This guide is prepared by Economou & Co LLC as the first in a series of practical guides examining the arbitration landscape in Cyprus. This instalment outlines the legislative framework, enforcement mechanisms, and the grounds and procedural requirements for challenging arbitral awards. Future entries will expand on procedural aspects, court involvement, and sector-specific arbitration considerations.

Economou & Co LLC stands out for its arbitration team, which has very recently taken unprecedented steps in the field of arbitration in Cyprus, including:

• Facilitating the recognition of an LCIA arbitral award worth approximately half a billion Euro; and
• Obtaining a Mareva injunction (prohibitory order) against a state in a high-stakes multi-million-euro dispute - an exceptional global feat underscoring our team’s ability to manage complex arbitration and enforcement challenges.

1. Legal Framework

Arbitration in Cyprus is governed by a multi-tiered legislative framework:

• The New York Convention (1958), incorporated into Cypriot law via Ratification Law L.84/1979, applies on a reciprocal basis and only to commercial disputes. It has superior force under Article 169(3) of the Constitution.
• The International Commercial Arbitration Law of 1987 (Law 101/1987), based on the 1985 UNCITRAL Model Law, governs international commercial arbitrations and has been amended by Law 11(I)/2024 to align with the 2006 Model Law amendments.
• The Arbitration Law, Cap. 4, governs domestic arbitration and is modeled on the English Arbitration Act of 1950.
• Law 121(I)/2000 and Part 44 of the Civil Procedure Rules (CPR) govern recognition and enforcement of foreign judgments and arbitral awards.

Cyprus is also a party to the ICSID Convention, the Energy Charter Treaty, and multiple Bilateral Investment Treaties (BITs).

2. Domestic vs International Arbitration

Cypriot law clearly distinguishes between domestic and international arbitration. Cap. 4 governs domestic arbitration, involving Cypriot parties and subject matter rooted in Cyprus.

Law 101/1987 (ICAL) governs international commercial arbitration. Section 3(2) of ICAL defines an arbitration as international when:

• The parties have their places of business in different states; or
• One of the following is situated outside the State in which the parties have their places of business:

• The place of arbitration (if specified in or pursuant to the arbitration agreement); or
• The place where a substantial part of the obligations is to be performed or the place most closely connected to the subject matter of the dispute

• The parties agree that the subject matter relates to more than one country.

Section 2(3) defines commercial disputes broadly to include various business relationships such as investment, licensing, construction, and joint ventures.

3. Enforcement of Awards

The enforcement framework is primarily governed by the International Commercial Arbitration Law (ICAL) and the New York Convention (Law 84/1979). These provide a streamlined and autonomous procedure for the recognition and enforcement of foreign arbitral awards, as confirmed in Beogradska Banka DD (1995) 1 Α.Α.Δ. 737.

This approach reflects the pro-enforcement bias of the New York Convention, also highlighted in the Guide to the Interpretation of the 1958 New York Convention: A Handbook for Judges (2012). Article III requires Contracting States to recognize arbitral awards as binding and enforce them under their procedural rules, without imposing stricter conditions than those for domestic awards.

To enforce an award, the applicant must submit:

• The duly authenticated original award or a duly certified copy;
• The original arbitration agreement or a duly certified copy;
• A certified translation if the documents are not in Greek, issued by a sworn translator or diplomatic/consular official.

Domestic awards are governed by Cap. 4. While both types of awards require court applications, foreign awards under the New York Convention benefit from a more favourable enforcement regime compared to the more traditional and court-integrated procedures under Cap. 4.

4. Challenging an Award

The grounds and procedures for challenging arbitral awards differ between international and domestic arbitration, each governed by its respective legal framework.

4.1 International Arbitration (ICAL & New York Convention)

Under Section 34(2) of ICAL, a party may apply to set aside an arbitral award on the following grounds:

• A party to the arbitration agreement lacked legal capacity, or the arbitration agreement is invalid under the law agreed upon by the parties, or, absent such agreement, under the law of the Republic of Cyprus.
• The party was not properly informed of the arbitral proceedings or the appointment of an arbitrator or was otherwise unable to present its case.
• The award deals with matters not submitted to arbitration or exceeds the terms of the arbitration agreement. If the award contains separable decisions, enforcement may proceed only for the part relating to issues that were properly submitted to arbitration.
• The arbitral tribunal was constituted, or the proceedings were conducted, in a manner inconsistent with the parties' agreement or, in the absence of such agreement, the provisions of ICAL.

Additionally, the court may annul an award ex officio if:

• The dispute is not arbitrable under Cypriot law;
• The award is contrary to the public policy of Cyprus. This is narrowly construed and does not entail a review of the merits unless necessary to identify a breach of fundamental legal principles.

4.2 Domestic Arbitration (Cap. 4)

Section 20 of Cap. 4 provides that a domestic arbitral award may be set aside by the District Court on grounds including:

• Misconduct or mishandling of the case by the arbitrator;
• Improperly procured arbitration proceedings;
• Improper issuance of the award.

5. Time Limits

Under Section 34(3) of ICAL, an application to set aside an award issued in Cyprus under ICAL must be filed within three months of receiving the award. If a request for correction or interpretation has been submitted under Section 33, the deadline begins from the date the tribunal rules on that request.

The court may suspend proceedings to allow the arbitral tribunal to cure the defects that form the basis for the annulment application.

If a party seeks to resist recognition or enforcement of a foreign award (rather than set it aside), an opposition must be raised in the context of the enforcement proceedings and based strictly on the grounds set out in Section 36 of ICAL.