Arab Rep 9 March 1959

Thailand 21 December 1959

Trinidad and Tobago 14 February 1966

Tunisia 17 July 1967

Ukrainian SSR 10 October 1960

United Kingdom 24 September 1975

United Republic of Tanzania 13 October 1964

United States of America 30 September 1970

Uruguay 30 March 1983

USSR 24 August 1960

Yugoslavia 26 February 1982

Appendix I

THE INTERNATIONAL COMMERCIAL ARBITRATION LAW, 1987

(English translation prepared by the Service for the Revision and Consolidation of the Cyprus Legislation and issued by the Ministry of Justice)

No. 101 of 1987

A LAW TO PROVIDE FOR INTERNATIONAL ARBITRATION IN COMMER- CIAL MATTERS AND FOR MATTERS CONNECTED THEREWITH

(29th May, 1987)

The House of Representatives enacts as follows:

Short title.

1. This Law may be cited as the International Commercial Arbitration Law, 1987.

Interpretation.

2. (1) In this Law, unless the context requires "arbitration" means any arbitration whether not administered by a permanent arbitral institution;

“arbitral tribunal" means a sole arbitrator or a panel of arbitrators;

"Court" means the competent District Court or a Judge thereof;

"parties to the agreement" or "parties" means the parties which have concluded the arbitration agreement.

(2) "International" is an arbitration if:

(a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or

(b) one of the following places is situated outside the State in which the parties have their places of business:

    1. the place of arbitration if determined in, or pursuant to, the arbitration agreement;
    2. 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
    1. the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.
    1. If a party has more than one place of business, the place of business for the purpose of subsection (2) is that which has the closest relationship to the arbitration agreement; and if a party does not have a place of business, reference is made to his habitual residence.

(4) "Commercial" is an arbitration if it refers to matters arising from relationships of a commercial nature, whether contractual or not.

(5) The term "relationships of a commercial nature" includes, but is not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services: distribution agreement; commercial representation or agency; leasing; construction or works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business co-operation; carriage of goods or passengers by air, sea, rail or road.

(6) Where a provision of this Law, except section 28, leaves the parties free to determine a certain issue, such freedom includes the right of the parties to authorize a third party, whether an individual or body corporate, including an arbitral institution, to make that determination;

(7) Where a provision of this Law refers to the fact that the parties have agreed or that they may agree or in any other way refers to an agreement of the parties, such agreement includes any arbitration rules referred to in that agreement;

    1. Where a provision of this Law, other than in sections 25(a) and 32(2)(a), refers to A claim, it also applies to a counter-claim, and where it refers to a defence, it also applies to a defence to such counter-claim.

Scope of application

3. (1) This Law shall apply exclusively to international application arbitration subject to any bilateral or multilateral agreement in force in the Republic of Cyprus.

    1. The provisions of this Law, except sections 8, 9, 35 and 36, apply only if the place of arbitration is in the territory of the Republic of Cyprus.

Cap. 4.

(3) The provisions of this Law shall in no way affect any other Laws by virtue of which certain disputes may not be submitted to arbitration or the Arbitration Law, which shall continue to be in force in relation to arbitration of disputes not failing under the provisions of this Law.

Receipt of written communications

4. (1) Unless otherwise agreed by the parties:

    1. any written communication is deemed to have been received if it is delivered to the addressee personally or if it is delivered at his place of business, habitual residence or mailing address; if none of these can be found after making a reasonable inquiry, a writ- ten communication is deemed to have been received if it is sent to the addressee's last-known place of business, habitual residence or mailing address by registered letter or any other means which provides a record of the attempt to deliver it;
    2. the communication is deemed to have been received on the day it is so delivered.
    1. The provisions of this section shall apply in relation to communications relating to arbitration proceedings and shall not apply to communications in Court proceedings.

Waiver of right to object

5. A party who knows that any provision of this Law from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time-limit is provided therefor, within such period of time, shall be deemed to have waived his right to object.

Extent of Court intervention

6. In matters governed by this Law, no Court shall intervene except where so provided in this Law.

PART II. - ARBITRATION AGREEMENT

Definition and form of arbitration agreement.

