Registration and enforcement of arbitration awards - Cyprus law

This article provides an overview of the laws governing the registration and enforcement of arbitration awards in Cyprus.

Upon completion of an arbitration in which the winning party is granted an award, there is the possibility that the losing party refuses to honor the arbitral award. In this occasion, the winning party must apply to the court requesting that the award is registered for the purpose of being enforced against the losing party. 

According to article 21 of Cyprus Arbitration Act, Cap. 4, an arbitral award that is issued on the basis of an arbitration clause may, with the permission of the Court, be registered and enforced in the same manner as a court decision or order. In the case of Pittaka v. G. & B. Hatzidemosthenous Ltd (2004) 1 A.A.D. 1895, the Court held that the wording of article 21 of Cap. 4 is exactly the same as of article 26 (1) of the English Arbitration Act 1950 and referred to Halsbury’s Laws of England (4th edition, Volume 2, paragraph 713) according to which “the Court shall grant leave to enforce the arbitral award unless there is a real reason to challenge the validity of the arbitral award or unless the arbitral award is of a form which can be enforced as a judgment”. 

As it was held in the case of G & Z Engineers Ltd v. Elite Constructions Ltd, Application No. 239/2015, date 7.9.2016, the Court will allow the registration of an arbitral award unless: 

(a)  the application for registration has not been served to the defendant, 

(b) the arbitral award was not notified to the defendant, 

(c)  the arbitral award does not have the necessary characteristics of a valid arbitral award, namely: 

(i) contains a manifest error, legal or factual; or

(ii) does not meet the requirements for a final and certain decision; or 

(iii) the arbitrator has exceeded the limits of his jurisdiction. 

In addition, in the case of Manolis Christofi v. Cooperative Credit Company of Latsia, Civ. Appeal 87/11, 20.06.2014 it was stated that “The court of first instance during the evaluation of the application (…) for registration of the arbitral award, had only to determine whether it was serviced, that the decision had the necessary characteristics of a valid arbitration decision and that it was notified to the appellant”. 

In order for an arbitral award to constitute a final and certain decision, it must, amongst others, be a justified decision. In the case of Application Piperi. Appeal No. 456/2012, dated 20/09/2019 it was held that the arbitral award must be duly justified in order for the court to be able to examine its validity. In this context, the arbitrator is expected to state even briefly the positions of the parties and to evaluate them to reach conclusions.

Furthermore, according to the English case Bremer Handelsgesellschaft GmbH v. Westzucker GmbH [1981] 2 Lloyd’s Rep 130 CA, in order to issue a “reasoned decision” the arbitrator must explain what happened in his view, considering the parties’ suggestions, and briefly explain why, in the light of what happened, reached his decision. 

On the same matter, Lord Bingham in “Reasons and Reasons for Reasons: Differences Between A Court Judgment And An Arbitration Award”, Arbitration International 4, no.2 (1988): 141 – 154, mentioned that the arbitrator is not expected to make a detailed analysis of the legal principles presented to him or to examine in detail the legal principles presented to him – it is sufficient to summarize briefly the arguments presented to him and to express his legal conclusion in a way which makes it understandable.

Regarding the jurisdiction of the arbitrator, as it was held in the case of Kazatzian and Other v. Ellinide and Other (1996) 1 A.A.D. 591, 596, when the parties agree on the resolution of their dispute by entrusting a party to decide on the matter, they are bound by the conclusion of such party. The Court will give effect to the agreement of the parties as a normal contract concluded by them, unless the appointed expect, so to speak, has been proven to have acted in a discriminatory matter or has been deceived. 

Additionally, the Court will not enforce the agreement if the expert’s report is so incorrect that it would be unfair to apply it, as this would amount to a breach of the terms of his appointment. Furthermore, the agreement will not be implemented if there is a deviation from the terms of its appointment, to the extent that its provisions would be substantially violated. 

This article has been written by Chara Palekythriti, Lawyer - Legal Consultant ©

Disclaimer: This article is for informative purposes only and does not constitute legal advice, opinion or otherwise.