1. Introduction

This guide, prepared by Economou & Co LLC, is the third in a series of practical overviews of arbitration in Cyprus.

Part I examined the legislative framework, mechanisms for enforcement and the grounds and procedure for challenging arbitral awards.

Part II focused on the arbitration agreement and its essential features.

Part III addresses the composition and authority of the arbitral tribunal, the availability of third-party funding, the requirements and scope of arbitral awards and the immunity of arbitrators.

The publication is divided into five sections:

1. Constitution of the Tribunal: covering appointment procedures, qualifications, and grounds for challenge.
2. Challenges, Duties, and Immunity: outlining challenge mechanisms, arbitrator responsibilities, and the scope of arbitrator immunity.
3. Tribunal Powers and Procedure: addressing procedural authority, interim relief, and default scenarios.
4. Third-Party Funding: examining the applicability and evolving legal stance on third-party funding in Cyprus.
5. Final Awards: detailing the formal and substantive requirements, remedies available, and time-related considerations for arbitral awards.

2. Constitution and Appointment of the Tribunal

1.1 Party Autonomy and Default Mechanisms

Cypriot law respects the parties' autonomy to agree on the appointment of arbitrators. In international commercial arbitration, where no agreement exists, section 11(3) of the International Commercial Arbitration Law of 1987 (ICAL) sets out default procedures.

For three-member tribunals, each party appoints one arbitrator, and the two appointees agree on the third. Failure to appoint triggers court intervention.

For sole arbitrators, if the parties cannot agree on a single arbitrator, the court can appoint one upon application by either party.

In domestic arbitration, where a party fails to appoint an arbitrator within seven clear days of receiving notice from the opposing party, the Cyprus courts are empowered to make the appointment pursuant to Section 10(2) of Cap. 4.

1.2 Number and Qualification of Arbitrators

No statutory restrictions exist regarding the number or qualifications of arbitrators. However, practical experience, neutrality and sector expertise remain essential considerations.

3. Challenges, Duties, and Immunity

2.1 Grounds for Challenge

In international arbitration, a party may challenge an arbitrator under Section 12 of the ICAL if there are justifiable doubts as to their impartiality or independence, or if they do not meet the qualifications agreed by the parties.

Arbitrators are under a continuing duty to disclose any such circumstances before and after their appointment.

A party may not challenge an arbitrator it appointed, or in whose appointment it participated, unless the relevant grounds became known after the appointment (Section 12(3), ICAL).

Absent an agreed procedure, the default challenge process under Section 13(2) of the ICAL applies. The challenge must be made within 15 days of becoming aware of the circumstances. If rejected by the tribunal, the party may apply to the court within 30 days (Section 13(3)). The tribunal may continue proceedings, including issuing an award, during this time.

Under section 14(1) of the ICAL, an arbitrator’s mandate may be terminated if they are unable to perform their duties or fail to act without undue delay. If the parties cannot agree on the termination, the court may decide; its decision is final.

In domestic arbitration under Cap. 4, the grounds for removal are broader. Section 13 allows the court to remove an arbitrator for unreasonable delay, while section 20 permits removal for misconduct. If misconduct is established, any resulting award may be set aside (Section 20(2), Cap. 4).

2.2 Duties of an Arbitrator

Arbitrators must:

• Maintain impartiality and independence (Section 12, ICAL);
• Ensure equal treatment and due process (Section 18, ICAL);
• Conduct proceedings as per party agreement or their own discretion (Section 19, ICAL);
• Apply the parties’ chosen substantive law (Section 28, ICAL).

2.3 Immunity of Arbitrators

Arbitrators in Cyprus enjoy qualified immunity for actions taken in the course of their arbitral functions, provided those actions fall within their jurisdiction and are carried out in good faith.

Section 4(4) of the Civil Wrongs Law (Cap. 148) expressly prohibits civil claims against judges or individuals lawfully performing judicial duties, including arbitrators, for tortious acts committed in their judicial capacity.

This effectively extends protection to arbitrators acting within the scope of their mandate.

The recognition of arbitrators as quasi-judicial figures entitled to such immunity has been affirmed in Cypriot case law, notably in Antoni Perikelous v. Andrea Christoforidi (Action No. 296/11, 30/08/2017).

4. Tribunal Powers and Procedure

3.1 Procedural Discretion and Evidentiary Powers

In the absence of an agreed procedure, the tribunal has wide discretion over the conduct of proceedings, including evidentiary matters and procedural timelines. It may:

• Decide on written or oral proceedings;
• Rule on admissibility and relevance of evidence;
• Appoint experts and compel document production (with court assistance, if necessary).

3.2 Interim Measures

Following recent legislative reforms, tribunals now have authority to grant interim relief akin to that under the 2006 UNCITRAL Model Law. This includes preserving assets, preventing procedural harm, or securing evidence.

Courts also retain concurrent jurisdiction to issue interim relief before or during arbitration proceedings.

3.3 Non-Participation and Default

A party’s failure to participate does not halt proceedings. The tribunal may continue in their absence and issue a final award based on the evidence before it, subject to procedural fairness.

5. Third-Party Funding

Cyprus lacks specific legislation on third-party funding (TPF), but judicial attitudes are evolving. Courts have shown a willingness to accept TPF arrangements in line with developments in other common law jurisdictions, especially where no public policy infringement is apparent.

A notable case, Kazakhstan Kagazy PLC v Arip, albeit a first-instance judgment, signals openness to TPF in Cyprus, even though the common law doctrines of maintenance and champerty still technically apply.

6. The Final Award

5.1 Formal Requirements

An arbitral award must:

• be in writing and signed by the arbitrator(s). In multi-member tribunals, signatures from the majority are sufficient, provided the reason for any missing signature is recorded;
• state its reasoning, unless the parties have agreed otherwise or the award reflects a settlement;
• state the date and the place of arbitration, which is deemed to be the legal seat of the award; and
• a signed copy of the award must be delivered to each party.

5.2 Substantive Basis

Tribunals must apply the substantive law chosen by the parties, or determine the applicable law via conflict-of-law principles.

Only if expressly authorised by the parties, the tribunal may decide the case ex aequo et bono or as amiable compositeur.

5.3 Timeliness

No statutory timeframe exists for issuing awards. However, unjustified delay may lead to removal of the arbitrator, particularly in domestic arbitration under Cap. 4.

5.4 Available Remedies

Arbitral tribunals may award compensatory damages, declaratory relief, specific performance, and interest (pre- and post-award), subject to public policy and arbitrability limitations.