What are the different types of (court) procedure in case of a commercial dispute?
Cyprus can offer the following ways for resolving commercial disputes:
Litigation
Litigation is the most favored and popular method used for resolving commercial disputes, despite the delays encountered in court proceedings. Currently the Civil Procedure Rules applicable in Cyprus are being reformed, and it is understood that they will include provisions, which will give greater flexibility to the court as well as to the parties, to submit a dispute to arbitration.
Arbitration
There is a growing trend to resort to arbitration given the inefficiency of the court system to resolve disputes quickly; nevertheless, litigation remains the most popular and widespread method of resolving commercial disputes.
Mediation
This method is not very common in Cyprus, though it is expected to increase in popularity in the future.
What is the working language of the different (court) procedures?
Litigation
The official languages of the Republic are Greek and Turkish, and hence, are the only languages permitted in court. An advocate may not conduct proceedings or address the court through an interpreter.
Arbitration
The working language in arbitration proceedings is determined by agreement of the parties.
Mediation
Through the mediator, the parties can agree on the time, place, language of the process and their representation, but at their own cost.
When is the relevant body competent to take cognisance of the dispute?
Litigation
There are currently five District Courts in the Republic, that of Nicosia, Limassol Paphos, Larnaca and in Famagusta, which in their competence as civil Courts, can adjudicate on any action whose cause arose within their district.
Arbitration
A matter may be subject to arbitration, provided that the parties have expressly agreed in writing that proceedings will be submitted to arbitration. The place of arbitration is usually agreed upon by the parties, or in case where the parties have failed to do so, it is determined by the arbitral tribunal.
Mediation
The process of mediation is initiated by an agreement to mediate which, as per the Law, must entail certain components. More specifically, the agreement should incorporate the procedural rules that are to be applied, specify a limitation period on the duration of the process, a confidentiality agreement, the appointment of a mediator and the determination of their fees. The agreement may further address any additional issues, should the parties wish to do so.
Which law is applicable to the different (court) procedures?
Litigation
The legal system in Cyprus is based on Common Law and court proceedings in civil jurisdictions are adversarial in nature. i.e. two or more opposing parties have the primary responsibility of gathering and submitting evidence to a judge, who acts as an impartial decision-maker. The process of examination of witnesses is conducted viva voce (in person with oral evidence being given before the court). 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 cases of a similar nature and common legal issues.
The Republic is a member of the European Union since 2004, and therefore, as a Member State, all Regulations of the EU have direct effect in Cyprus.
Arbitration
The arbitral tribunal applies the law chosen by the relevant parties. If there is no choice of law, then the arbitral tribunal shall apply the law, which it considers appropriate.
Mediation
Mediation in Cyprus is governed by the Certain Aspects of Mediation in Civil Matters Law 159(I)/12) and covers commercial and civil disputes. It is applied to all civil disputes pending before a Cypriot Court, irrespective of whether the parties are nationals of Cyprus, EU member State nationals or non-EU State nationals.
The role of the Cypriot Courts is that of a supervisory nature, reinforcing the parties’ autonomy. They are empowered to grant a stay of judicial proceedings in favour of mediation, but, importantly, parties cannot be compelled to mediate or denied the opportunity to do so. This approach is in line with the Law which does not offer any incentives to mediate nor does it sanction parties who fail to do so.
Does the judge have specific knowledge of the market?
Litigation
The judges usually have no specific knowledge of the market in which the parties in dispute operate.
Arbitration
The arbitrator or arbitrators are appointed by the parties, therefore it is up to the parties to appoint a tribunal which consists of specialists or other experts as arbitrators with expertise in the subject matter of the dispute.
Mediation
Parties have great flexibility in determining the process as they can jointly appoint the mediator who shall then arrange the process around their preferences. A mediator with expertise in the subject matter of the dispute is therefore possible.
Are the procedures and the rulings confidential?
Litigation
The judgement is given in public, nevertheless, the court may direct that (part of) the hearing is held in private or that only certain persons are allowed to attend the hearing.
