Tag: Cyprus law

EAC & CYTA contract: smart electricity meters

Posted on | by Paschalis Paschali
IOANNIDES DEMETRIOU LLC, acting on behalf of the Electricity Authority of Cyprus, has secured a victory of pivotal significance to our client and the electricity market of Cyprus

Client Alert: IOANNIDES DEMETRIOU LLC, acting on behalf of the Electricity Authority of Cyprus, has secured a victory of pivotal significance to our client and the electricity market of Cyprus in general before the Court of Appeal (Administrative Division).

The judgment in Appeals 13/2024 and 14/2024, handed down on the 18.7.2024, reverses the first instance judgment of the Administrative Court and paves the way for the signature of the contract between the Electricity Authority of Cyprus and the Cyprus Telecommunications Authority (CYTA) for the installation of 400,000 smart electricity meters all over Cyprus.

This project, valued at approximately EURO 50million, is a highly significant project as it represents a major and long awaited first step in the opening of the electricity market as well as the advent of the smart grid in Cyprus. Additionally, the introduction of a first roll out of 400,000 electricity smart meters will allow EAC and consumers to obtain electricity consumption data in real time. This translates to cost savings, improved efficiency, better planning and forecasting in relation to energy consumption and a host of other advantages the Cypriot consumer can benefit from.

The three lawyers involved in the matter from the outset on the part of our firm were our Managing Director, Andrew Demetriou and senior members of our Administrative law team, namely Partner Mrs. Anna Christou and Associate Director Mr. Demetris Kailis.

Pictured above at the signing ceremony of the contract between EAC and CYTA on 24.7.2024, from left to right, is the General Manager of EAC Mr. Adonis Yiasemides, the President of the Board of EAC Mr. George Petrou, the President of the Board of CYTA Mrs. Maria Tsiakka Olympiou, the Minister of Energy of the Republic of Cyprus Mr. George Papanastasiou and the Director General of the Ministry of Energy Mr. Marios Panayides.

The Implementation of Telework Law Framework

Posted on | by Paschalis Paschali
The implementation of the remote working law framework. Article by Irene Kattami, Senior Associate at Ioannides Demetriou LLC

The landscape of work has undergone significant transformation in recent years, which was particularly accelerated by the global pandemic. Teleworking has become increasingly common, prompting the need for a clear legislative framework to govern its implementation. This need has been addressed with the House of Representatives’ approval of a comprehensive framework regulating remote working. The Framework for Telework of 2023 Legislation (the “Law”), which came into effect on December 1, 2023, aims to establish guidelines and protections for both employers and employees navigating the remote work environment.

The Law stipulates that teleworking can be implemented under the following circumstances: (i) an optional teleworking scheme may be adopted subject to a written agreement entered into between the employer and the employee, (ii) mandatory teleworking may be imposed under a Decree issued by the Minister of Health due to public health considerations and (iii) mandatory teleworking may be required for an employee whose health is demonstrably at risk, which can be mitigated by refraining from working on the employer’s premises.

Apart from prescribing the conditions under which teleworking can be established, the Law also delineates the responsibilities that the employer bears towards the employee. Firstly, among these obligations is the coverage of expenses incurred by the employee related to teleworking. These expenses include various aspects, such as equipment costs (unless agreed to utilize the employer’s equipment), telecommunications, usage of the home workspace, and the maintenance and repair of equipment. Moreover, the employer bears the responsibility of ensuring that the employee receives the essential technical support required for their work. To further regulate the financial aspects, the Minister of Labour and Social Insurance is expected to issue a Decree specifying the minimum teleworking cost payable to the employee. Importantly, the Law stipulates that any expenses covered by employers will not be considered as part of the employee’s remuneration, but they are deemed as deductible expenses, exempted from both social insurance and taxation.

In maintaining consistency with the aforementioned responsibilities, the employer is obliged, among other things and in addition to those outlined in the Occupational Safety and Health Law 1996 to (i) have at their disposal a suitable and sufficient written risk assessment of the existing teleworking risks, (ii) determine the preventive and protective measures to be taken based on the written risk assessment, (iii) provide such information, instructions, and training to ensure the safety and health of their employees. Employers have the same health and safety responsibilities for employees, whether they work from home or in a workplace.

Furthermore, the Law requires that employers should provide certain information to employees regarding teleworking, within eight (8) days from the date of commencement of such arrangement. This information includes:
a) The employee’s right to disconnect;
b) An analysis of the extend of teleworking costs incurred by the employer;
c) The equipment necessary for the provision of services remotely and the procedures in place for the technical support, maintenance and repair of the equipment;
d) Any restrictions on the use of the equipment and any penalties in case of violation of the restrictions;
e) The agreement regarding remote readiness, it’s time limits and the response deadlines of the teleworking employee;
f) An evaluation of the risks associated with remote work and measures taken by the employer for their prevention based on the risk assessment;
g) The responsibility to protect and secure the professional and personal data of the teleworking employee and the relevant procedure to comply with such obligation;
h) The supervisor from whom the teleworker will receive instructions.

Any information which does not have to be personalised and addressed to teleworking employees, can be communicated to appropriate personnel through the employer’s internal policies.

Employees engaged in teleworking have the equivalent rights and obligations as their counterparts working on-site at the employer’s premises, including rights or obligations concerning their workload, assessment criteria and procedures, compensation, access to employer-related information, training, professional development, and where applicable trade union activity including their unhindered and confidential communication with trade union representatives.

