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Commercial arbitration in Cyprus, without … VAR

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Commercial arbitration in Cyprus, without ... VAR

The recent publication, by Rizes, of the book by Nikos Papaefstathiou “Commercial Arbitration in Cyprus – Law and Practice” was a good opportunity to talk to the well-known lawyer (with 40 years of professional practice of law), Cyprus, its usefulness and role in dispute resolution, the legal framework that defines it, the changes that are needed.

As the Attorney General, George Savvidis, states in the book's preface, “Nikos Papaefstathiou manages to present in detail and directly the situation in relation to the institutional framework of arbitration in Cyprus. It deals with all aspects of arbitration law, citing a rich historical background, as well as an in-depth explanatory analysis of the legislation, in particular the Arbitration Law, Chapter 4, and the International Commercial Arbitration Law 101/1987 “.

The book, of 636 pages, is structured in 20 chapters, in which the individual aspects of the dietary process are analyzed in detail.

Complete freedom of parts

This interview, Mr. Papaefstathiou, we deliberately choose to address mainly to those readers who do not have a clear picture of what commercial arbitration is and under what laws, terms and regulations it is conducted. The first thing we want to tell you is whether commercial arbitration is a process that takes place in the private sphere, with the sole choice / decision of two private bodies that disagree or whether the state or the judiciary is in any way involved. We also want to know if commercial arbitration is resorted to by two parties in order to avoid a court dispute or if they are referred to it by the court that hears the case that concerns them.

In modern democracies, the administration of justice is guaranteed by state courts. The Constitution and the European Convention on Human Rights guarantee the free access of every citizen to the courts, in order to safeguard his rights and interests. In every modern state, in addition to the usual method of resolving disputes, there is also provision for the settlement of disputes, which arise from an agreement, and by methods of separation. Dispute resolution through arbitration has been a well-established dispute resolution institution for hundreds of years. The main features of arbitration are the free agreement of the parties, the settlement of the dispute between them, the referral of the dispute for resolution by a third party, which automatically means the exclusion of the jurisdiction of the courts.

A dispute may be referred to arbitration by both parties, based on their agreement, but the court is also given the power to refer a dispute to arbitration which is pending before it, either on its own initiative or at the request of a party. At this point, I should add that it is not just disputes between individuals that are referred to arbitration. Private disputes between the state and individuals can also be referred to arbitration.

The special feature of arbitration is the complete freedom of the parties to choose, the way, the method and the procedure of their case. The limitations set by law and case law are minimal. Within this framework, the parties are free to choose, inter alia, the procedure for resolving their dispute, the arbitrators, the language of the arbitration procedure, the place where the meetings will take place, the legal framework for resolving their dispute, the nature the procedure, the manner and method of presenting testimony and the hearing procedure.

The term arbitration spontaneously refers to an attempt by a “neutral” to resolve a dispute between two or more parties. We wonder whether there are objectively neutral arbitrators or professional arbitrators, who are resorted to by those who want to resolve a commercial dispute. How is the referee selected, in short, is he / she a lawyer by definition or are other professionals involved in these proceedings?

A key feature of arbitration is the selection by the parties of one or more “private judges” to adjudicate a certain dispute, instead of the ordinary courts. Objectively and from the outset the referee should be “neutral”. As has been decided in a series of decisions of the Cypriot courts, the arbitrator exercises a quasi-judicial duty. He must be and act as an independent and impartial judge. It must not have anything to do with the parties or the subject matter of the dispute. In the trial of the case he must apply rules that ensure equality, objectivity and impartiality. Several of my colleagues act as arbitrators in disputes. Of course, you do not have to be a lawyer to act as an arbitrator. Many experienced referees have professional and academic training in engineering disciplines. This is where the important advantage of arbitration lies. The choice by the parties of the appropriate arbitrator to adjudicate their case, taking into account the nature of their dispute.

The two roles

From the Advocate General's prologue to your book but also from your own introduction, I understand that you have many years of professional activity both as an arbitrator and as a lawyer for arbitrators. How “simple” is it to change roles (client representative in arbitration and arbitrator in other cases) and how often has your long professional activity and representation of a large number of clients made it difficult for you to take on refereeing roles?

Changing roles, as you mention, through my many years of experience is an important “weapon” in improving the institution of arbitration. An arbitrator who also acts as a lawyer (in other cases of course) is in a better position to understand the positions put before him by the lawyer of a party. Conversely, the lawyer is better able to understand the requirements of the arbitration process. The experience gained from the exercise of the roles mentioned above is an important element of the credibility and development of the institution.

Is there an accreditation process to be considered a referee or is it just enough to be chosen by two parties who want to resolve a dispute?

No conditions or qualifications are set out in the law for the appointment of an arbitrator. Therefore, any person can be appointed as an arbitrator to resolve a specific dispute. Usually, however, arbitration agreements provide for specific professional or academic qualifications, which must be possessed by the person appointed as arbitrator. In practice, the parties select in arbitration the person who in their judgment is the most appropriate in terms of professional and academic knowledge to resolve this dispute. Of course, as I said before, this person must be independent and not have anything to do with the parties or the subject matter of the dispute. I should add that in several cases the parties adopt the Arbitration Rules of a specific arbitration body. In such cases, the appointment of an arbitrator is also assigned to that body.

Who ensures that the arbitrator's decision in a commercial arbitration will be respected by both parties to a dispute? Were there cases where the arbitral awards were not respected? And if so, what follows a “failed” arbitration or an arbitral award that is not respected?