7. (1) "Arbitration agreement" is an agreement by the parties to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(2) The arbitration agreement shall be in writing.

(3) An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part or the contract.

Arbitration agreement and substantive claim before Court.

8. (1) A Court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting claim his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

(2) Where an action referred to in sub-section (1) of this section has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the Court.

Interim measures by Court

9. It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a Court an interim measure of protection and for a Court to grant such measure.

PART Ill. - COMPOSITION OF ARBITRAL TRIBUNAL

Number of arbitrators.

10. (1) The parties are free to determine the number of arbitrators.

(2) Failing such determination, the number of arbitrators shall be three. Appointment of arbitrators

11. (1) Subject to the provisions of the following sub-sections of this section, no person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties.

The parties are free to agree on a procedure of appointing the arbitrator, subject to the provisions of sub-sections (4) and (5) of this section.

    1. Failing such agreement, the following rules shall apply:
    1. in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointment, the appointment shall be ma- de, upon request of a party, by the Court at the request of either party;
    1. Where, under an appointment procedure agreed upon by the parties,
    1. a party fails to act as required under such procedure, or
    2. the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure, or
    3. a third party, whether an individual or body corporate, including an arbitral institution fails to perform any function entrusted to it under such procedure, any party may request the Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
    1. A decision on a matter entrusted by sub-sections (3) or (4) of this section to the Court shall be subject to no appeal. The Court in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and, in the case of sole or third arbitrator, shall take into account as well the advisability of appointing an arbitrator of a nationality other than those of the parties.

Grounds for challenge

12. (1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall have the same obligation to disclose any such circumstances.

    1. An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or it he does not possess qualifications agreed to by the parties.
    2. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

Challenge procedure.

13. (1) The parties are free to agree on a procedure for challenging an arbitrator, subject to the provisions of sub-section (3) of this section.

    1. Failing such agreement, a party who intends to challenge an arbitrator shall, within fifteen days after be- coming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstance referred to in section 12(2), send a statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

(3) If a challenge under any procedure agreed upon by the parties or under the procedure of sub-section (2) of this section is not successful, the challenging party may request, within thirty days after having received notice of the decision rejecting the challenge, the Court to decide on the challenge, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award.

Failure or impossibility to act.

14. (1) If an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay, his mandate terminates if he withdraws from his office or if the parties agree on the termination. Otherwise, if a controversy remains concerning any of these grounds, any party may request the Court to decide on the termination of the mandate, which decision shall be subject to no appeal.

    1. If, under this section or section 13(2), an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, this does not imply acceptance of the validity of any ground referred to in this section or section 12(2).

Appointment of substitute arbitrator.

15. Where the mandate of an arbitrator terminates under section 13 or 14 or because of the revocation of his mandate by agreement of the parties or in any other case of termination of his mandate, a substitute arbitrator shall be appointed according to the provisions of section 11 of this Law that were applicable to the appointment of the arbitrator being replaced.

PART IV. - JURISDICTION OF ARBITRAL TRIBUNAL

Competence of arbitral tribunal to rule on its jurisdiction.

16. (1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For the purposes of this sub-section, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

    1. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified.
    2. The arbitral tribunal may rule on a plea referred to in sub-section (2) of this section either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the Court to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.

Power of arbitral tribunal to order interim measures.

  1. Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute. The arbitral tribunal may require any party to provide appropriate security in connection with such measure.

PART V. – CONDUCT OF ARBITRAL PROCEEDINGS

Equal treatment of parties.

  1. During arbitral proceedings the parties shall have the same rights and the same obligations subject to the principle of equality, and each party shall be given a full opportunity of presenting his case.

19. (1) Subject to the provisions of the Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.

    1. Failing such agreement, the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

Place of arbitration.

20. (1) The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

    1. Notwithstanding the provisions of sub-section (1) of this section, the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members. For hearing witnesses, experts or the parties, or for inspection of goods, other property or documents.

Commencement of arbitral proceedings.