A key protection established by the Law is the employees’ right to disconnect in order for the provisions of the Transparent and Predictable Working Conditions Law to be implemented. Employers and employees’ representatives are required to agree on the technical and organizational methods to ensure that remote employees can disconnect from electronic communication without any adverse consequences. If no such agreement is reached, employers must still notify employees of this right.
Moreover, the Law also sets out the duties and powers of Inspectors, who are officials of the Ministry and/or other public servants appointed by the Minister of Labour and Social Insurance. Their primary responsibility is to ensure the thorough and effective enforcement of the provisions of the Law. Failure to comply with the provisions of the Law could render employers liable, with potential fines upon conviction not exceeding €10.000.

In conclusion, the Framework for Telework of 2023 represents a significant step towards formalizing and protecting the evolving landscape of remote work. This legislation not only establishes clear guidelines and responsibilities for both employers and employees but also ensures a fair and supportive environment for teleworking. By addressing key aspects such as expense coverage, health and safety requirements, and the right to disconnect, the Law aims to create a balanced framework that promotes productivity while safeguarding employee well-being. As teleworking becomes an integral part of the modern work environment, the effective implementation and adherence to this framework will be crucial in fostering a sustainable and equitable remote working culture.

Corporate tax policy and the European Union institutions

Posted on | by Paschalis Paschali
Newsletter: Corporate tax policy and the European Union institutions by C. HJI Panayi, June 2024

On the 9th of June 2024, Cyprus and other Member States elected their representatives to the European Parliament. This is the only institution of the European Union whose members are directly elected from the people. Nevertheless, this is also one of the institutions with limited powers in many areas. As far as taxation is concerned, the European Parliament has no role whatsoever in the legislative process. This is rather ironic, given the general political slogan of ‘no taxation without representation’.

But which institution makes tax policy in the European Union? The answer is not very straightforward and requires a basic understanding of institutional dynamics in the European Union and competences.

The most important institutions in the European Union are the European Commission, the Council of the European Union, the European Parliament, the European Council and the Court of Justice of the European Union. The legal system of the European Union, as underpinned by the Treaty on the European Union and the Treaty on the Functioning of the European Union, empowers these institutions to participate in the law-making process but only when such power has been so conferred under EU law. In other words, different institutions have different law-making powers, and can only act within the scope of these powers (i.e. competences).

The European Commission is the quasi-executive body of the European Union which proposes laws and manages and implements EU policies. In the field of competition law, it also has some judicial functions. There are 27 Commissioners – one from each Member State. The Commissioners are not directly elected but they are appointed by the government of each Member State. However, once appointed, they are not supposed to represent their Member State. Rather, they take on a portfolio of a policy area and assisted by the relevant directorates-general, they exercise leadership in that area. As far as taxation is concerned, the relevant portfolio is that of ‘economy’ and it is assisted by the DG-TAXUD.  

The Council of the European Union is the institution which represents Member State governments in different configurations. The configuration relevant for taxation is the Economic and Financial Affairs Council (ECOFIN) configuration, which is made up of the economic and finance ministers from all Member States. It is in the ECOFIN meetings that the Commission tax proposals are considered and voted upon. The Presidency of the Council rotates among Member States every six months.

The European Council is the EU institution that defines the general political direction and priorities of the European Union. The members of the European Council are the heads of state or government of the 27 EU member states, the European Council President and the President of the European Commission. It has bi-annual meetings, usually at the end of each Council presidency.

The European Parliament comprises of the Members of the European Parliament, which are directly elected by voters in each Member State. Although usually parliaments are legislative bodies, the European Parliament’s powers are rather limited and circumscribed. In the adoption of legislative acts, a distinction is made between the ordinary legislative procedure (co-decision), whereby the European Parliament is on an equal footing with the Council, and the special legislative procedures, which applies only in specific cases where Parliament has a consultative role only. In certain areas such as taxation the European Parliament can only ever give an advisory opinion.

The Court of Justice of the European Union is the judiciary of the European Union and is considered to be the guardian of the Treaties. The judges of the Court of Justice are appointed by Member States though again, not to represent the Member States, but to apply and interpret EU law in the spirit of the acquis communaitaire.

As mentioned above, each institution can only exercise law-making powers only to the extent that it has competence to do so – this is EU competence. Broadly, EU competence can be exclusive or shared. Where the EU does not have any competence, then this area has remained within the exclusive powers of Member States.

Trade policy and trade law is an exclusive competence of the European Union. This means that only the European Union (through the relevant institution(s)) can legislate on trade matters and conclude trade agreements with third countries. A Member State cannot enter into its own trade agreements with other countries, nor deviate from the EU’s trade rules. This was one of the thorny issues under the Brexit negotiations: the UK was not able to negotiate trade agreements with third countries until it left the EU. That is why there was a brief transition period following the UK’s departure from the EU during which period it still benefitted from the EU’s trade agreements with third countries.  

There can also be shared competence, where both the EU and Member States can legislate. Examples of shared competence are the internal market, environment and consumer protection.  

As far as corporate taxation is concerned, the EU has no competence whatsoever. This remains within the powers of Member States. Nevertheless, even in areas where the EU has no competence, sometimes, the EU legislates by using what I call ‘proxy’ legal bases under the Treaty. More characteristically, in the area of taxation, general (i.e. non-tax specific) Treaty provisions have been used to propose tax legislation, such as Art 115 of the Treaty on the Functioning of the European Union. Pursuant to this Article, the Commission can propose directives in any area it does not have competence (e.g. taxation) on the basis that this is necessary for the establishment or functioning of the internal market. This Treaty provision stipulates that for these proposals to become law, they must be approved by all Member States in Council. This unanimity requirement often makes it very difficult for any tax proposal to go through, as even one Member State can veto the proposal.

