Tag: Cyprus law

The New Cyprus Commercial Court: An “Internationalisation” of Cyprus Civil Justice?

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On 2nd June 2022 the Cypriot parliament passed law 69(I)/2022 for the establishment of a Commercial Court and an Admiralty Court (“the Law”).

Introduction

Many readers will be aware that Cyprus is an island in the eastern Mediterranean and the eastern most outpost of the European Union. Its geographical location being at the crossroads of Asia, Europe and the Middle East has shaped its history. Previously seen as a strategic location for would be conquerors of which there were many, the location of Cyprus, its Common Law background, large number of Double Tax Treaties, business friendly climate and highly effective and efficient services sector have been key drivers in making Cyprus a favoured business destination for many Europeans especially Dutch, for Canadians, nationals of the states of the former Soviet Union and latterly Chinese and Israeli investors. This has established Cyprus as a major international business hub which has a reach that belies its size.

The growth of Cyprus as a business centre has placed great pressure on its civil courts, resulting in delays that are amongst the worst in the European Union. The reasoning behind the establishment of the Commercial Court is the creation of a specialist Court where the judges will specialise in commercial disputes in the same manner and with the same efficiency as specialist courts such as commercial courts, construction and technology courts operate in other jurisdictions.

Characteristics of the Commercial Court

One unique aspect of the Commercial Court which demonstrates the desire of the legislature to ease the administration of justice in international commercial disputes is the permissibility of using the English language. This mirrors recent initiatives in some EU jurisdictions, most notably Holland which have established similar international commercial courts to cater for the foreign business community that conducts business in or through these jurisdictions.

Jurisdiction of the Commercial Court

The Commercial Court will hear commercial disputes which are defined in the law as disputes relating to:

(a) Business documents or contracts.

(b) Purchase, sale, import and export of goods.

(c) The carriage of goods by land, air or pipeline.

(d) The exploitation of oil, natural gas or other natural resources.

(e) Insurance and reinsurance.

(f) The functioning of markets or the exchange of shares, stock or other monetary credit or investment vehicles or goods (which is clarified to mean every kind of moveable property save for choses in action and money and includes bonds and shares.

(g) The provision of services excluding medical, quasi medical, dentistry services or services that are provided within an employment contract.

(h) Manufacture of vehicles.

(i) Commercial representations.

(j) The application of the provisions of the law relating to Compensation for Breaches of competition law.

(k) Disputes between shareholders in entities that are regulated by any regulatory authority within the Republic of Cyprus.

(l) Matters relating to copyright and related rights within the ambit of the law for the Protection of Copyright and Related Rights law and the Certificates of Inventions law.

(m) Arbitration Issues.

Minimum Monetary Value of Disputes

The Law sets the minimum value of disputes that will be heard by the Commercial Court at €2 million excluding interest claimed. In the event of a dispute as to the value of the dispute, and by extension the jurisdiction of the court the objecting party may apply to the court of a determination.

In the event that the court determines that the value of the commercial dispute is below €2 million the Law allows the Commercial Court to refer the dispute to the District Court.

Geographical Jurisdiction

(a) The cause of action arises in whole or in part in the district where the Court has jurisdiction.

(b) The defendant or any one of the defendants at the time of the filing of the action resides, carries on business, or in the case of a legal person has its registered office in the district where the court has jurisdiction.

(c) The parties jointly agree between themselves by written agreement to refer the commercial dispute to the Commercial Court, in such a case if any one of the parties resides outside Cyprus, or carries on business outside Cyprus, or in the case of a legal person has its registered office outside Cyprus. In such a case the Commercial Court sitting in Nicosia shall have jurisdiction

(d) The jurisdiction of the Commercial Court derives from community law, international treaty or any rule of private international law. In such a case the Commercial Court sitting in Nicosia shall have jurisdiction.

Transfer of Cases from the District Court to the Commercial Court

Any party may apply to either the Commercial Court or to the District Court for a case that is before the District Court to be transferred to the Commercial Court provided that the hearing of the case has not commenced.

Transfer of Cases from the Commercial Court to the District Court

A judge of the Commercial Court may transfer a case to the District Court where:

(a) the Commercial Court lacks jurisdiction, or

(b) where upon the application of any party that it is appropriate for the case to be tried before the District Court.

Sittings of the Commercial Court

The Commercial Court shall sit in the district capitals of each administrative in buildings that will be specifically prescribed and published in the Official Gazette. Given that there are four administrative districts one can assume that two judges will sit in Nicosia one in Limassol, one in the Larnaca-Famagusta District and one in Pafos.

