Cyprus

Following extensive judicial reform implemented in 2022, the Cyprus court system dealing with commercial claims operates in a three-tier structure.

Courts of first instance

At first instance, all commercial claims are currently heard by the District Courts. Each geographical district has a District Court. There are three ranks of judges within each District Court, namely, District Judges, Senior Judges and Presidents of the District Court. Upon filing, a claim is allocated to a judge based on the value of the claim.

As part of the 2022 reforms, legislation was enacted establishing a new specialist court, the Commercial Court. At the time of writing this guide, the Commercial Court is not yet operational, as the process for appointing its judges has not been completed, and commercial disputes therefore continue to be heard at first instance by the District Courts. Once operational, the Commercial Court will have jurisdiction to hear and determine, at first instance, commercial disputes exceeding EUR 2 million including, but not limited to, disputes arising from contracts and other commercial documents, sale of goods, insurance, and the operation of financial markets. It will also have jurisdiction over competition, arbitration-related and intellectual property disputes, irrespective of the amount in dispute. The Commercial Court is expected to contribute to the more efficient adjudication of complex and high-value commercial disputes.

Court of second instance

The newly established Court of Appeal is the court of second instance for all civil and commercial matters, which has been hearing appeals since 1 July 2023. It hears appeals from decisions of the District Courts. Appeals are generally heard by three judges and are determined primarily on the basis of the record of the first-instance proceedings. The hearing of fresh evidence or witness testimony is exceptional. The Court of Appeal may uphold, vary or set aside the decision under appeal, or order a retrial.

Court of third instance

The third tier comprises two separate courts, the Supreme Constitutional Court and the Supreme Court. The Supreme Court exercises third-instance jurisdiction in commercial matters on limited grounds.

Commercial litigation in Cyprus is primarily governed by the new Civil Procedure Rules (CPR), which entered into force on 1 September 2023 and apply to civil and commercial proceedings commenced on or after that date.

The new CPR are modelled closely on the Civil Procedure Rules of England and Wales of 1998 and are intended to effect a fundamental shift in litigation culture, moving away from party-driven proceedings towards active judicial case management. Central to the new CPR is the “overriding objective”, namely, to enable the court to deal with cases justly and at proportionate cost. To this end, the courts have been vested with active case management powers, including, for example, powers to encourage the use of alternative dispute resolution (ADR), promote cooperation between the parties and set and enforce procedural timetables.

Certain aspects of civil procedure, including the granting of interim relief, are also regulated by the Courts of Justice Law of 1960 (L. 14/1960) and the Civil Procedure Law, Cap. 6.

The previous CPR, which were based on the Civil Procedure Rules of England and Wales of 1954, continue to apply to all civil and commercial proceedings filed before 1 September 2023.

The new CPR provide for certain pre-action protocols, which are generally required to be followed before proceedings are commenced, save in prescribed exceptional circumstances (e.g. in urgent claims).

 Specific pre-action protocols currently apply to the following types of claims:

• Protocol I (Type I): claims for a liquidated sum.
• Protocol II (Type II): claims arising from road traffic accidents and personal injury.

For disputes where no specific pre-action protocol applies, the procedure and conduct set out in protocol III is followed.

Subject to any claim-specific requirements contained in the specific pre-action protocols as applicable, the claimant is generally required to send the prospective defendant a letter of claim prior to commencing proceedings, setting out a summary of the nature of the claim and the facts relied upon, together with all key supporting documents. The prospective defendant is then required to respond, noting whether he admits or disputes the claim. Where the claim is disputed, the response must set out detailed reasons for the denial and include copies of documents relied upon. Where the claim is admitted, the response must include proposals for settlement or payment, as applicable.

Failure to comply with applicable pre-action conduct requirements may be taken into account by the court when issuing case management directions and in the award of costs. As a general rule, a non-complying party may be ordered to bear the costs arising from such non-compliance.

The principal forms of ADR available in Cyprus are arbitration and mediation.