A distinction should be made between direct taxation (which includes corporate taxation and the taxation of individuals) and indirect taxation (which includes VAT, customs & excise taxes, etc). The latter area is largely harmonized. It should be pointed out that the Treaty provision which enables the harmonization of indirect taxes (Art 113 of the Treaty on the Functioning of the European Union) also requires unanimity in Council. However, from the early stages of the European Union, there has always been more willingness by Member States to harmonise these taxes compared to direct taxes, which are thought of as more closely aligned with sovereignty.

In any case, due to the lack of competences and the use of general Treaty proxy bases, the Commission and the Council are effectively the only EU institutions that have a meaningful role in the development of direct tax policy. This can be problematic if it is a controversial proposal, which does not enjoy the support of all Member States. It can take years for such proposal to go through, if at all. Even if it does go through, the amendments made to appease some Member States may significantly water down the approved legislation or render it incoherent.

Let us take as an example the proposal for a Financial Transaction Tax. This was first proposed in 2011 but has never been approved. There was an attempt to bypass the unanimity requirement by proposing to introduce a Directive through enhanced cooperation (i.e. only to bind the Member States agreeing to it) but again, this has not been successful. Up until recently, a draft Directive on a Financial Transaction Tax featured in the agenda of ECOFIN meetings but it seems to have faded away.

A more recent example of a proposal which faced opposition in Council but this time eventually got through is the Directive on Minimum Effective Tax Rate. This was originally proposed in December 2021, with the expectation that it would be transposed into the domestic law of Member States by 1 January 2023. However, from the beginning Member States voiced concerns and asked for the delayed implementation of it (mostly, Estonia, Hungary and Poland). Two subsequent revised compromise texts were rejected at ECOFIN meetings in March and April 2022. Whilst many had written off this draft Directive, rather surprisingly, unanimity was achieved in Council (at an ECOFIN meeting) in December 2022 and the Directive was eventually approved.

One could argue that the power of the fiscal veto protects some of the smaller Member States from being forced into unwanted tax harmonization. However, experience from recent years suggests that apart from some Member States in the eastern bloc, smaller Member States such as Cyprus, Malta, Ireland, Luxembourg are unlikely to veto tax proposals. The fiscal veto is more effectively used by the larger Member States to block a proposal. For example, the UK’s objections to the proposed Financial Transaction Tax were one of the reasons that the proposal never went very far. It was feared that with the UK’s departure from the European Union there would be a power vacuum and all tax proposals would be pushed through in Council but some Member States have very effectively filled this gap.  

This brief overview explains how the institutional dynamics, combined with the very restrictive legal bases (Treaty bases) for harmonization, have led to limited and often uncoordinated legislation produced in the area of corporate taxation. There have been calls to remove the unanimity requirement and allow other Treaty bases to be used which only require qualified majority voting. So far, these calls have been resisted by most Member States. Nevertheless, this seems to be a pyrrhic victory as experience so far shows that many of the smaller Member States are rather muted when it comes to negotiations in Council. But the threat of vetoing Commission tax proposals, especially if raised by more than one Member States, is a powerful deterrent for the Commission to make amendments. Therefore, alliances amongst Member States are crucial in influencing tax policy in the EU.  

What this brief note shows is that in principle, Member State governments have the final say in the development of corporate tax policy, through their voting in Council. However, whether they choose (or are able to) exercise their power of veto is often a political question. Rather counterintuitively, due to the limitations of the legislative process, taxpayers often have a greater role in the development of tax law in the EU, but in a reactive manner. Taxpayers can challenge domestic tax laws on the basis that they breach the EU’s fundamental freedoms and fundamental rights. They can also make complaints to the Commission and urge it to start an infringement proceeding against a Member State on the basis of Art 258 of the Treaty on the Functioning of the European Union. Many important developments in the area of corporate tax policy in the European Union were in fact a result of taxpayers’ action, with the help of a good legal team.

For more information on any of the issues raised in this newsletter, please get in touch with us.

Liquidated damages in construction contracts

Posted on | by Paschalis Paschali

Client Alert: Ioannides Demetriou LLC has scored an important victory for its client, the University of Cyprus, in a bitterly contested interim order application by a contractor seeking to restrain the University (as employer in the contract) from deducting liquidated damages for delay under the contract. The contract was the standard Cyprus public sector construction contract.

The Applicant contractor claimed that the contract had become “time at large” due to the fact that the employer had failed to respond to an application for extension of time and had also given instructions for additional works after the contractual date for completion of the works.

The judgment provides both contractors and public sector employers with guidance as to the legal considerations that may influence a Court in relation to issues such as requests for an extension of time, the liquidated damages clause and the role of KEAA in the standardised construction contract for public works. The court adopted a common sense approach and emphasised the need for both contractor and the employer to comply with the terms of the contract in so far as the submission of claims and their evaluation is concerned.

