© Allen & Overy 2012 1 Yacine Francis The 10 Point Guide to International Arbitration in Cyprus

© Allen & Overy 2012 1

Yacine Francis

The 10 Point Guide to

International Arbitration

in Cyprus

© Allen & Overy LLP 2012 2

Dispute Scenario

– Russian investor and English investor are both shareholders in a Cypriot company that holds assets in multiple international jurisdictions.

– Multiple agreements entered into by the Cypriot company with third parties in Cyprus, the USA and Russia.

– Shareholders’ agreement between the investors.

– Each of the shareholders has a director on the board of the company.

– A dispute arises in respect of the activities of the Cypriot company.

– One shareholder wants to commence arbitration against the other shareholders, the company, certain directors and third parties.


Point One – Refer Disputes to Arbitration (1)

– Pathological clause:

“Disputes may be referred to arbitration by the courts of Cyprus.”

– The scope of disputes covered by the arbitration agreement should generally be wide.

– The reference to arbitration must be clear.

– Equivocal language should be avoided.

© Allen & Overy LLP 2012

Point One – Refer Disputes to Arbitration (2)

– Effective reference to arbitration:

“Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration.”

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Point Two – Choose Cyprus (1)

“We assumed that the arbitration would be in Cyprus and governed by Cypriot law.”

– Include the seat of the arbitration as an express term of the arbitration agreement.

– It is also recommended to include the governing law of the arbitration agreement as an express term.

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Point Two – Choose Cyprus (2)

– Effective choice of seat and governing law:

“The seat, or legal place, of arbitration shall be Limassol, Cyprus; and

The governing law of this arbitration agreement shall be the substantive law of the Republic of Cyprus.”

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Point Three – Institutional Arbitration? (1)

– International Options:– ICC (International Chamber of Commerce);– LCIA (London Court of International Arbitration).

– Options in Cyprus:– CAMC (Cyprus Arbitration and Mediation Centre); – CEDRAC (Cyprus Eurasia Dispute Resolution and Arbitration Center).

– Difference between:– Institutional administration; and– Institutional rules.

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Point Three – Institutional Arbitration? (2)

–Consider:

–Track record of institutions;

–The terms of the institutional rules; and

–Institutional and arbitrator fees.

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Point Four: Choose an Appointing Authority (1)

– Basic provision:

“The number of arbitrators shall be three.”

– The default position under the International Commercial Arbitration Law 101/1987:

– Section 10: three arbitrators;

– Section 11: each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator, or in the event of a default, the appointment shall be made, upon request of a party, by the Court.

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Point Four: Choose an Appointing Authority (2)

– Appointing authorities in Cyprus:– CAMC;

– CEDRAC.

– International appointing authorities:– The LCIA;

– The ICC.

– Default under the UNCITRAL Arbitration Rules: any party may request the Secretary-General of the Permanent Court of Arbitration at the Hague to designate the appointing authority.

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Point Five: Choose the language

–Basic provision:

“The language to be used in the arbitral proceedings shall be English.”

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Basic Institutional Arbitration Agreement

– Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under [the LCIA Arbitration Rules], which Rules are deemed to be incorporated by reference into this clause.

– The arbitral tribunal shall consist of three arbitrators.

– The Claimant shall nominate one arbitrator in the request for arbitration, the second arbitrator shall be nominated by the Respondent within 30 days of receipt of the request for arbitration and the two party-nominated arbitrators shall nominate the third arbitrator, who shall act as chairman, within 30 days of the nomination of the second arbitrator. If any arbitrators are not nominated within these time periods, [the LCIA] shall, upon the request of any party, make the nomination(s).

– The seat, or legal place, of arbitration shall be Limassol, Cyprus.

– The language to be used in the arbitral proceedings shall be English.

– The governing law of this arbitration agreement shall be the substantive law of the Republic of Cyprus.

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Basic Ad-Hoc Arbitration Agreement

– Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under [the UNCITRAL Arbitration Rules], which Rules are deemed to be incorporated by reference into this clause.

– The arbitration shall be administered by [the Cyprus Arbitration and Mediation Centre (the “CAMC”)].

– The arbitral tribunal shall consist of three arbitrators.

– The Claimant shall appoint one arbitrator in the notice of arbitration, the second arbitrator shall be appointed by the Respondent within 30 days of receipt of the notice of arbitration and the two party-appointed arbitrators shall appoint the third arbitrator, who shall act as chairman, within 30 days of the appointment of the second arbitrator. If any arbitrators are not appointed within these time periods, [the CAMC] shall, upon the request of any party, make the appointment(s).

– The seat, or legal place, of arbitration shall be Limassol, Cyprus.

– The language to be used in the arbitral proceedings shall be English.

– The governing law of this arbitration agreement shall be the substantive law of the Republic of Cyprus.

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Point Six: Check the Parties (1)

–Scenario:

–The shareholders by the shareholders’ agreement;

–The company and each third party by separate agreements;

–The directors, Court proceedings?

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Point Six: Check the Parties (2)

– Consider:

– A separate “umbrella” arbitration agreement; or

– Identical arbitration agreements with joinder and consolidation provisions; or

– Identical parallel arbitration agreements; or

– A new tailored arbitration agreement once the dispute has arisen.

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Point Seven: Consider Interim Measures

– Powers of the arbitral tribunal to order interim measures:– Section 17 of the International Commercial Arbitration Law 101/1987: Unless otherwise agreed

by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute. The arbitral tribunal may require any party to provide appropriate security in connection with such measure;

– Emergency arbitrator provisions?

– Access to local Courts for interim measures:– At the seat:

– Section 9 of the International Commercial Arbitration Law 101/1987: It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a Court an interim measure of protection and for a Court to grant such measure ;

– In the enforcement jurisdiction.

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Point Eight: Tailor the Procedural Order

– Consider:

– Preliminary issues;

– Time periods and deadlines;

– Page limits for pleadings;

– Application of the IBA Rules on the Taking of Evidence in International Arbitration;

– Disclosure of documents;

– Expert evidence;

– Partial awards;

– Bifurcated proceedings; and

– “Paper-only” applications.

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Point Nine: Keep the Originals

– Section 35 of the International Commercial Arbitration Law 101/1987:– The party relying on an award or applying for its enforcement

shall supply: – the duly authenticated original award or a duly certified copy thereof,

and; – the original arbitration agreement […] or a duly certified copy thereof.

– If the award or agreement is not made in an official language of the Republic of Cyprus the Court may request the party to supply a duly certified translation thereof into such language.

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Point Ten: Beware of the “Seven Deadly Sins” (1)

– Section 36 of the International Commercial Arbitration Law 101/1987:

i. a party to the arbitration agreement […] was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

ii. the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

iii. the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration […]; or

iv. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

v. the award has not yet become binding on the parties or has been set aside or suspended by a Court of the Country in which, or under the law of which, that award was made; or

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© Allen & Overy 2012

Point Ten: Beware of the “Seven Deadly Sins” (2)

– Arbitrability:

vi. if the Court finds that the subject-matter of the dispute is not capable of settlement by arbitration under the law of the Republic of Cyprus; or

– Public policy:

vii. if the Court finds that the recognition or enforcement of the award would be contrary to provision relating to public order of the Republic of Cyprus.


Questions?

These are presentation slides only. The information within these slides does not constitute definitive advice and should not be used as the basis for giving definitive advice without checking the primary sources.

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© Allen & Overy 2012 1 Yacine Francis The 10 Point Guide to International Arbitration in Cyprus