Domestic arbitration is governed by the Arbitration Law, Cap. 4, while international arbitration is governed by the International Commercial Arbitration Law of 1987 (Law 101/1987), which closely follows the UNCITRAL Model Law and applies where the arbitration is both international and commercial in nature. Arbitration is usually preferred in high-value construction disputes, owing inter alia, to the freedom of the parties to appoint specialists as arbitrators, procedural flexibility and relative speed, allowing disputes to be resolved.

Mediation in Cyprus is governed by the Certain Aspects of Mediation in Civil Matters Law of 2012 (Law 159(I)/2012), which implemented Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters. While mediation is generally regarded as more effective in family disputes, its use as an ADR mechanism has, to date, remained limited.

Although participation in ADR remains voluntary, the new CPR actively encourage and promote its use, including by incorporating it within the court’s active case management powers.

The time required for court proceedings in Cyprus to reach trial varies significantly depending, among other factors, on the District Court before which the proceedings are commenced, the complexity and nature of the dispute, party conduct, and the workload of the court.

At present, the average period between the commencement of civil proceedings and trial at first instance remains approximately four to five years.

That said, the introduction of the new CPR (see Question 2, above), the establishment of new specialised courts, the introduction of measures aimed at addressing existing backlogs, and the rollout of an electronic filing and case management system are expected to reduce the time between the commencement of proceedings and trial.

Disclosure obligations in Cyprus depend on whether proceedings are governed by the previous CPR or the new CPR (see Question 2, above).

The new CPR distinguish between “general disclosure” and “specific disclosure”.

General disclosure must be carried out at least 14 days before the case management conference by filing a witness statement in the prescribed form and serving it, together with copies of the disclosed documents, on the other parties. Unless the court directs otherwise, a party may make supplementary general disclosure, but no later than six months before the case is fixed for hearing. As a general rule, a party may not rely at trial on documents which it failed to disclose, unless the court is satisfied that there were justified reasons for the omission.

In substantive terms, general disclosure under the new CPR largely reflects the disclosure obligation that existed under the previous rules, under which disclosure was effected by filing a list of documents verified by affidavit confirming that no other relevant documents are in the party’s possession, custody or control.

Specific disclosure concerns disclosure of specific documents or categories of documents which are or were in the possession, custody or control of a party. As a matter of principle, parties have a duty to disclose all relevant documents, even those that are detrimental to their case. If a party validly believes that the other party is in possession, custody or control of a document that is relevant and material for the outcome of the proceedings, then it may apply for specific disclosure of such a document or category of document.

The new CPR also allow for specific disclosure against non-parties and, in appropriate cases, pre-action disclosure.

In cases governed by the previous CPR, the general rule is that witnesses are examined by giving testimony orally and in open court. However, the court retains discretion to, amongst other things, allow for a written witness statement, in which case, the witness is required to attend court and adopt the content of his/her witness statement on oath.

The examination of witnesses at trial follows a three-stage process: (1) examination in chief; (2) cross-examination, and (3) re-examination. Following examination in chief, a witness may be cross-examined by the opposing party and thereafter re-examined by the party calling the witness. The court may also question the witness after re-examination.

Under the new CPR, the general rule is that any fact requiring proof by witness evidence must be proved at trial, either through oral testimony or written witness statements, given in open court. In either case, the witness may be cross-examined and be required to attend trial for cross-examination.

Courts have wide discretion in making costs orders. The general rule is that costs follow the event, meaning that the unsuccessful party is ordered to pay the costs of the successful party.

Costs under the previous CPR

In cases governed by the previous CPR, costs awarded are calculated by reference to the scales set out in the relevant Regulation issued by the Supreme Court of Cyprus. These scales are linked primarily to the value of the claim. In practice, the amounts recoverable are relatively low and often represent only a fraction of the successful party’s actual legal costs.

Costs under the new CPR

The new CPR provide a more comprehensive framework, both as to the types of costs orders the court may make and the factors to be taken into account in exercising its discretion — with an increased emphasis on the conduct of the parties. Costs are calculated by reference to the amounts set out in Annex B to the CPR.