The case was handled by our Senior Associate, Anna P. Christou

Links to judgment: pp.1-10 / pp.11-20 / pp.21-30

Χρόνος στα Κατασκευαστικά Συμβόλαια

Posted on | by Paschalis Paschali

Μια σύμβαση εργολαβίας, όσο περίπλοκη και αν είναι, είναι ουσιαστικά μια συμφωνία μεταξύ
ενός εργοδότη / ιδιοκτήτη και του εργολάβου, σύμφωνα με την οποία, σε αντάλλαγμα για το
ποσό της σύμβασης, ο εργολάβος συμφωνεί με τον εργοδότη / ιδιοκτήτη να εκτελέσει τις
εργασίες για μια σταθερή ή προσδιορίσιμη τιμή, εντός καθορισμένου χρόνου, στην ποιότητα
που ορίζεται στη σύμβαση, όπως εύλογα καθορίζεται από τον Αρχιτέκτονα / Μηχανικό /
Εργοδότη / εκπρόσωπο του Εργοδότη, ανάλογα με την περίπτωση.


Επομένως, ο χρόνος είναι ένα σημαντικό στοιχείο σε μια κατασκευαστική σύμβαση. Είναι
τόσο σημαντικός όσο το χρήμα.


Είναι επίσης η πιο κοινή πηγή διαφορών.

Διαβάστε πιο κάτω την μελέτη με τίτλο: Χρόνος στα Κατασκευαστικά Συμβόλαια του Ανδρέα Δημητρίου, Διευθύνων Σύμβουλος, Ioannides Demetriou LLC:

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Illegal purpose contracts: Can they ever be enforced under Cyprus Law? – Understanding the “illegality defence”

Posted on | by Paschalis Paschali

“No Court will lend its aid to a man who founds his cause of action upon an immoral or illegal act” said Lord Mansfield CJ in Holman v Johnson (1775) 1 Cowp 341, and marked the Cyprus legal framework around illegality in contracts up to the present date. The principle was redefined in the case of Tinsley v Millingan [1994] 1 AC 340 where the so called “reliance test” was established, essentially providing that if a Claimant needs to rely upon an illegal act in order to advance his claim, then that claim should be rejected. Also known as the common law principle of “ex turpi causa non oritur actio” (meaning “no action can arise from an illegal act”), this maxim usually presents itself as the “defence of illegality”, which is invoked by Defendants so as to argue that the claim against them should not succeed as it is based upon an illegal act.

The case of Christodoulou and others v Antonius H.F.M. Vraets, Civ.Appeal No. 329/2006, is a good example of how Cyprus Courts react to the invocation of this defence. In that case, the Claimant, claimed that he was entitled to the recovery of the amount of $856.000 which he paid as part of an agreement between himself and Defendants 1 and 2. The agreement considered the purchase of rough diamonds from Africa, which would subsequently be sold to the black market and would be exported from Angola to Belgium for processing. All three parties would divide the proceeds from the sale of the processed diamonds.  The Claimant brought an action against both Defendants, as after the payment of the amount above he received no percentage from the sale of the processed diamonds. Defendant 1 attempted to rely on the “illegality defence” and subsequently alleged that since the agreement between the parties was carried out for an illegal purpose, the Court could not “lend its aid” to a man whose cause of action was based on an illegal contract and therefore the Claimant was not entitled to recover his money. The Cyprus Court of Appeal, based their reasoning on the cases of Holman v Johnson and Tinsley v Millingan above and upheld the Defendant’s argument. It was essentially held that since the Claimant was aware of and participated in the illegality of the transaction, he was not entitled to the recovery of his money.

The case of Andronikou v Mavropoulou and another, Civ. Appeal No. 14/2014 is also relevant. In this case, the Claimant brought an action against the Defendant and his daughter for fraud, false representation, deceit and unjust enrichment. The Claimant contended that she had made an agreement with the Defendant, that she would pay him an amount of money, which the Defendant subsequently would pay to certain “key officials” of a developing company so as to persuade them to buy the Claimant’s land. The Claimant’s land was indeed acquired by the developing company but the Defendant took the money and placed them to his daughter’s account instead. The first instance court held that the Claimant was entitled to the return of her money. The Defendant appealed. The Court of Appeal’s decision was not unanimous. It was held by majority that it was evident that the agreement between the parties was signed for an illegal purpose, namely bribery. The Court could not therefore “lend its aid” to the Claimant and hence the latter was not entitled to the recovery of her money.

Remarkably enough, the Court of Appeal accepted in both cases cited above that the Claimant and the Defendants were “in pari delicto”, meaning “in equal fault” regarding the signing of the illegal contract. Yet despite the above finding, the Court held that the Claimants were not entitled to the recovery of their property, the inevitable result of their decision being that the property remained to the Defendants’ possession.

The following questions subsequently arise: If it is accepted that both parties have contributed equally to the illegality of the contract, why is it acceptable for one party to retain the property and not for the other? Why do we consider it unacceptable for the Claimant to recover his property because of his misconduct, while, the Defendant who is culpable of the same misconduct, is often allowed to keep the property?

Although it is evident that this strict approach aims at encouraging morality and ethos in every-day transactions, it is doubtful whether it represents the common sense of justice given the “paradox” results that is sometimes creates.