The Commercial Court will have its own separate registry and registrars.

Judges of the Commercial Court

The Commercial Court will be manned by five judges to be appointed by the Supreme Legal Council.

As the Law prescribes that the number of judges shall be five. This number will effectively and for all intents and purposes be limited to five as a change of law is required for the increase in the number of judges.

The judges of the Commercial Court shall have the standing and shall have the same powers as those of a President of the District Court. (Hitherto the highest tier of judges of first instance in the civil justice system of Cyprus).

The powers derive from the Courts of Justice Law and the Civil Procedure Law.

Procedure Before the Commercial Court

The Courts of Justice Law applies to the following extent:

  • Section 29 relating to the law to be applied (the Constitution, Statute law, Common Law and Equity, Vakouf (Turkish Cypriot trusts and immoveable property) law;
  • Part 4 – relating to the powers of the Court;
  • Part 5 – relating to the witnesses and evidence;
  • Part 7 – relating to the transfer of cases from a court to another court having jurisdiction by order signed by the President of the Supreme Court*.

Procedure before the Commercial Court shall be regulated by procedural regulations specially formulated for the requirements of the Commercial Court. For this purpose, the Supreme Court* has power within the Law to issue a procedural order for the better implementation of the Law and for the regulation of any matter capable of regulation by way of procedural rules.

Use of English Language

A judge of the Commercial Court may where the interests of justice demand allow for the hearing of the case and the filing of pleadings to be in the English language following an application of one of the parties. In such a case the court prescribes that the English language as the language in which the procedure shall be carried out and shall issue its judgment in English.

Appeals from the Commercial Court

Each judgment or order of the Commercial Court is subject to appeal before the Supreme Court.

A decision of the Commercial Court for the pre-trial referral of a question to the ECJ or a decision of the Commercial Court dismissing an application for the pre-trial referral of a question to the ECJ shall not be subject to appeal.

As with other courts in Cyprus the Law establishing the Commercial Court does not contain any provisions for leave to appeal or any restrictions as to the grounds of appeal.

In the case of an appeal, the Law states that the Supreme Court* shall not be bound by any findings of fact made by the Commercial Court and shall where the circumstances so demand shall have power to review and re-examine evidence and reach its own conclusions and shall further be entitled examine further evidence and to rehear witnesses and to issue any order of judgment that is justified under the circumstances including an order the rehearing of the case by the Commercial Court or other court having jurisdiction to hear the case.

Conclusions

The establishment of the Commercial Court is a reaction to commercial pressure for a quicker and more specialist trial court for larger commercial disputes many of which run into hundreds of millions and indeed some into billions of Euros.

Specialist commercial judges will in time gain the experience and specialised knowledge so as to be able to deal with complex commercial cases effectively and speedily.

The ability of the court to conduct proceedings in English will expand and enhance cooperation with foreign lawyers and make justice more accessible to a large number of potential litigants who conduct their commercial businesses within and through Cyprus.

The wide jurisdiction given to the Supreme Court* may appear daunting at first. It is however to be seen as an attempt to give finality to the proceedings at the level of the appeal. This should eliminate the need for retrials in all but the most unavoidable circumstances.

On the whole, the legal and commercial community of Cyprus has greeted the creation of the commercial court with an open mind and a cautious optimism. 

Andrew Demetriou

Ioannides Demetriou LLC  

*It should be noted that the current Supreme Court will be re-organised into an Appeals Court and a Constitutional Court. The appeal from the Commercial Court will be to the civil division of the Appeals Court.

“An Evolving Profession” by Andrew Demetriou, Co-Founder, Managing Director, Ioannides Demetriou LLC

Posted on | by Paschalis Paschali

“The days of the lawyer as ‘Jack of all trades’ – and, dare I say it, ‘master of none’ in many cases – are long gone” Andrew Demetriou, Co-Founder, Managing Director, Ioannides Demetriou LLC

Read more about the evolving legal landscape, the developments in technology and the skillset that lawyers need to master in Mr. Demetriou’s recent interview in Gold Magazine.

An_Evolving_Profession_ADemetriou_GoldMagazine_TheLrgalEdition_Issue137-August2022

Download the article here

Major overhaul of the Cypriot legal system

Posted on | by Paschalis Paschali

There are a number of monumental (as far as the Cypriot legal system is concerned) changes afoot in relation to the modus operandi of the courts in Cyprus, with most of them coming into effect in the coming year. These sorely needed changes, some of which are remedies for longstanding ills, are meant to usher the Cypriot legal system into a new age of speedy, effective justice and ultimately enhance Cyprus’ reputation as a regional business centre. 