In issuing a costs order, the court takes into account, amongst other matters:

• the conduct of the parties before and during the proceedings;
• whether the winning party succeeded in part of their case, even if not wholly successful; and
• any acceptable settlement offers disclosed to the court to which the cost consequences of Part 35 of the CPR do not apply.

Cyprus is a premier jurisdiction for obtaining interim relief in civil and commercial matters. Under the new CPR, the jurisdiction of Cypriot courts to grant injunctive relief has been significantly expanded, allowing for injunctive relief to be granted before proceedings are commenced, during the proceedings, or after judgment, and in support of substantive proceedings — judicial or arbitral proceedings — which are taking place, or will take place, within or outside Cyprus.

The main types of interim remedies available include the following:

• Freezing orders:
  • Freezing orders are the most commonly sought form of interim relief. Their purpose is to prevent a respondent from dissipating, transferring or concealing assets, thereby ensuring that the defendant’s assets remain available to satisfy a potential judgment — but do not give the claimant security over the assets.
  • Such orders may apply to a wide range of assets, including bank accounts, shares, real estate and even cryptocurrencies, and may extend to assets located outside Cyprus.
• Chabra order:
  • A Chabra order is a form of freezing injunction directed against a third party who, while not directly involved in the wrongdoing and against whom the applicant has no cause of action or claim, holds assets beneficially owned by the primary defendant.
  • They are particularly relevant in offshore trusts, nominee arrangements, or other indirect ownership structures, often encountered in multi-jurisdictional disputes.
• Ancillary disclosure orders:
  • Ancillary disclosure orders are typically granted in support of freezing injunctions.
  • They require the respondent to disclose the nature, value and location of their assets for the purpose of policing a freezing order.
• Disclosure orders (also known as “Norwich pharmacal orders”):
  • Norwich pharmacal orders are disclosure orders granted against a third party who is mixed up in the wrongdoing, often innocently — such as a bank or corporate service provider — requiring them to reveal information or documents that will enable the claimant to trace assets, identify wrongdoers, or prove and plead his/her case. 
• Search orders (also known as “Anton Piller orders”):
  • Search orders permit entry to a respondent’s premises for the purpose of searching for, inspecting and preserving evidence, to prevent a respondent from destroying key evidence that may be central to a legal dispute.
  • They are a highly intrusive yet effective legal remedy available under Cypriot law.
• Appointment of an interim receiver:
  • Receivership orders are powerful legal remedies under Cypriot law, enabling the court to appoint an interim receiver to manage, preserve or safeguard assets that are the subject of a dispute.
  • This is a draconian remedy, generally reserved for cases where freezing orders are insufficient, and are particularly valuable in cases involving financial mismanagement, corporate disputes, and fraud.

Cyprus adopts a pro-arbitration approach, with the courts generally inclined to uphold arbitration agreements, stay court proceedings in favour of arbitration, and recognise and enforce arbitral awards, subject to limited statutory exceptions.

Arbitration in Cyprus is governed by a comprehensive legislative and procedural framework:

• Arbitration Law, Cap. 4 governs domestic arbitration, which is modelled on the English Arbitration Act of 1950.
• The International Commercial Arbitration Law of 1987 (Law 101/1987) (the “ICA Law”) governs international commercial arbitration. The ICA Law is based on the UNCITRAL Model Law of 1985.
• The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the “New York Convention”), which was ratified in Cyprus by the Ratifying Law 84/1979, governs recognition and enforcement between contracting states.
• The Foreign Courts Judgments (Recognition, Registration and Enforcement) Law of 2000 (Law 121(I)/2000) and section II of Part 44 of the new CPR governs the procedure for recognition and enforcement of a foreign award.

International arbitration

Following notable amendments in 2024, the ICA Law introduced a new Part IV, which incorporates the provisions of the UNCITRAL Model Law 2006 relating to the power of arbitral tribunals to grant interim relief (see Question 10, above).