The UK Courts did not fail to notice the “anomalies” created by the strict application of the “illegality defence” and completely changed their approach as to its application in 2016 with the adjudication of the case of Patel v Mirza [2016] UKSC 42. The Claimant in this case transferred an amount of money to the Defendant intending the latter to trade in shares in the Royal Bank of Scotland using insider information that he anticipated receiving. Neither the insider information, nor the purchase of shares ever materialized. When the Claimant brought an action against the Defendant, the Defendant attempted to rely on the “illegality defence” and argued that the Claimant could not recover his money as trading by using insider information is illegal. The Supreme Court held that the Claimant was entitled to the recovery of his money and that in fact, there is no reason for a party who manages to prove that he is capable of recovering his property on the basis of unjust enrichment, not to do so, just because the monies were paid to the Defendant for an illegal purpose. Additionally, the Supreme Court, held that in applying the “illegality defence” the following three considerations need to be taken into account: a)what is the purpose of the law that has been infringed and whether rejecting the claim would enhance that purpose b) any other relevant public policy on which the denial of the claim may have an impact c) whether the denial of the claim would be a proportionate response to the illegality.

The approach adopted in of Patel v Mirza demonstrates a shift from a rigid approach to a more flexible one which takes into consideration the peripheral circumstances of the case and is capable of producing more reasonable and pragmatic results.

Although the case of Patel v Mirza has been invoked in several first instance court decisions in Cyprus, to some of which, the invocation was indeed successful, it is apparent that the dominant approach regarding the  application of the illegality defence remains the one established by Holman v Johnson and Tinsley v Millingan. Of course, the fact that the Cyprus Court of Appeal has not yet been given the chance to apply or make holistic reference to the case of Patel v Mirza plays an important role to the reproduction of the strict approach established by the “reliance test”.

What is certainly inarguable is that the case of Patel v Mirza which has shown the “way forward” to a more liberal approach has not been overlooked by the Cyprus Courts. What remains to be seen is how this approach will affect and re-shape the application of the “illegality defence” in Cyprus law.

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Cyprus’ Path in the European Green Deal: Integrating the Just Transition Mechanism

Posted on | by Paschalis Paschali
the European Green Deal #EUGreenDeal

As the European Union (EU) embarks on a transformative journey towards a greener and more sustainable future through the European Green Deal (EGD), the question of ensuring that no one is left behind takes a central stage. This article aims to analyse the measures that the government of Cyprus is undertaking to achieve its 2030 and 2050 climate targets and to assess how the concept of social inclusion is endorsed along the way.

National Energy and Climate Plan (NECP)

Cyprus, like other EU nations, has embraced the ambitions of the EGD, aiming to tackle climate change and move towards sustainability. [1]  The NECP is a vital part of this, mandated by EU regulations from 2021 to 2030. Its main objective is to devise cost-effective policies to meet energy and climate goals, driving economic growth and addressing environmental challenges. [2] Approved by Cyprus’ Council of Ministers in January 2020, it outlines the energy sector’s current status, past policies, and future trajectory to achieve national goals by 2030. Its three key pillars focus on emission reductions, energy efficiency, and increasing renewable energy sources.

For emissions, Cyprus targets a 21% reduction in non-ETS sector emissions compared to 2005 levels. Strategies include promoting natural gas, boosting renewable energy, improving carbon sinks, enhancing energy efficiency across sectors, and reducing emissions in transport, agriculture, and waste. [3]

Regarding energy efficiency, Cyprus aims for a final energy consumption of 2.0 megatonne of oil equivalent (Mtoe) and a primary energy consumption of 2.4 Mtoe by 2030. The plan includes energy efficiency obligations for distributors, low-interest loans for efficiency projects, support programs for households and businesses, voluntary agreements with businesses, and various initiatives for efficient lighting, water, and transportation.

Lastly, Cyprus aims to increase the share of renewable energy sources (RES) in its energy consumption. Targets include RES constituting 23% of gross final energy consumption, 26% of gross final electricity consumption, 39% in heating and cooling, and 14% in transportation.

To achieve these targets, Cyprus has adopted a wide-ranging approach, including various support schemes for RES, incentives for electric vehicles, and integrating RES and energy efficiency into public buildings. Efforts also focus on enhancing RES utilisation in the transportation sector.

Solar water heater adoption rates are impressive, with over 90% of households and 50% of hotels utilising these systems. However, effective energy storage solutions are crucial to fully harness solar potential. [4] Initiatives like the experimental energy storage system in Nicosia and EU projects aim to develop policies for integrating energy storage effectively, boosting photovoltaic self-consumption in the Mediterranean.[5]

To address energy security, Cyprus is implementing Liquefied Natural Gas (LNG) imports through the “CyprusGas2EU” project, diversifying energy sources and reinforcing security. Support for projects like the “EuroAsia Interconnector” and “EastMed Pipeline” will further eliminate energy isolation. The EuroAsia Interconnector, connecting Cyprus’ electricity network to the EU continental network, will facilitate RES development, reduce CO2 emissions, and enhance Cyprus’ position in the regional energy sector. [6] This project will also pave the way for widespread adoption of solar energy and sustainable practices, promoting both environmental and economic sustainability. [7]

Future trajectory

Importantly, Cyprus has submitted an updated draft of its NECP to the European Commission for review and approval. This revision is prompted by institutional obligations, failure to meet existing targets, and changes in European energy and climate goals. The revised draft includes, inter alia, commitments to reduce GHG emissions by 32% by 2030 compared to 2005 levels, increase carbon dioxide removals from land use, achieve a 42.5% penetration of RES in gross final consumption by 2030, and contribute to the EU’s mandatory energy efficiency improvement target. [8]

Additionally, Cyprus aims to design policies to support low-emission growth, laying the groundwork for achieving zero emissions by 2050. The Long-Term Low GHG Development Strategy for 2050 aligns Cyprus with the European objective of transitioning to a climate-neutral economy by 2050, emphasising a commitment to a greener future.[9] This strategy complements the NECP and envisions a shift towards clean technologies, promoting innovation and new business models, mitigating climate change impacts, enhancing economic competitiveness, and addressing environmental challenges.

