The recognition and enforcement of international arbitral awards are frequently sought in Cyprus, which is a hub for international business transactions and a jurisdiction where numerous physical persons and legal entities maintain their assets.
Foreign arbitral awards are enforceable in Cyprus under the provisions of the Cypriot Law on International Arbitration in Commercial Matters Law No. 101/1987 (the ‘Law 101/1987’) and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the ‘New York Convention’), which was ratified in Cyprus through the enactment of the Law on the Convention and Enforcement of Arbitral Awards of 1979, Law 84/1979.
Our national legislation boosts the attractiveness of arbitration by making the cross-border enforcement of arbitral awards significantly easier than the cross-border enforcement of court judgments. Article 35 of the Law 101/1987, which governs arbitration disputes of international and commercial nature, provides that a foreign arbitral award shall be recognised as binding, unless there are valid grounds for refusing its recognition and enforcement.
Further, Article 36 of Law 101/1987 sets out the limited grounds on which an application for recognition and enforcement of an arbitral award must be rejected, (i.e. the contractual incapacity of the parties or the invalidity of the arbitration agreement; the lack of proper notice as to the appointment of the tribunal or of the arbitral proceedings; the fact that the award deals with a dispute not falling within the terms of the submission to arbitration or that it goes beyond the scope of the submission; the fact that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties; the fact that the award has not yet become binding on the parties or has been set aside or suspended by the competent court of the country in which, or under the law of which, the arbitration took place; the fact that the subject matter of the dispute is not capable of settlement by arbitration under the laws of Cyprus; and the fact that the recognition and enforcement of the award would contradict to the public policy of Cyprus).
An application filed before the Cyprus courts needs to be accompanied with:
Once an international arbitral award has been recognized and successfully registered in Cyprus, it obtains the same legal status as a domestic judgment and all the methods of execution of Cypriot judgments are available to the award – creditor who wishes to attack the assets of the award-debtor in Cyprus.
Both the legislature and the judiciary in Cyprus follow a pro-enforcement approach and arbitration is currently considered as the preferred means of resolving disputes. Arbitration’s popularity in Cyprus is reflected in a number of recent developments, such as the reform of our national arbitration legislation, the revision of the Cyprus Arbitration and Mediation Centre Arbitration Rules, as well as the organisation of seminars and conferences, such as the Cyprus Arbitration Day, which took place last June in Limassol, with great success.