Pursuant to section 17 of the ICA Law, unless the parties agreed otherwise, the arbitral tribunal can, at the request of a party, grant interim measures. An interim measure is defined as any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to:

• maintain or restore the status quo pending determination of the dispute;
• take such action that would prevent, or refrain from taking action likely to cause immediate or imminent harm, or to prejudice the arbitral proceedings themselves;
• preserve assets out of which a subsequent award may be satisfied; or
• preserve evidence that may be relevant and material to the resolution of the dispute.

The aforesaid provisions apply mutatis mutandis in the event that the arbitration procedure, as determined by the parties, provides for the appointment of an interim arbitrator to resolve an urgent dispute.

Domestic arbitration

The Arbitration Law, Cap. 4 does not contain similar detailed provisions empowering arbitrators to grant interim relief. In domestic arbitrations, the availability of interim measures therefore depends primarily on the agreement of the parties; or the adoption of institutional arbitration rules, which expressly confer such powers on the arbitral tribunal.

International arbitration

Pursuant to the ICA Law, proceedings for annulment of an arbitral award are initiated by way of an application before the competent District Court, within three months of the arbitral award’s notification on the following grounds:

• one of the parties to the arbitration agreement lacked contractual capacity, or the arbitration agreement is invalid under the law chosen by the parties or, in the absence of a chosen applicable law, under the laws of Cyprus;
• a party was not given proper and timely notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise deprived of a chance to present its case;
• the arbitral award deals with a dispute not contemplated by or not falling within the terms of the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement, provided that, where the decisions on matters submitted to arbitration can be separated from those not so submitted, only the part of the award exceeding the tribunal’s authority may be set aside;
• the composition of the arbitral tribunal or the procedure of arbitration was not in accordance with the agreement of the parties, unless such agreement is contrary to a mandatory provision of the ICA Law, or, in the absence of agreement between the parties, it was not in accordance with the provisions of the ICA Law;
• the subject matter of the dispute is not capable of being resolved by arbitration under the laws of Cyprus; or
• the award is contrary to the public policy of Cyprus.

Domestic arbitration

Pursuant to the Arbitration Law, Cap. 4, proceedings for annulment of an arbitral award are also initiated by way of an application before the competent District Court, but there is no specific time limit.

Under Cap. 4, an award may be set aside where:

• the arbitrator or the umpire has misconducted themselves or handled the proceeding poorly; or
• the arbitration proceedings were improperly conducted, or the award was improperly issued — this is a broad ground which may encompass issues of jurisdiction or any other issue capable of rendering the award invalid or unenforceable.

In both international and domestic arbitration, a decision of the District Court on an application to annul an arbitral award may be appealed against.

Foreign judgments

European instruments and international conventions

The recognition and enforcement in Cyprus of judgments issued by courts of EU Member States are governed primarily by Regulation (EU) No. 1215/2012 (Brussels I Recast), which applies to civil and commercial judgments delivered after 10 January 2015 by courts of EU Member States, with the exception of Denmark.

Cyprus is also party to the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Lugano Convention 2007), which applies where one party is domiciled in an EU Member State and the other in an EFTA state, namely, Norway, Switzerland or Iceland.

In addition, Cyprus applies a number of EU instruments and is bound, either by virtue of its EU membership or as a contracting state, by various multilateral conventions relating to the recognition and enforcement of judgments, including, inter alia:

• Regulation (EC) No. 861/2007 establishing a European small claims procedure;
• Regulation (EC) No. 1896/2006 creating a European order for payment procedure;
• Regulation (EC) No. 805/2004 creating a European Enforcement Order for uncontested claims;
• Regulation (EC) No. 1346/2000 on Insolvency Proceedings;
• the Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters;
• the European Convention on Certain International Aspects of Bankruptcy; and
• the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, entered into force on 1 September 2023, between the EU Member States (excluding Denmark) and Ukraine.

Bilateral treaties

Cyprus has concluded numerous bilateral treaties governing mutual recognition and enforcement of judgments with non-EU states, including, by way of example, the Russian Federation, Georgia, Belarus, Ukraine, China, Egypt, Serbia, Syria and Qatar.