Nevertheless, transitioning to carbon neutrality and renewable energy adoption presents a series of social challenges that require proactive solutions. Therefore, as Cyprus embarks on its journey towards a greener future, the integration of the Just Transition Mechanism (JTM) takes a central role in ensuring that this transition is not only environmentally sound but also socially equitable.

Just Transition Mechanism

The JTM is a critical component of the EGD, acknowledging the socio-economic realities of member states.[10] It provides a framework for financial and policy support to facilitate the transition to cleaner and more sustainable economies while safeguarding livelihoods and communities.[11]Each member state’s unique circumstances further underscore the necessity of adaptable strategies to harmonise environmental and economic aspirations.[12]

In terms of Cyprus, it has recently received the approval for its Partnership Agreement and Just Transition Plan from the EU, entailing over €1 billion in funding from 2021 to 2027. This funding will support various initiatives aimed at promoting economic, social, and territorial cohesion, facilitating the green and digital transition, and fostering competitive, inclusive, and sustainable growth. [13]

One of the most important aspects of the Agreement is the ‘Thalia 2021-27’ Cohesion Policy operational program.[14] A multi-annual, multi-fund development initiative, the Thalia program outlines Cyprus’ strategic plan for utilising resources allocated through the Cohesion Policy Funds.[15]

Central to this initiative is the Just Transition Fund (JTF), which will support an array of vital interventions. The strategic goal is to reduce GHG emissions at the power station in Dekelia and of energy-intensive businesses in general.[16] Recognising the need for social inclusion, Cyprus plans to allocate a portion of the JTF budget to modernise labour market services and support vulnerable populations, women, and youth. Additionally, initiatives to address the shortage of qualified human resources through green education initiatives are emphasised. The program prioritises equal opportunities, non-exclusion, and non-discrimination, ensuring gender equality and compliance with fundamental rights.

In conclusion, Cyprus’ proactive approach aligns with the EGD, addressing climate change, promoting economic growth, and ensuring social inclusion. However, and despite the series of green measures and initiatives that are underway, the nation faces a substantial gap between its commitments and actual outcomes.[17] To improve results and make progress toward the 2030 and 2050 targets, the government of Cyprus must enhance its efficiency in the public sector and collaborate closely with the private sector to streamline not only the processes but also the procedures for implementing all its ambitious projects.

References and URLs:

[1] General Secretariat of European Affairs, ‘CY National Strategy for EU Affairs’ (November 2021)

[2] ‘National Energy and Climate Plans (NECPs)’ <https://energy.ec.europa.eu/topics/energy-strategy/national-energy-and-climate-plans-necps_en>

[3] ‘Cyprus’ Integrated National Energy and Climate Plan’ (January 2020)

[4] Theodoros Zachariadis, ‘Monitoring EU Energy Efficiency First Principle and Policy Implementation’ (Odyssee Mure, November 2021)

[5] ‘Invest Cyprus – CEO Interviews 2018’

[6] ‘Commission Participates in Launch of EuroAsia Electricity Interconnector’

[7] EuroAsia, ‘Significant Benefits for Cyprus from Construction of the EuroAsia Interconnector | EuroAsia Interconnector’ (26 July 2023)

[8] ‘PRELIMINARY DRAFT UPDATE CONSOLIDATED NATIONAL PLAN OF CYPRUS ON ENERGY AND CLIMATE OF CYPRUS 2023’ (27 July 2023)

[9] Department of Environment, Ministry of Agriculture, and Rural Development and Environment, ‘Cyprus’ Long-Term Low GHG Emission Development’ (September 2022)

[10] ‘The Just Transition Mechanism’

[11] Aliénor Cameron and others, ‘A Just Transition Fund – How the EU Budget Can Best Assist in the Necessary Transition from Fossil Fuels to Sustainable Energy’ [2020] Policy Department for Budgetary Affairs Directorate General for Internal Policies of the Union

[12] Sebastiano Sabato and Boris Fronteddu, ‘A Socially Just Transition through the European Green Deal?’ [2020] SSRN Electronic Journal

[13] ‘Partnership Agreement and Just Transition Plan for Cyprus’ (European Commission – European Commission)

[14] ‘ΘΑΛΕΙΑ 2021-2027- Θεμέλια Αλλαγής, Ευημερίας, Ισότητας Και Ανάπτυξης’ (2022)

[15] ‘Short Description – ΘΑλΕΙΑ 2021-2027’ (21 June 2022)

[16] Green Deal: Pioneering Proposals to Restore Europe’s Nature by 2050 and Halve Pesticide Use by 2030’

[17] European Commission, ‘2023 Country Report – Cyprus’, (2023), COM(2023) 613 final

Expert Witnesses under the New Civil Procedure Rules

Posted on | by Paschalis Paschali

The new Civil Procedure Rules, which have entered into force on the 1st of September 2023, have brought about monumental changes in the way in which cases will be heard before the Cypriot Courts.

A very important change comes with Part 34 of the new Regulations, which concerns the evidence given to the Court by Experts. Part 34 has completely revised what was in force up until now in relation to Expert evidence. The ultimate purpose of this new Part 34 is to limit the testimony of Experts so as to resolve the dispute faster and with a reduced costs burden. If the Expert ignores his obligations towards the Court, there is a real risk that the Court will decide that this testimony cannot be taken into account.

