Cyprus: Alternative Dispute Resolution

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Litigation is still the predominant method for resolving disputes in Cyprus, however, alternative dispute resolution (ADR) is becoming an increasingly popular choice, particularly for disputes relating to cross-border transactions and commercial matters, although to date, no official bodies in Cyprus specifically offer ADR services.

The Cypriot Courts are very supportive of ADR, with judges becoming more reluctant to proceed with hearing a case involving specialised, technical matters or scientific issues requiring specialised knowledge. In such cases, they are likely to recommend the appointment of an arbitrator.

Georgiades & Associates are in a strong position to provide assistance to their clients both through traditional litigation and extrajudicial processes (Alternative Dispute Resolution - ADR), such as arbitration and mediation.

In order to commence arbitration proceedings, there must be an arbitration agreement between the parties, which is usually irrevocable and therefore binding, unless it contains a contrary provision or a court order is issued (Arbitration Law 1944, Section 3, Cap. 4 – the law governing domestic arbitration in Cyprus). The agreement should be in writing - Arbitration Law 1944, Section 2 and the International Commercial Arbitration Law L.101/87 - international arbitration.

If the parties commence legal proceedings in any Court against an arbitration agreement, the Court has a discretionary power to stay the proceedings under Article 8 of the domestic arbitration law for referral to an arbitrator.

In Cyprus, all commercial matters are arbitrable. However, any matter concerning criminal or family law is considered to be non-arbitrable.

Alternatively, the parties can voluntarily refer their dispute to an independent third party who helps them negotiate in order to find a settlement via mediation. Georgiades & Associates are well equipped to deal with mediation proceedings since Mr Georgiades, the Managing Partner, was at an event last year, held in Milan, by the Chamber of Arbitration of Milan, and he was appointed as one of 28 online European mediators who deal with cross-border disputes. We would advise clients to include a detailed arbitration clause in their commercial agreements covering their requirements for a well-organised, efficient and final resolution of the dispute on a cost- effective basis. It is important in dealing with disputes that practical points are not missed. All agreements should be read in accordance with the Arbitration Law, Cap. 4 for domestic arbitration. Litigation is still the predominant method for resolving disputes, yet ADR is becoming an increasingly popular choice, particularly for disputes relating to cross-border transactions and commercial matters, although to date, no official bodies in Cyprus specifically offer ADR services. The Courts are very supportive of ADR, with judges becoming more reluctant to proceed with hearing a case involving specialised, technical matters or scientific issues requiring specialism knowledge. In such cases, they are likely to recommend the appointment of an arbitrator. Cyprus is, to a large extent, unaffected by the worldwide economic crisis, primarily because the initial attractions, such as the strategic location and the low rates of tax.

Businesses in Cyprus are becoming more aware of the relevance and usefulness of ADR processes. Its membership of the European Union and the geographical location of Cyprus makes it an ideal center for resolving international disputes.

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