Supreme Court denies jurisdiction for ship arrest in Cyprus in aid of foreign arbitration proceedings

In a judgment issued on 22 October 2012, the Cyprus Supreme Court, acting as Admiralty Court, held that it lacks jurisdiction to arrest a ship berthed in a Cyprus port, for the purpose of aiding foreign arbitration proceedings. According to the judgment, the Court’s jurisdiction to arrest a ship in an action in rem should not be exercised for the purpose of providing security for an award which may be made in arbitration proceedings. 

Under the current legislative framework in Cyprus, the Admiralty Court may entertain provisional measures that seek to provide security in respect of the action in rem, however this is not the case when the interim relief is sought in order to provide security in some other proceedings, e.g arbitration proceedings. In reaching this result, the Supreme Court applied the English ruling in The Vasso (formerly Andria) (1984) Lloyd’s Reports 235, which was decided prior to the English Civil Jurisdiction and Judgments Act 1982. It follows that if a claimant invokes the jurisdiction of the Supreme Court (acting as Admiralty Court) to obtain the arrest of a ship as security for an award in arbitration proceedings, the Court may not issue a warrant of arrest. A possible alternative for protection of a potential Claimant would be to invoke the provisions of section 9 of the International Commercial Arbitration Law 1987 (N. 101/87) which confers jurisdiction, on the application of one of the parties, for provisional measures at any time before commencement or in the course of arbitration proceedings. Nevertheless, any such application can only be commenced before a District Court. The time may well be ripe when the law on this point is revisited.

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