The general principle that Experts must be objective and impartial, of course, still applies.  

One of the two very important changes brought about by Part 34 is that, whereas until recently (before the entry into force of the New Civil Procedure Rules) each party in Court proceedings, selected the Expert whose testimony it wished to adduce to the Court, without first being obliged to submit a request, this unfettered right will no longer exist.

The summoning of an Expert by the parties can now only be achieved by applying to the Court. A disputing party, which wishes to file a relevant Expert Report with the Court, may not do so without prior permission, and when such permission is requested, the issues to be dealt with by that Expert must, inter alia, be specified.

However, what must be borne in mind by both the parties to the dispute and the Court, is that the right of the Court to limit the testimony of the Expert cannot be exercised arbitrarily and must always be exercised in the light of the overriding objective of a achieving a fair trial. In addition, the facts of each case should be taken into account, as well as suggestions/positions of the parties and there should be no general instructions from the Court on these issues.

The second very important change brought about by Part 34, is that the Court is now given the power to order that the testimony be provided by a joint Expert if the disputing parties think it appropriate for an Expert witness to give evidence on a particular matter. However, in the event of disagreement between the parties as to the person of the joint Expert, the Court itself is invited to select such an Expert from a list drawn up by the parties (unless otherwise instructed). It should also be noted that, in accordance with the relevant (English) case-law on the subject, it has been held that, where a party agrees to the appointment of a joint Expert, this does not constitute an obstacle to requesting additional appointment of an Expert if there is good reason to contest the joint Expert’s Report.

Furthermore Part 34 places a raft of stringent requirements on the content of Expert Reports and requires Experts to state explicitly whether there are conflicting opinions on a particular matter and whether the Expert can opine on a particular matter with or without reservation. Furthermore, the Court now is afforded the power to investigate the precise instructions that were given the Expert by the party adducing the Expert evidence and the Expert must include in his Expert report a summary of his opinion so as to make it easier for the Court to understand his opinion and decide upon it. Finally, Expert Reports must now contain a Statement of Truth signed by the Expert. Understandably, these heightened requirements aim at ensuring that the Expert evidence adduced before the Court will be of the highest quality.

In conclusion, it is plainly evident that under Part 34 parties will now have to put particular care into choosing Experts, giving instructions to Experts and in readying the Expert Report so that it can be successfully adduced as evidence before the Court.   

Trademark protection in the Metaverse

Posted on | by Paschalis Paschali

As the Metaverse continues to grow and evolve, it brings about exciting opportunities and challenges for businesses and creators alike. With virtual worlds becoming a significant part of our digital lives, intellectual property protection becomes crucial in this immersive digital realm. In this article, we will explore how trademark protection in the Metaverse has been addressed so far.

The Metaverse can be described as a virtual universe where users interact with one another and digital content in real-time. It encompasses virtual reality (VR), augmented reality (AR), and other immersive technologies. Within this vast digital landscape, brands and trademarks play a crucial role in distinguishing products and services, fostering consumer trust, and promoting healthy competition.

Recently, in a groundbreaking ruling, a New York court applied trademark infringement analysis to non-fungible tokens (NFTs) and found that a collection of digital images called ‘MetaBirkins,’ featuring fur-covered handbags attached to an NFT, could confuse consumers with the luxury fashion brand Hermès Birkin bag. Hermès argued that the MetaBirkins collection infringed its trademark for the word ‘Birkin’ violated its trade dress rights, and involved cyber-squatting and unfair competition. The court upheld all of Hermès’ claims and awarded the brand $133,000 in damages. This decision has significant practical implications, suggesting that existing trademark rights on physical goods can potentially be enforced against their unauthorized use in virtual environments. It also highlights the importance of balancing fundamental rights when addressing trademark infringements related to NFTs and new forms of artistic expression. Additionally, the ruling raises questions about the distinction between owning the digital images and owning the ownership rights to the NFT in terms of legal action against infringement.

Although this decision has no binding effect in Europe, significantly, it indicates that existing trade mark rights on physical goods could potentially be enforced against their unauthorised use in virtual environments, in spite of the fact that the trade mark proprietor is not yet active in the metaverse or in the market of NFTs certified digital assets.

While most businesses have trademark registrations for “real world” goods/services, some are extending their trademark portfolios to include virtual goods and services. The European Union Intellectual Property Office (EUIPO) has provided guidance to brand owners on describing metaverse and NFT-related goods/services and the appropriate NICE classes to use. According to the guidelines, classes 9 (downloadable virtual items), 35 (retail store services encompassing virtual products), 41 (online entertainment services), and 42 (minting of NFTs) are relevant for trademark registrations related to the Metaverse. Generic terms like “virtual goods” or “non-fungible tokens” are not sufficient and must be further specified, such as “downloadable virtual goods, namely, virtual clothing” or “downloadable digital files authenticated by non-fungible tokens.”

There are also several infringement issues to address, including whether reproducing a trademark in the metaverse constitutes an infringement. Mere reproduction of a mark by an avatar in the metaverse may not satisfy the criteria for trademark infringement, similar to how wearing a T-shirt with a third-party logo does not infringe in the real world. However, offering an avatar design or accessory service using a third-party trademark or using a third-party trademark for a virtual store front likely constitutes infringement.