United Kingdom and certain other Commonwealth jurisdictions

Judgments of the courts of the United Kingdom and certain Commonwealth jurisdictions are enforceable in Cyprus under the Foreign Judgments (Reciprocal Enforcement) Law, Cap. 10, which has assumed particular importance following Brexit.

Common law

Where no EU instrument, multilateral convention or bilateral treaty applies, Cypriot courts may recognise and enforce foreign judgments under common law principles, subject to established requirements.

Arbitral awards

The recognition and enforcement of arbitral awards in Cyprus is governed by the following international instruments and domestic legislation:

• The ICA Law governs the recognition and enforcement of international commercial arbitral awards, irrespective of the country in which they were issued.
• The New York Convention, pursuant to which awards issued by contracting states can be recognised and enforced between them.

Where Cyprus has concluded a treaty providing for mutual recognition and enforcement of arbitral awards, the applicable procedure is governed by the Foreign Courts Judgments (Recognition, Registration and Enforcement) Law of 2000 (Law 121(I)/2000). The procedure is now also reflected in section II of Part 44 of the new CPR.

In Cyprus, the types of judgments in commercial matters capable of enforcement depend on the country of origin of the foreign judgment and the applicable recognition and enforcement regime, each of which determines both the judgments that may be enforced and the relevant exclusions. The regimes most commonly relied upon are outlined below:

• Under Regulation (EU) No. 1215/2012 (Brussels I Recast) a judgment capable of recognition and enforcement is defined as any judgment given by a court or tribunal of an EU Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as a determination of costs or expenses by an officer of the court. For enforcement purposes, a judgment need not be final; however, it must be binding and enforceable in the Member State of origin.
• Bilateral treaties and International Conventions to which Cyprus is a party contain their own provisions defining the types of judgments that may be recognised and enforced. As a general remark, typically such instruments provide for the enforcement of final and conclusive judgments, for a specific sum of money.
• Under the Foreign Judgments (Reciprocal Enforcement) Law, Cap. 10 a judgment capable of enforcement is defined as a judgment or order given or made by a court in any civil proceedings, or a judgment or order given or made by a court in any criminal proceedings for the payment of a sum of money by way of compensation or damages to any injured party. For enforcement, such judgments must, inter alia, be final.
• Under common law principles, enforcement is limited to judgments for a definite sum of money, which, inter alia, must be final and conclusive between the parties and not subject to alteration by the issuing court, save where enforcement is stayed pending appeal.

Foreign judgments

The formal process for recognition and enforcement of foreign judgments depends on the instrument applicable:

• Under Regulation (EU) No. 1215/2012 (Brussels I Recast), a judgment given in an EU Member State is directly enforceable in Cyprus, without need of any special procedure or to obtain a declaration of enforceability.
• The procedure for recognition and enforcement of foreign judgments issued by any court or tribunal of a foreign country with which Cyprus has concluded a bilateral treaty is governed by the Decisions of Foreign Courts (Recognition, Registration and Enforcement) Law (Law 121(I)/2000) and on the provisions of the relevant treaty. The process requires an application by summons, supported by an affidavit, which must be fixed for hearing within four weeks of filing and soon thereafter be served on the respondent.
• The recognition and enforcement of foreign judgments issued by UK courts, and certain other Commonwealth jurisdictions is governed by the Foreign Judgments (Reciprocal Enforcement) Law, Cap. 10 as well as by the Foreign Judgments (Reciprocal Enforcement) Procedural Regulation (1062/1925), which governs procedural matters. The judgment creditor may file an application to the court on an ex parte basis (without notifying the other party) requesting the recognition of the judgment.
• If a foreign judgment cannot be recognised and enforced under any of the aforementioned, it may be enforced under common law by bringing a fresh common law action having as a cause of action the foreign judgment itself.

