06-12-2012

Enforcement Of Foreign Judgments And Arbitral Awards In Cyprus

Authors

  • Andrianna Joanne Solomonides, Advocate, LLB (Hons), LLM, LPC
    Associate at L Papaphilippou & Co LLC

ENFORCEMENT OF FOREIGN JUDGMENTS

Can foreign judgments be enforced in Cyprus?

A Foreign judgment has no direct operation in Cyprus but may however be enforced under European Union Regulations, Statute, Common Law, or may be recognised as a Defence to an action. Therefore, there is no unified system in Cyprus for the enforcement of foreign judgments. The general practice of Cypriot Courts is that they will assist in the enforcement of foreign judgments provided that the following requirements are met:

  • the foreign judgment has been issued by a court which has jurisdiction in accordance with Cypriot rules on conflict of laws
  • the enforcement of foreign judgments is not contrary to Cypriot Public policy
  • the foreign judgment has been made on merit and not according to procedure
  • the foreign judgment has not been obtained by fraud and
  • the proceedings which led to the issue of the foreign judgment were not contrary to the laws of natural justice.

ENFORCEMENT OF EU JUDGMENTS

How are EU judgments enforced in Cyprus?

EU judgments are enforced in Cyprus through the procedures laid down in the Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) and the Council Regulation (EC) No. 805/2004 of the European Parliament of 21 April 2004 creating a European Enforcement Order for uncontested claims. The Republic of Cyprus acceded to the European Union on 1 May 2004 and is therefore bound by EC regulations. Thus, there was no need to implement the EC Regulations No. 44/2001 and No. 805/2004 into national law, since all regulations of the European Union have direct effect on Member States. By introducing the said Regulations, the European Union’s aim was to ensure mutual trust in the administration of justice within its boundaries and to make the recognition of judgments from one member state to the other automatic, remaining any intermediate procedures.

EC Regulation No. 805/2004 –v- EC Regulation No. 44/2001

EC Regulation No. 805/2004 offers significant advantages when compared with EC Regulation No. 44/2001. It accelerates and simplifies access to enforcement in a Member State by enforcing automatic recognition and enforcement and disposing of any other measures needed to be taken prior to enforcement. Unlike EC Regulation No. 44/2001, there is no need to obtain a declaration of enforceability in Member State where enforcement is sought under EC Regulation 805/2004 and its recognition cannot be opposed, thus making the whole procedure efficient and less expensive. However, it is necessary to note that EC No. 805/2004 only applies to “uncontested claims” as defined in Article 3(1) of the Regulation.

What are the reasons of non-enforcement of EU Judgments? Can they be challenged?

Reasons for non-enforcement are strictly the ones stated in the Regulations. Such reasons are stated in Articles 34 and 35 of EC Regulation No. 44/2001 (applied together with articles 45 and 72). Under Article 34 of EC Regulation No. 44/2001, Courts may refuse the judgment’s recognition and enforcement if the judgment is contrary to the pubic policy of Cyprus; if, where the judgment was given in default of appearance, the Defendant was not served with the document instituting proceedings in good time or in a manner as to enable him to prepare his defence; if the judgment is inconsistent with an earlier judgment of the Cypriot Courts between the same parties; or if recognition is inconsistent with an earlier judgment given in another Member State or in a third State between the same parties regarding the same cause of action. Article 35 contains provisions of non- enforcement in situations where sections 3, 4 and 6 of the EC Regulation 44/2001 had not been complied with. With regards to EC Regulation No. 805/2004, non enforcement is governed by Article 21 which states that a court will refuse enforcement if upon the application of the debtor the judgment certified as a European Enforcement Order is inconsistent with an earlier judgment given in any Member State or in a third country. This is provided that the earlier judgment involved the same cause of action and was between the same parties and the earlier judgment was given in the Member State of enforcement or fulfils the conditions necessary for its recognition in the Member State of enforcement and the inconsistency was not and could not have been raised as an objection in the court proceedings in the Member State of origin. Furthermore, it is essential to note that a foreign judgment cannot be reviewed as to its substance and therefore the courts will either accept or refuse the judgment’ s recognition and enforcement, without interfering with the substance of the judgment.

