The institution of arbitration, as an alternative means of dispute resolution, is heading towards substantial reform following a relevant draft bill by the Ministry of Justice and Public Order, with the adaptation of the legislation to the new circumstances and modern requirements of the time being the primary concern.
The draft of the bill titled “the Arbitration Law of 2024” (the Bill) aims at reforming the legislative framework of the institute of arbitration as alternative dispute resolution (ADR). It is the result of a study and comparison of relevant legislation and international conventions from England, Hong Kong, Ireland, Greece and the United States of America.
The entry into force of the Bill shall mark the modernisation of the institution of arbitration by repealing the existing laws, namely the Arbitration Law, Cap. 4 (the Arbitration Law), and the International Commercial Arbitration Law of 1987 (the International Commercial Arbitration Law), and by establishing a single legislative framework for all arbitration disputes – future, pending, national and international excluding labour disputes.
Divided into nine parts, the Bill aims to introduce remarkable reforms and establish innovative provisions at all stages of the arbitration proceedings. First and foremost, it is notable that most provisions allow for derogations from several provisions of the Bill, provided that the parties to the arbitration agree otherwise, thus safeguarding free will and the constitutional right of “freedom of contract". A loosening in accessibility to the arbitral tribunal is discernible (the Arbitral Tribunal). The existence of a written arbitration agreement shall not constitute a prerequisite, as provided for in the current laws; however, the parties will be able to resort to arbitration after unreservedly accepting its jurisdiction. In contract, the right of intervention of the district court (the Court) to arbitration matters is only permitted where such power is expressly provided for.
Composition of the Arbitral Tribunal
Reforms are also present in the composition of the Arbitral Tribunal, especially as regards the number and appointment of arbitrators. In the absence of agreement by the parties in this regard, the number of arbitrators shall not necessarily be 3, as provided for in the International Commercial Arbitration Law; instead, clear timeframes shall be introduced within which the arbitrators must be appointed depending on the number of arbitrators comprising the Arbitral Tribunal.
Additionally, in cases where the parties fail to appoint arbitrators as agreed, intervention by the Court shall be permitted upon the filing of a relevant application. Furthermore, the Court is granted jurisdiction to intervene for the purpose of considering a request for the removal of an arbitrator, without affecting the progress of the arbitration proceedings. The arbitrator, against whom such an application is directed, retains the right to appear and be heard before the Court prior to the issue of the final award. Both aforementioned interventions are conditional upon the fact that the parties have not agreed on a different method for securing appointment or authorised another body, respectively.
At the same time, conditions are provided for the possibility of revoking an arbitrator's order, unless specifically regulated by the will of the parties. Revocation shall be effected only by mutual written agreement of the parties or by a duly authorised body, without prejudice to the power of the Court to revoke or remove an arbitrator.
However, the most significant reform regarding arbitrators is the determination of the degree of fault of the arbitrator. In the performance of their duties, the arbitrator in question shall be liable only for wilful misconduct and gross negligence, with no derogation from this rule. At the same time, their resignation shall not give rise to any liability for them unless it is not justified under the circumstances.
A specific provision is also introduced regarding the arbitrator’s right to costs and fees in the event of termination or resignation, either as amounts owed to or as amounts reimbursable by the arbitrator if they have already been paid to them. The order sought shall be examined before the Court, in the absence of a different agreement, and its judgment shall be final.
Jurisdiction of Arbitral Tribunal
The Arbitral Tribunal shall remain responsible for deciding on its jurisdiction and it shall also retain the power to grant interim measures, provided that it has the agreement of the parties. However, a significant deviation from the existing legislation might be noted, namely the deliberate absence of a provision for the Court to refer and handle the case when a question of fraud arises, despite the existence of an arbitration clause. The deliberate omission of such a provision in the Bill highlights the limitation on the Court’s intervention in arbitration proceedings and the principle of determining its own jurisdiction, while also respecting the parties' choice to resort the Arbitral Tribunal.
The jurisdiction of the Arbitral Tribunal is expanded with the introduction of a novel institution for the Cyprus legal order, that of the emergency arbitrator, which applies only with the agreement of the parties. Their role is to examine the application of the parties and provide the emergency relief prior to the establishment of the Arbitral Tribunal.
Conduct of Arbitration proceedings
The Bill seems to promote a number of important modifications in the conduct of the entire proceedings. In particular, the parties will be able to agree to join arbitration proceedings even if the arbitration disputes involve a different party or parties. However, in the absence of an agreement to the contrary, the powers of the Arbitral Tribunal at the stage of proof are also increased, as it will have the power to require the parties to provide all relevant evidence or documentation in their possession. Nevertheless, the Court's assistance shall remain active upon request either by one of the parties or by the Arbitral Tribunal itself.
Unless otherwise agreed by the parties, the Arbitral Tribunal shall be afforded the discretion to issue multiple awards at different points in time on various aspects of the arbitral dispute. In addition, the parties will be able to provide the Arbitral Tribunal with the right to issue interim arbitral remedies identical to those that may be granted at the final stage of the award.
Furthermore, noteworthy and innovative regulations include both the right to submit an application for summary proceedings, without prejudice to the parties’ right to present their case before the Arbitral Tribunal, and the provision for filing an application before the Court on a preliminary legal issue arising during the arbitration proceedings. The decision on this matter may be appealed within 10 days of its issuance before the Court of Appeal.
Arbitral award and legal remedies
Even though the grounds for annulment of an arbitral award remain the identical to the current ones, a significant distinction is identified in the relevant provision of the Bill. Following a recourse against the arbitral award, the Court may remit the dispute to the Arbitral Tribunal, provided that the defect in the award can be remedied. At the same time, a 90-day time limit shall be set within which a new arbitral award must be issued.
A provision is introduced for the right to file an appeal with the Court of Appeal on a legal issue arising from the arbitral award, with a 42-day deadline from the date of its issuance. The enforcement of the arbitral award shall be stayed both from filing an application for annulment and from filing an appeal, pending the issue of a final judgment. It is further noted that the annulment of the arbitral award may revive the arbitration agreement.
Conclusion
The Bill represents an in-depth restructuring and formulation of the legislative framework for arbitration, which meets the contemporary needs of society and transactions. It clearly defines both the operational and functional framework of the Arbitral Tribunal and the limited powers of the Court in arbitration disputes, thereby avoiding the excessive and needless waste of time and resources through repeated referrals to the Court. Important guidelines are established across the entire spectrum of arbitral proceedings providing legal certainty, clarity, functionality and trust in arbitration as an alternative method of dispute resolution.
For more information or any inquiries, please feel free to write to the members of the Harris Kyriakides Dispute Resolution team or contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.
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