Arbitral awards

The recognition of a foreign arbitral award issued in a country which is signatory to the New York Convention is governed by its provisions. The requirement for the party requesting the recognition of a foreign arbitral award is to submit an application to the court accompanied by: the duly authenticated original award or a duly certified copy thereof; the original arbitration agreement or a duly certified copy thereof; and a translation of the aforesaid documents into Greek.

A similar procedure is followed under the ICA Law (see Question 10, above). Pursuant to section 35(1) of the ICA Law, the foreign arbitral award, irrespective of the country in which it has been issued, shall be recognised as binding.

Once recognised, an arbitral award may be enforced in the same ways as a court judgment.

The procedure for recognition and enforcement of any foreign award issued in a country with which Cyprus has signed a treaty on mutual recognition and enforcement of arbitral awards is the one explained above under the Foreign Courts Judgments (Recognition, Registration and Enforcement) Law of 2000 (Law 121(I)/2000).

Once a foreign arbitral award is recognised and registered in Cyprus, it obtains the same legal status as a domestic judgment and can be enforced in the same manner as a judicial decision or order. The execution of an arbitral award for monetary claims may involve:

• the seizure and sale of movable property;
• the sale or charging of immovable property;
• the sequestration or attachment of property;
• ordering the delivery of movable or immovable property; or
• examination of the judgment debtor before the court for the issuance of a court order for payment of the judgment debt in instalments and/or encumbering the interest of the judgment debtor on shares and other stock owned.

Judgment creditors may also consider applying for the liquidation of companies where the relevant judgment or award registered relate to legal entities registered in Cyprus.

Obtaining interim relief pending the recognition or enforcement of foreign judgments and arbitral awards is a common practice in Cyprus, and the courts have broad powers to grant interim relief under the applicable statutory framework and common law principles.

Available interim remedies include, inter alia, freezing orders, disclosure orders, Chabra orders, the appointment of an interim receiver, charging orders over the judgment debtor’s assets, and garnishee orders ordering the attachment of debts owed to the judgment debtor by third parties. These interim measures largely mirror those available in substantive proceedings, as outlined in Question 9, above.

Proceeding on the assumptions outlined in the Model Answer, would a court in this jurisdiction recognise and enforce the arbitral award under the New York Convention?

In particular:

• Does the award fall within the scope of Article V(1) of the Convention, or would any of the grounds in Article V(1) justify refusal on the assumed facts?
• Is the subject matter of the dispute capable of settlement by arbitration under domestic law for the purposes of Article V(2)(a)?
• Would recognition or enforcement of the award be contrary to public policy within the meaning of Article V(2)(b)?

Response

Recognition in Cyprus under the New York Convention

On the assumption that, under the law governing the arbitration agreement and the seat, non-payment of a monetary obligation constitutes a dispute capable of arbitration, the enforcement in Cyprus of an arbitral award issued pursuant to the clause described above is unlikely to be susceptible to challenge on the grounds set out in article V(1) of the New York Convention.

It might be argued that recognition of the arbitral award should be refused on the basis that the award deals with matters falling beyond the scope of the submission to arbitration (Article V(1)(v)). However, given that: (a) the tribunal was not empowered to review or re-litigate the merits of the final court judgment; and (b) the arbitration concerns a distinct contractual obligation arising upon non-payment, we are of the view that such argument is unlikely to succeed.

Arbitrability under Cyprus law

Under Cyprus law, non-payment of a monetary sum that is due and payable constitutes a dispute referable to arbitration. As a corollary, the subject matter of the dispute is capable of settlement by arbitration under Cyprus law for the purposes of Article V(2)(a).

Public policy considerations

A possible ground for refusing recognition of the award could be that recognition would be contrary to the public policy of Cyprus, on the basis that the contractual mechanism effectively seeks to circumvent the domestic legal framework governing the enforcement of court judgments. That said, Cypriot courts construe public policy narrowly in the New York Convention context. The relevant test is whether enforcement of the arbitral award itself would offend the moral, economic, legal and political order of Cyprus. In the premises, we consider it unlikely that such an argument would succeed.