21. (1) Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

Cap. 4

    1. Commencement of the arbitral proceedings shall cause suspension of the period of limitation in accordance with the provisions of the following sub-section.
    2. The limitation period in relation to any claims which are referred to arbitration in accordance with the provisions of this Law shall be governed, subject to the provisions of this Law, by the provisions of sub-sections (1), (2), (5), (6) and (7) of section 24, of the Arbitration Law.
    3. Cap. 15

    4. The words "is absent from the Republic" in the fifth line of section 8 of the Limitation of Actions Law shall not apply in the case of claims which are refer- red to arbitration in accordance with the provisions of this Law.
    5. 57 of 1964.

    6. The limitation of Actions (Suspension) Law shall not apply in relation to claims which are referred to arbitration in accordance with the provisions of this Law.

Language.

22. (1) The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings. This agreement or determination, unless otherwise specified therein, shall apply to any written statement by a party, any hearing and any award, decision or other communications by the arbitral tribunal.

    1. The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon the parties or determined by the arbitral tribunal as provided in the preceding sub-section.

Statements of claim and defence.

23. (1) Unless otherwise agreed by the parties, the statement of claim shall contain the facts supporting the claim, the points at issue and the relief of remedy sought, and the statement of defence shall clearly state the defence in respect of these particulars. The statement of claim and the statement of defence shall be submitted within the time agreed by the parties or determined by the arbitration tribunal and may be accompanied by all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.

    1. Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it.

Hearings and written proceedings.

24. (1) Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials. However, unless the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party.

    1. The parties shall be given sufficient advance notice of any meeting of the arbitral tribunal for the purposes of a hearing or inspection of goods, other property of documents.
    2. Documents of any kind supplied to the arbitral tribunal by one party shall be communicated to the other party. Also any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.

Default of a party.

  1. Unless otherwise agreed by the parties, if, without showing sufficient cause,
    1. the claimant fails to communicate his statement of claim in accordance with section 23(l), the arbitral tribunal shall terminate the proceedings;
    2. the respondent fails to communicate his statement of defence in accordance with section 23(l), the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant's allegations;
    3. any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.

Appointment of experts.

26. (1) Unless otherwise agreed by the parties, the arbitral tribunal-

    1. may appoint one or more experts to report to it on specific issues put to them by the arbitral tribunal;
    1. may require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.
    1. Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in a hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue.

Court assistance in taking evidence.

  1. The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a Court assistance in taking evidence. The Court may execute the request with in its competence and according to its rules on taking evidence.

PART VI. - MAKING OF AWARD

AND TERMINATION OF PROCEEDINGS

28. (1) The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. Any designation of the law or legal system of a given State shall be construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict of laws rules.

    1. Failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable.
    2. The arbitral tribunal shall decide aequo at bono or as amiable compositeur only if the parties have expressly authorized it to do so.
    3. In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usage of the trade applicable to the transaction.

Decision making by a panel of arbitrators.

  1. In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its members. However, question of procedure may be decided by a presiding arbitrator, if so authorised by the parties or all members of the arbitral tribunal.

30. (1) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form, of an arbitral award on agreed terms.

    1. An award on agreed terms shall be made in accordance with the provisions of the following section and shall state that it is an award. Such an award has the same status and effect as any other award on the merits of the case.

31. (1) The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated therein.

    1. The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under section 30.
    2. The award shall state its date and the place of arbitration as determined in accordance with section 20(1). The award shall be deemed to have been made at that place.
    3. After the award is made, a copy signed by the arbitrators in accordance with sub-section (1) shall be communicated to each party.

32. (1) The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal in accordance with the following sub-section.

    1. The arbitral tribunal shall issue an order for the termination of the arbitral proceedings when:
    1. the claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute;
    2. the parties agree on the termination of the proceedings;
    3. the arbitral tribunal finds that the continuation of the proceedings has for any other reason become the provisions unnecessary or impossible.
    1. The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings, subject to the provisions of sections 33 and 34(4).

Correction and interpretation of award; additional award.

