Introduction

The legal world in Cyprus is constantly evolving and adapting to the changing needs of businesses and investors. One recent development is the introduction of “Alternative Dispute Resolution” (ADR) in the country’s legal system.

What is ADR

ADR refers to methods of resolving disputes outside of traditional court proceedings, such as mediation, arbitration, and negotiation. This is a significant development for Cyprus as it provides businesses and individuals with more options for resolving disputes quickly and efficiently.

Relevant legislation

Directive 2013/11/EU on Alternative Dispute Resolution (ADR) has been transposed into national law with the passage of the Alternative Dispute Resolution for Consumer Disputes Law of 2017 (85 (I)/2017 (the “Law”). The Law introduced the Consumer Protection Service as the competent authority to oversee and regulate the functioning Authority of ADR Bodies set in Cyprus.

Benefits of ADR

• Cost-effective: ADR is often less expensive than traditional court proceedings, as the process is typically quicker and requires less resources. Parties can also save on legal fees and other costs associated with court proceedings.
• Time-efficient: ADR can be completed much faster than traditional court proceedings. Mediation, for example, can be completed within a matter of weeks or months, whereas court proceedings can take several years to reach a final judgement.
• Flexibility: ADR allows for a wider range of options for resolving disputes, such as mediation, arbitration, and negotiation. This can provide parties with more flexibility in finding a solution that works for them.
• Confidentiality: ADR proceedings are typically private and not open to the public. This can be beneficial for businesses and individuals who want to keep the details of their disputes confidential.
• Preservation of relationships: ADR can help to preserve business relationships, as it allows parties to reach a mutually-acceptable solution without the need for a court judgement.
• Expertise: Some ADR methods, like arbitration, involves experts in the field of the dispute, which can be beneficial when dealing with technical disputes.
• Customizable: ADR allows for a more tailored approach to dispute resolution, as parties can agree on the process and outcome that works best for them.
• Enforceability: Many ADR methods, like mediation, results in a legally binding agreement, which can be enforced by the court if necessary.

Promotion of ADR in Cyprus

The Cyprus government and legislature have recognized the importance of ADR and have taken steps to promote its use in the country. This includes the establishment of the Cyprus Mediation Center, which offers mediation services for a wide range of disputes, and the introduction of new legislation that allows for the use of ADR in commercial disputes.

Positive Impact on the economy

ADR can also have a positive impact on the economy such as:

• Increased business activity: ADR can help to resolve disputes quickly and efficiently, which can lead to increased business activity. When disputes are resolved quickly and efficiently, businesses can get back to their operations and continue to generate revenue, which can have a positive impact on the economy.
• Attracting foreign investment: ADR can also be beneficial for attracting foreign investment. Investors are often more likely to invest in a country where disputes can be resolved quickly and efficiently, as this reduces the risk of delays and financial losses.
• Cost savings: ADR can also lead to cost savings for businesses and the economy as a whole. When disputes are resolved quickly and efficiently, businesses can save on legal fees and other costs associated with court proceedings, which can have a positive impact on the economy.
• Reducing the burden on the court system: ADR can also reduce the burden on the court system, as it provides an alternative way to resolve disputes. This can lead to a more efficient and cost-effective court system, which can have a positive impact on the economy.
• Improving the business climate: ADR can help to improve the overall business climate in a country, as it provides businesses and investors with more options for resolving disputes. This can help to attract more businesses and investors to the country, which can have a positive impact on the economy

Economou & Co LLC’s comment

In summary, ADR provides a more cost-effective, time-efficient, flexible, confidential, relationship-preserving, expertise, customizable and enforceable way of resolving disputes, which can be beneficial for parties involved.

The content of this article is valid as at the date of its first publication. It is intended to provide a general guide and does not constitute legal advice. We recommend that you seek professional advice on a specific matter before acting on any information provided.