In relation to filings, once documents are filed, court proceedings are not open to the public. Access to court filings is only granted to parties within the proceedings. All court filings are kept at the Court Registry and only be viewed or searched following a written application to the Registrar of the Court.
Arbitration
In principle, arbitration proceedings are private and confidential. This is often seen as an advantage of arbitration proceedings, as especially in international commercial disputes parties are not keen for the contents of the dispute to become public.
This private nature of arbitration proceedings entails an obligation on the part of the arbitrators not to reveal or disclose information with regards to the arbitral proceedings, documents or award.
Mediation
One of the biggest benefits of mediation is the importance placed on confidentiality. The Law provides that the parties, the mediator or any other participant to the process, may not divulge any information conversed during the mediation process in any subsequent civil and commercial proceedings or any arbitration. The parties are exempt from complying to the rule in case of a) an overriding public policy concern or (ii) if disclosure is necessary in order to enforce the agreement.
What are the costs of the different (court) procedures?
Litigation
The fee structure most commonly used in commercial disputes is often based on hourly charging rates. Charging rates can be standard or agreed between the lawyer and the client.
The Bar Association and the Legal Board have a supervisory role and may conduct an investigation should the Client file a complaint due to being overcharged.
In the absence of a written agreement, the legal fees are calculated in accordance to the Court Procedural Regulations. The Regulations set a range within which the fees should vary, based on the scale of the case. Contingent and success sharing agreements are prohibited, as they are contrary to the principle of champerty.
Arbitration
The cost of arbitration proceedings may vary depending on factors such as the form of arbitration, the arbitration institute and/or the number of arbitrators.
Mediation
The cost of Mediation depends on various factors but in principle it is regarded as being more cost effective than litigation.
Can the losing party be ordered to pay the costs of the proceedings?
Litigation
Litigation is funded by the parties themselves and as a principle, the losing party is ordered to pay the cost of the prevailing party.
Arbitration
The burden to pay the cost of the lawyer’s fees and court fees is at the discretion of the umpire of the arbitral tribunal. If the parties include a provision in the arbitration agreement pertaining to decide on the payments of the costs, such a provision is void.
Mediation
Each of the parties bears its own costs. There is also no obligation to be represented by a lawyer and therefore, any of the parties who do not have the financial means of representation, may limit their costs only to those of the mediator.
What is the average lead time of the different (court) proceedings?
Litigation
The lead-time may vary depending on the district the case will be heard, nevertheless hearings for cases in Cyprus start approximately 3-8 years after lodging the case. An exception to this is when a claim is exceptionally clear, and as a result, an application for summary judgment can be made.
Arbitration
Arbitration proceedings are in general concluded in a relatively short period of time. Nevertheless, the lead-time of such proceedings may vary depending on the form of arbitration as well as the arbitration institute that shall handle the case. The proceedings are usually less time-consuming than court proceedings.
Mediation
The average lead-time of Mediation is a matter of days or weeks from the date the decision is made to mediate.
Is the judgment consigned in other EU member states and can it be enforced there? And outside the EU?
Litigation
The recognition and enforcement of judgments between European Member States is governed by the Regulation (EU) no.1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Regulations”).
The Regulation introduced unifies rules with a means to achieve free circulation of judgments across the EU.
As a result, a judgment given in a Member State is now enforceable in all other Member States, without a declaration of enforceability being required.
Arbitration
Arbitral awards are enforceable in most countries through international conventions.
Arbitral awards issued in Cyprus can be registered and enforced in foreign jurisdictions as Cyprus is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention)
Mediation
Each party can file an application to the Court for the enforcement of the mediation settlement, either jointly or independently, provided that there is explicit consent from the other side, or the consent has been given in the mediation settlement. The Court then issues a declaration of the enforceability of the mediation settlement, in part or in whole, which has the same legal and binding effect as a judgment or order. Furthermore, the Court can also issue a judgment reinforcing the content of the mediation settlement.