33. (1) Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties, a party, with notice to the other party, may:

    1. request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature;
    2. if so agreed by the parties, request the arbitral tribunal to give an interpretation of a specific point or part of the award.
    1. If the arbitral tribunal considers the request to be justified, it shall make the correction or give the interpretation within thirty days of receipt of the request. The interpretation shall form part of the award.
    2. The arbitral tribunal may correct any error of the type referred to in sub-section (1)(a) on its own initiative within thirty days of the date of the award.
    3. Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within thirty days of receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within sixty days.
    4. The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, interpretation or an additional award under subsections (2), (3) or (4).
    5. The provisions of section 31 shall apply to a correction or interpretation of the award or to an additional award.

PART VII. - RECOURSE AGAINST AWARD

Application and grounds for setting aside an award.

34. (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside in accordance with the following provisions of this section.

    1. An arbitral award may be set aside by the Court only if:
    1. the party making the application furnishes proof that:
    1. a party to the arbitration agreement referred to in section 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the Republic of Cyprus; or
    2. the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
    3. the award deals with a dispute not contemplated by or not failing within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
    4. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law, or, failing such agreement, was not in accordance with this Law; or
    1. Court finds that:
    1. the subject - matter of the dispute is not capable of settlement by arbitration under the law of the Republic of Cyprus; or

(ii) the award is in conflict with provisions relating to public order of the Republic of Cyprus.

    1. An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or if a re- quest had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal.
    2. The Court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the set- ting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside.

PART VIII. - RECOGNITION AND ENFORCEMENT

OF AWARDS

Recognition and enforcement of an award

35. (1) An arbitral award, irrespective of the country in which and enforcement it was made, shall be recognized as binding. Upon application in writing by either party, the Court, shall issue an order of enforcement of the arbitral award, subject to the provisions of this or the following section.

    1. The party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy thereof, and the original arbitration agreement referred to in section 7 or a duly certified copy thereof. If the award or agreement is not made in an official language of the republic of Cyprus the Court may request the party to supply a duly certified translation thereof into such language.

Grounds for refusing recognition or enforcement of an arbitral award.

36. (1) Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:

    1. at the request of the party against whom it is invoked, if that party furnishes proof that:
    1. a party to the arbitration agreement referred to in section 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
    2. the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
    3. the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
    4. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
    5. the award has not yet become binding on the parties or has been set aside or suspended by a Court of the Country in which, or under the law of which, that award was made; or
    1. if the Court finds that:
    1. the subject-matter of the dispute is not capable of settlement by arbitration under the law of the Republic of Cyprus; or
    2. the recognition or enforcement of the award would be contrary to provision relating to public order of the republic of Cyprus.
    1. If an application for setting aside or suspension of an award has been made to a Court referred to in sub-section (1)(a)(v) of this section, the Court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security.

 

Appendix 2

CONVENTION ON THE RECOGNITION AND ENFORCEMENT

OF FOREIGN ARBITRAL AWARDS

Done at New York, 10 June 1958

United Nations, Treaty Series, vol. 330 P. 38 No. 4739 (19.59)

Article I

 

  1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising our of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the Sae where their recognition and enforcement are sought.
  2. The term "arbitral awards" shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.

3. When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It may also declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration.

Article II

  1. Each Contracting State shall recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.
  2. The term “agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

Article III

Each Contracting State shall recognize arbitral awards as binding and en- force them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.

Article IV

  1. To obtain the recognition and enforcement mentioned the party applying for recognition and enforcement shall, at the time of the application, supply:
    1. The duly authenticated original award or a duly certified copy thereof;
    2. The original agreement referred to in article 11 or a duly certified copy thereof.
  1. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.

Article V

  1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

(a) The parties to the agreement referred to in article 11 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

    1. the award deals with a difference not contemplated by or not failing within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
    2. the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
    3. the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
  1. Recognition and enforcement of an arbitral award may also be re- fused if the competent authority in the country where recognition and enforcement is sought finds that:
    1. The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or
    2. the recognition or enforcement of the award would be contrary to the public policy of that country.