The law provides that the arbitral award is final and binding on all parties. The arbitral award is required to be registered as a court decision, with a relatively simple procedure and can be executed as a court decision. This ensures that the arbitral award is accepted by the parties and can be enforced against the failing party. The arbitral award can also be challenged in court, but only for the limited reason of “misconduct” on the part of the arbitrator. It is a fact that the failing party usually seeks to challenge the arbitral award. An attempt to overturn the decision can only be successful for the limited reasons I have mentioned.

From your many years of experience, can you tell us on average how long it takes a trading process to reach an agreement? Do you have any cases in mind that lasted for years? What percentage of arbitrations result in an agreement?

There is no general rule regarding the time required to complete a dietary procedure. The arbitration process is definitely more flexible than a court procedure and is usually handled in a shorter time. In addition, referring a matter to an arbitrator, due to his knowledge as an expert on the subject, leads to a shorter procedure.

Mainly for contractors

In which sub-sectors is the need for commercial arbitration most common?

Arbitration can be used as a method of resolving all commercial disputes. Such disputes arise in commercial transactions for the supply of goods or services, representation agreements, construction projects, investments, financing, insurance operations and other business activities. Most of the disputes that lead to arbitration mainly concern contractors. It is common for these contracts to have disputes over time, the value of the work performed, additional work, compensation and other related issues.

What laws govern commercial arbitration? I read in the preface of your book that there is a need to modernize the legal framework. Is there no legal framework in the EU for arbitration that is mandatory for Member States?

The two basic laws are the Law on Arbitration, Chapter 4 and the Law on International Commercial Arbitration 101/1987. There is no single legal framework in the European Union that governs arbitration matters. I note that there is a European Directive which deals with alternative dispute resolution methods, for traders and consumers. There are, however, international organizations, or centers of global reach and acceptance, which operate as dispute resolution centers based on their own regulations.

The creation of the Arbitration Center and its role

I read that you personally contributed to the creation of the Arbitration Center. Explain to us what is the role of this center and what is its institutional status.

With the well-known chronic problems of the state justice system, arbitration is an important institution, which contributes and can contribute more to the rescue of dispute resolution. A credible way of administering justice, especially in disputes concerning technical, scientific or other similar matters, effectively reinforces the administration of justice itself. Having in mind the above data, several years ago I made a proposal to the Scientific and Technical Chamber of Cyprus for the creation of an Arbitration Center. My suggestion was adopted and this Center has been operating effectively and successfully for a period of more than ten years. The Center has its own Arbitration Rules, provides full support in conducting the arbitration procedure, by appointing an arbitrator from its own list of arbitrators, with secretarial and other necessary support. In practice, it is usually incorporated in the agreement of the parties that in case of any dispute this will be conducted in accordance with the Arbitration Rules of ETEK. The parties address the ETEK, which appoints an arbitrator from a specific list and will provide the parties with all the necessary support. I note that the courts, in cases where the issues before them concern technical disputes, refer the parties to arbitration, based on the Arbitration Regulations of ETEK.

Assistance for lawyers, judges, arbitrators

When was Mr. Papaefstathiou born with the idea of writing the book “Commercial Arbitration in Cyprus, Law and Practice”? Did you collect material for years, did you always have up-to-date files so that you could move quickly, or did you have to work long after the decision to write the book?

From my involvement with the various issues of arbitration law, in court and arbitration proceedings, I had gathered a lot of material. In addition, I had material from various seminars in which I was a speaker. The idea of processing and recording this material in a book was born several years ago and its implementation began about two years ago.

How can this book be used by lawyers or arbitrators or other stakeholders? And a question: Is there “jurisprudence” in arbitral awards? That is, can an old arbitral award be binding or ancillary to a current arbitration on a similar issue?

Lawyers, judges, arbitrators can refer to the book to seek legal solution to a problem or issue raised in arbitration or litigation related to or related to arbitration. All Supreme Court rulings on arbitration issues are binding case law. Arbitral awards are confidential and will not be published. However, court decisions on arbitration issues are published and are a precedent.

The general finding that arbitration legislation needs to be modernized

And a provocative question for the end, Mr. Papaefstathiou: Do you think that the arbitration could be nationalized in the future, that is, offered by the state itself with institutionalized procedures and permanent arbitrators, or is it something that will always be up to the will and the choices of the parties that have a dispute and want to resolve it?

“Nationalization” of arbitration means its abolition. State courts are available to resolve disputes by providing legal protection to citizens and by ensuring a fair trial through the institutionalized framework of the judiciary. The nature of arbitration is a recognition of the right of citizens to seek a solution to their dispute with “private judges”. For this reason it does not mean “nationalization” of arbitration. What is required of state bodies is to take the necessary decisions to modernize arbitration legislation. This implies further development and evolution of arbitration, in a way that will help the administration of justice in our country. I would add that the success of any reform of the justice system in our country will be judged by the degree of development and assistance of arbitration and alternative dispute resolution methods.

From all the bodies that deal with the specific subject, the necessity of the modernization of the arbitration legislation is ascertained. Modernization is becoming more necessary to safeguard and further develop the institution, as a reliable dispute resolution system. The state undoubtedly has a direct benefit and will be in its interest, if it shows interest and encourages the arbitration process, since it will relieve the already burdened state courts with the outdated time-consuming procedures. It should be noted that in the context of arbitration and despite the outdated legislation that governs it, the parties, the lawyers who represent them and the arbitrators follow in practice the modern methods of arbitration. And this is exactly what helped to develop the arbitration process as a credible and acceptable dispute resolution body. However, this practice did not follow the appropriate legislative approach with the necessary reform.

Source: www.philenews.com

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