As the Metaverse continues to shape the digital landscape, the EU is proactively addressing trademark protection to safeguard brand owners’ rights. The established trademark protection framework, through institutions like the EUIPO, enforces legal remedies, prevents consumer confusion, and fosters international cooperation. This concerted effort ensures that the Metaverse remains a secure and innovative space for businesses, creators, and consumers alike. By upholding trademark rights, the EU promotes a thriving virtual environment where brands can flourish while providing users with a trusted and engaging experience.

Ultimately, the level of trademark protection in the Metaverse will depend on the legal and regulatory developments that emerge as the concept evolves and becomes more established. It is advisable for brand owners and businesses to closely monitor the legal landscape and consult with legal experts who specialize in intellectual property and emerging technologies to understand the specific implications and protections related to trademarks in the metaverse.

Get in touch for a consultation with our team.

Navigating EU sanctions – overview and predictions for 2023

Posted on | by Paschalis Paschali

European Commission President Ursula von der Leyen has recently announced that the EU is preparing a 10th package of sanctions on Russia and is planning to have it in place by 24 February 2023 – the 1 year anniversary of Russia’s actions in Ukraine. The new package is said to be focusing on technology that may be used by the military of Russia and in cutting sanctions circumvention. It may further include financial sanctions against four Russian banks. Overall, the EU has progressively imposed sanctions against Russia since 2014, in light of the annexation of Crimea and the non-implementation of the Minsk agreements.

EU sanctions do not apply extraterritorially. The Sanctions Regulation applies, inter alia, to any person inside or outside the territory of the Union who is a national of a Member State, and to any legal person, entity or body, inside or outside the territory of the Union, which is incorporated or constituted under the law of a Member State.

The measures forming part of the various sanctions packages as found and developed under the two main EU regulations, namely Council Regulation (EU) No 833/2014 (a.k.a. economic or sectoral sanctions) and Council Regulation (EU) No 269/2014 (a.k.a. individual or targeted sanctions) are complex and multi-layered, and understanding their full scope and compliance is becoming an increasingly challenging exercise for the stakeholders involved.

The EU economic sanctions regime imposes prohibitions and limitations via the targeting of specific sectors of the Russian economy as a whole including inter alia prohibitions on new investments in the energy sector; prohibitions on certain operations in the aviation sector; prohibitions on imports of iron and steel; prohibitions on the financing of the Russian government and Central Bank as well as banning all those transactions related to the management of the Central Bank’s reserves and assets; prohibitions on a range of financial interactions, financial rating services and transactions with Russia; prohibitions on accepting deposits; prohibitions on trust and a number of business-related services.

The EU individual sanctions regime imposes the freezing of assets belonging to, owned, held, or controlled by listed persons or entities: all their assets in the EU are frozen and EU persons and entities cannot make any funds available to those listed. Both Regulations have broad anti-circumvention provisions, pursuant to which it is prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent prohibitions as found under the Regulations. Additionally, any person who facilitates the circumvention of sanctions by others, may now be included in the sanctions list himself – and this includes EU natural and legal persons.

The year ahead

It seems unlikely that developments in sanctions policy and regulations will be slowing down in 2023. On the contrary, we expect to see more packages but also enforcement actions as regulators and prosecutors come under increasing pressure to show more “teeth” rather than simply introducing and drafting new policies. The controversial idea of ceasing and not only freezing assets has also been increasingly under discussion.

On 28 November 2022, the European Council unanimously decided to add violations of EU sanctions to the list of “EU crimes”. On 2 December 2022, the European Commission introduced a proposal for an EU Directive which sets out minimum rules concerning the definition of criminal offences and penalties in respect of violating EU sanctions. The willingness to introduce such a Directive is reflective of the EU’s objective for stronger harmonization in the enforcement of sanctions by Member States and for dissuading circumvention at the EU level. Of course, for the Directive to take effect, Member States will have to incorporate it via the passing of national legislation. The Commission has also recently launched an EU whistle-blower tool enabling the anonymous reporting of possible sanctions violations, including circumvention.

Additionally, a Directive on asset recovery and confiscation has been proposed with the aim to tackle “the serious threat posed by organised crime” and provide the means to competent authorities to “effectively trace and identify, freeze, confiscate and manage the instrumentalities and proceeds of crime and property that stems from criminal activities.” Should such proposal solidify further, EU member states would be required to make substantial changes to their national laws and confiscation regimes for instance, the confiscation of unexplained wealth – enabling judicial authorities to confiscate property when they are convinced it derives from criminal activities, even if it cannot be linked to a specific crime. Such confiscation measures will inevitably be raising inter alia various property and human rights considerations, which will eventually have to be determined by the member state courts.

At the moment, while EU regulations set out the prohibitions and licensing grounds with respect to sanctions, it is implementing legislation at each Member state level which imposes the applicable penalties. Cyprus currently adopts The Implementation of the Provisions of the United Nations Security Council Resolutions or Decisions (Sanctions) and the European Union Council’s Decisions and Regulations (Restrictive Measures) Law (Law 58(I)/2016) which renders violation of any provisions of such sanctions/restrictive measures a criminal offence subject to imprisonment and/or penalties.

The above information and challenges make it even more important that businesses adopt their own robust and up-to-date sanctions compliance measures. It is the individual responsibility of each person and organisation to carefully examine risks potentially arising under the EU sanctions regime and verify whether any of the listed individuals or entities are part of their business relationships or whether their activities violate sanctions.

The contents do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. It is recommended to seek independent legal advice when considering participating in activities or transactions which may give rise to sanctions-related matters. Engaging in thoughtful due diligence at the outset of any investment/transaction will help you to prevent pitfalls further down the line.