ENFORCEMENT OF NON-EU JUDGMENTS

Is Cyprus a party to any bilateral treaty or multilateral convention for the reciprocal recognition and enforcement of foreign judgments?

Cyprus is party to a number of bilateral treaties in relation to the recognition and enforcement of foreign judgments. Specifically, it has signed and ratified such treaties with the Czech Republic (Rat. Law 68/82), Hungary (Rat. Law 7/83), Bulgaria (Rat. Law 18/84), Greece (Rat. Law 55/84), Syria (Rat. Law 160/86, 13/97), Russia (Rat. Law 172/86), Ukraine

(Rat. Law 172/86 and 8/2005), Belarus (Rat. Law172/86), Georgia (Rat. Law 172/86), Serbia (Rat. Law 179/86), Slovenia (Rat. Law 179/86), Egypt (Rat. Law 32/92 and 14/96), China (Rat. Law 19/95) and Poland (Rat. Law 10/97). Cyprus is also a signatory to the following multilateral conventions relating to the recognition and enforcement of foreign judgments:

  • the Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters and Supplementary Protocol (Hague Convention) thereto;
  • the Convention on the Recovery Abroad of Maintenance (Ratification);
  • the European Convention on the Recognition and Enforcement of Foreign Arbitral Awards; and
  • the European Convention on the Recognition and Enforcement on Certain

International Aspects of Bankruptcy. With regards to the Hague Convention, it is important to note that even though Cyprus has signed the Convention, the Convention has no practical effect on its own because according to Article 21 decisions rendered in a Contracting State shall not be recognised or enforced in another Contracting State unless the two States, being Parties to the Convention, have signed a Supplementary Agreement to this effect.

Is there a specific procedure followed in court in order to enforce foreign judgments?

In order to simplify procedures for enforcement and execution of foreign judgments in Cyprus, Law No. 121(1)/2000 was introduced in relation to the Recognition, Enforcement and Execution of Foreign Judgments which applies to all cases in which recognition, registration and enforcement of decisions of foreign courts is requested. According to section 5, an application by summons accompanied by an affidavit must be filed at the District Court and in accordance with the applicable Civil Procedure Rules in Cyprus. The application will be fixed for hearing within four weeks from the filing date and the respondent must be served with a copy of the application without any delay. The respondent is given the opportunity to contest the application by filing a written objection accompanied by an affidavit at least two days before the date of the hearing. The Court will normally refuse to extend the time period for filling an objection unless special reasons are put before the court justifying the granting of such an extension. However, it should be borne in mind that if the original judgment was obtained in a EU Member State, then the procedure followed will be that stated in the Regulation itself. According to EU Regulation 44/2001 a party seeking recognition or applying for a declaration of enforceability shall file an application by summons at the court where judgment enforcement is sought and produce a copy of the judgment that satisfies the conditions necessary to establish its authenticity together with a certification that the judgment is enforceable in the member state of issue. The court or competent authority of the member state where judgment was given shall issue, at the request of any interested party, a certificate using the standard form in annex V to the Regulation. The applicant must also give an address for service of the respondent within the area of jurisdiction of the court applied to.

ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

Can foreign arbitral awards be enforced in Cyprus?

Foreign arbitral awards can be enforced in Cyprus by virtue of the provisions stated in the Cyprus International Commercial Arbitration Law No.101/1987 and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 which was ratified by Law No. 84/1979.

Has Cyprus adopted the UNCITRAL Model Law?

Cyprus has fully adopted the suggestions from the UNCITRAL Model Law into Law No. 101/1987. The only additional provision included within Cypriot legislation is the definition of the term “commercial arbitration” which refers to matters arising from relationships of a commercial nature whether contractual or not. Additionally, it should be noted that although the Law has adopted the UNCITRAL Model there are still however some provisions within the Law that are structured slightly differently from those of the UNCITRAL Model.

ENFORCEMENT OF FOREIGN ARBITRAL AWARDS UNDER THE 1958 NEW YORK CONVENTION

What is the effect of Cyprus being a signatory to the 1958 New York Convention on the enforcement of foreign arbitral awards?