Article VI

If an application for the setting aside or suspension of the award has been made to a competent authority referred to in article V (1) (e), the authority before which the award is sought to be relied upon may if it considers it proper, adjourn the decision of the party claiming enforcement of the award, order the other party to give suitable security.

Article VII

  1. The provisions of the present Convention shall not affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral awards entered into by the Contracting States nor deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.
  2. The Geneva Protocol on Arbitration Clauses of 1923 and Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the extent that they become bound, by this Convention.

Article VIII

  1. This Convention shall be open until 31 December, 1958 for signature on behalf of any Member of the United Nations and also on behalf of any other State which is or hereafter becomes a member of any specialized agency of the United Nations, or which is or hereafter becomes a party to the Statute of the International Court of Justice, or any other State to which any invitation has been addressed by the General Assembly of the United Nations.
  2. This Convention shall be ratified and the instrument of ratification shall be deposited with the Secretary-General of the United Nations.

Article IX

  1. This Convention shall be open for accession to all States referred to in article VIII.
  2. Accession shall be effected by the deposit of an instrument of accession with the Secretary-General of the United Nations.

Article X

  1. Any State may, at the time of signature, ratification or accession, declare that its Convention shall extend to all or any of the territories for the international relations of which it is responsible. Such a declaration shall take effect when the Convention enters into force for the State concerned.
  2. At any time thereafter any such extension shall be made by notification addressed to the Secretary-General of the United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary-General of the United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned, whichever is the later.
  3. With respect to those territories to which this Convention is not extended at the time of signature ratification or accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent of the Governments of such territories.

Article XI

In the case of a federal non-unitary State, the following provision shall apply:

    1. With respect to the those articles of this Convention that come within the legislative jurisdiction of the federal authority, the obligations of the federal Government shall to this extent be the same as those of Contracting States which are not federal States;
    2. With respect to those article of this Convention that come within the legislative jurisdiction of constituent states or provinces which are not, under the constitutional system of the federation, bound to take legislative action, the federal Government shall bring such articles with a favourable recommendation to the notice of the appropriate authorities of constituent states or provinces at the earliest possible moment;
    3. A federal State Party to this Convention shall, at the request of any other Contracting State transmitted through the Secretary-General of the United nations, supply a statement of the law and practice of the federation and its constituent units in regard to any particular provision of this Convention, showing the extent to which effect has been given to that provision by legislative or other action.

Article XII

  1. This Convention shall come into force on the ninetieth day following the date of deposit of the third instrument of ratification or accession.
  2. For each State ratifying or acceding to this Convention after the deposit of the third instrument of ratification or accession, this Convention shall enter into force on the ninetieth day after deposit by such State of its instrument or ratification of accession.

Article XIII

  1. Any Contracting State may denounce this Convention by a written notification to the Secretary-General of the United Nations. Denunciation shall take effect one year after the date of receipt of the notification by the Secretary-General.
  2. Any State which has made a declaration or notification under article X may, at any time thereafter, by notification to the Secretary-General of the United Nationals, declare that this Convention shall cease to extend to the territory concerned one year after the date of the receipt of the notification by the Secretary-General.
  3. This Convention shall continue to be applicable to arbitral awards in respect of which recognition or enforcement proceedings have been instituted before the denunciation takes effect.

Article XIV

A contracting State shall not be entitled to avail itself of the present Convention against other Contracting States except to the extent that it is itself bound to apply the Convention.

Article XV

The Secretary-General of the United Nations shall notify the States contemplated in article VIII of the following:

  1. Signatures and ratifications in accordance with article VIII;
  2. accessions in accordance with article IX;
  3. declarations and notifications under articles I, X and XI;
  4. the date upon which this Convention enters into force in accordance with article XII;
  5. denunciations and notifications in accordance with article XIII.

Article XVI

  1. This Convention, of which the Chinese, English, French, Russian and Spanish texts shall be equally authentic, shall be deposited in the archives of the United Nations.

2. The Secretary-General of the United Nations shall transmit a certified copy of this Convention to the States contemplated in article VIII.