Below I will provide a brief overview of three major changes, which in my opinion are the ones that will have a profoundly positive effect on litigants, lawyers and the country’s economy.   

Re-introduction of English as a litigation language

Last month the Cypriot House of Representatives amended the constitution to allow for English to be used as a legal language in the Cypriot Courts. This is actually quite a development. English was used in the Cypriot Courts, due to Cyprus’ colonial heritage, up to the late 80s. Then, based on some misplaced sense of nationalism we ushered it out. Some thirty years later the House of Representatives has, to my mind, seen sense, and has brought back English as a language to litigate in. The benefit of litigating in one of the “world” languages in a common law jurisdiction is plainly evident. It makes Cyprus much more “litigation friendly” for both foreign parties and foreign lawyers.

The newly formed Commercial Court

The re-introduction of English is only part of the plan. The second part of the plan is the formation of a dedicated Commercial Court and a dedicated Admiralty (Maritime) Court. Previously there was no Commercial Court and admiralty actions were dealt with by Supreme Court judges sitting alone. This of course ate in to the time of the Supreme Court and elongated appeal times in both the Criminal and Civil divisions. It was a situation that was in dire need of remedial action.

The newly formed Commercial Court will be a court of first instance and will:

a) hear cases of the highest scale (€2.000.000 and above), which is the highest Court scale in the Cypriot Court system. In short it will try the most important civil cases.

b) hear “Commercial disputes”, which are deemed to be disputes in relation to:
(i) a business document or contract,
(ii) purchase, sale, import and export of goods,
(iii) transport of goods by land, sea and air,
(iv) natural resources,
(v) insurance and reinsurance,
(vi) financial markets, stocks, shares and other financial instruments and investment instruments,
(vii) contracts of service, excluding contracts for the provision of medical services and any contract in which service is rendered through an employment contract,
(viii) automotive production,
(ix) contracts of agency,
(x) Competition law,
(xi) entities regulated by the Republic of Cyprus,
(xii) intellectual property and patents,
(xiii) arbitration.

c) be staffed by the most senior District Court Judges, namely Presidents of the District Courts. Presidents usually have about 20 or so years of experience since it takes about that long to get promoted to the level of President (which is the level before becoming a Supreme Court Judge),

d) try cases in English if a party to an action requests it. This means that the pleadings, testimony and judgment will be in English,

e) allow the parties in an action now before the District Courts to apply to have their case heard by the Commercial Court if the value of the claim is €2.000.000 and above,

f) shorten trial times drastically. Some early statistical speculations suggest that the Commercial Court will have the ability to issue judgments within a year to a year and a half.

New Civil procedure rules

Third on this list is the adoption of a totally new set of civil procedure rules which will come into force on the 1.9.2023. When Cyprus achieved independence in 1960 the newly formed Republic of Cyprus adopted the English civil procedure rules as they had been formulated in the White Book of 1958. Almost 70 years later this antiquated set of rules had remained largely unchanged. They were a cumbersome product of a bygone age with serious deficiencies, primarily because they were drafted at a time when technology was absent from the courts and then subsequently, they were not amended to cater to resolving disputes in the modern age.

About four years ago the Republic of Cyprus set about the task of essentially rewriting the civil procedure rules. Lord Dyson, Cypriot judges and advocates, academics and other experts all contributed to the endeavor through their involvement in the relevant committees and the cumulative result of their efforts is a new set of civil procedure rules which will drastically reduce trial times once they come into force.

The new rules are heavily modelled on the English civil procedure rules and in fact share the same pillar, the so called “overriding objective”. In short, the overriding objective, means that the purpose of the rules and what the Court seeks to achieve in applying them is the fair resolution of a dispute in a timely and cost-efficient manner.

Factors such as ensuring that the parties are on an equal footing, saving costs, trying a case with regard to the value of the claim, the seriousness of the case, the complexity of the issues to be decided and the financial ability of the parties are all factors the Court must now take into account when applying the “overriding objective” to the new rules.

Furthermore, a number of pre-trial protocols will be put in place, whereby a prospective claimant, before lodging an action for a debt will be required to demand payment in writing and at the same time furnish the prospective defendant with proof in relation to the debt itself.    

The new rules are also much more detailed. As far as rulemaking in concerned, more detail translates to fewer disputes over how the rules should be applied. This in turn creates a streamlined process, with less interim applications and therefore a case is helped along to trial much faster.  Finally, there is a sense of reserved optimism about these “modifications” in the circles of the legal practitioners on the island but I am confident that once this changes take effect the domestic legal landscape will change for the better.