Since Cyprus has signed the New York Convention on the enforcement of foreign arbitral awards and has ratified it under Law No. 84/1979 it is obliged to enforce awards made in foreign states that are signatories to the Convention, because the Convention imposes an obligation on all contracting states to recognise arbitral awards as binding and to enforce them.

What are the reasons for non-enforcement of a foreign arbitral award under the New York Convention?

Recognition and enforcement of an arbitral award may be refused for the reasons stated in Article V of the Convention. Thus, an arbitral award will not be enforced in Cyprus if the arbitration agreement is invalid under the laws of Cyprus or the laws of the country which it was made or the parties were incapable of entering into an arbitration agreement; if the party against whom the award was made was not given proper notice of the appointment of the arbitrator or the proceedings or was not able to present his case; if the foreign award was outside the of the arbitration agreement; if the composition of the authority was not in line with the agreement of the parties or the applicable law where the arbitration took place; if the award has not yet become binding on the parties or has been set aside or suspended. Recognition and enforcement of an arbitral award may also be refused by Cypriot courts if the subject matter of the arbitration is not capable for settlement under Cypriot law or if the subject matter violates the public policy of Cyprus.

What is the procedure followed in order to enforce a foreign arbitral award under the New York Convention ?

The party seeking enforcement must file an application by summons accompanied by an affidavit. Such application must be served to the other party and pursuant to Article IV of the Convention such application must also be accompanied with the duly authenticated original award or a duly certified copy of it and the original agreement or a duly certified copy of it. If the award is not drafted in Greek, the party applying for recognition must also produce an official translation in Greek of the aforementioned documents. Once the application is served upon the other party, he is then given the opportunity to appear before the court and oppose the registration of the award.

ENFORCEMENT OF FOREIGN ARBITRAL AWARDS UNDER THE CYPRUS INTERNATIONAL COMMERCIAL ARBITRATION LAW

Can foreign arbitral awards be enforced in Cyprus through another legal basis ?

Yes. Arbitral awards relating to commercial matters can be enforceable in Cyprus through the provisions of the Cyprus International Commercial Arbitration Law (Law No. 101/1987). Section 35 provides that irrespective of the country in which an arbitral award was made, such award shall be recognised as binding.

What are the reasons for non-enforcement of a foreign arbitral award under Law No. 101/87?

Recognition and enforcement of a foreign arbitral award may be refused for the reasons stated in section 36 of the Law. Section 36 provides that an arbitral award may be refused only if the party against whom enforcement is sought, proves to the Court that one of the parties to the arbitration agreement was under some incapacity; or the said agreement was not valid under the law to which the parties had subjected it to; or 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 in any case unable to present his case or the award dealt with a dispute outside the scope of the arbitration or the arbitral tribunal; or the arbitral procedure was not in accordance with the agreement of the parties or not in accordance with the law of the country where the arbitration took place; or the award had not yet become binding on the parties or was set aside or suspended. Recognition and enforcement of an arbitral award may also be refused if the subject matter of the dispute is not capable of being subject to arbitration under the laws of the Republic of Cyprus or the recognition or enforcement of the award would be contrary to the public policy of the Republic of Cyprus. From the above it can be seen the reasons for non-enforcement of a foreign arbitral award under Law No. 101/87 are the same with those of the convention.

What is the procedure that must be followed to enforce an arbitral award under Law No. 101/87?

The party seeking enforcement must file an application by summons accompanied by an affidavit at the District Court and in accordance to the Civil Procedure Rules of Rules applicable in Cyprus. Such party much also produce a duly authenticated original award together with the original agreement or a certified copy of the award and agreement. If the award and agreement are not drafted in Greek the Court may ask for an official translation. The application will be fixed for hearing within 4 weeks from the filing of the application and the respondent will be given the opportunity to contest the application by filing a written objection.

What is the approach of the Cypriot Courts regarding enforcement of foreign arbitral awards?

Generally, Cypriot Courts will be very careful when applying the provisions of non­enforcement of foreign awards. To our knowledge, there have only been a few cases where Cypriot Courts have refused and denied the enforcement of foreign awards.

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