Litigation is still the predominant method for resolving disputes in Cyprus, however, alternative dispute resolution (ADR) is becoming an increasingly popular choice, particularly for disputes relating to cross-border transactions and commercial matters. Businesses in Cyprus are becoming more aware of the relevance and usefulness of ADR processes. Its membership of the European Union and the geographical location of Cyprus makes it an ideal centre for resolving international disputes.
There are three main ADR methods in Cyprus:
Mediation. This is the least formal method of ADR. The parties voluntarily refer their dispute to an independent third party who must discuss the issues with both sides and help them discuss and negotiate areas of conflict and identify and settle certain issues.
Conciliation. This lies between informal mediation and formal arbitration. The process is very similar to mediation, but the third party can offer a non-binding opinion that can lead to a settlement.
An agreement that is reached in the process of a mediation or conciliation process is binding as between the parties to the agreement.
Arbitration. An arbitration agreement is irrevocable and, therefore, binding unless it contains a provision or a court order is issued to the contrary. An arbitration agreement must be in writing.
ADR is most frequently used in the construction industry, trade and the shipping and energy related sectors. The referral of an issue to arbitration depends upon the existence of a valid and binding arbitration agreement between the parties. The arbitration process is conducted in a rather formal but strictly confidential manner that resembles litigation. The arbitral tribunal issues a decision (the arbitral award), which is binding upon the parties, after both parties have introduced evidence and presented their case before it. A third party can intervene in ADR processes in order to protect its interest once notified of the process taking place.
Advantages of ADR
• Using experts in the field of dispute
• Cost effective solution, which is often significantly cheaper than court action
• Speedier than pursuing action through traditional litigation
• Flexibility for businesses
• Easier to enforce
How may we assist you?
The Cypriot Courts are very supportive of ADR, with judges becoming more reluctant to proceed with hearing a case involving specialised, technical and construction matters or scientific issues requiring specialised knowledge. In such cases, they are likely to recommend the appointment of an Arbitrator.
Fellas & Christou LLC can assist clients both through traditional litigation and extrajudicial processes, such as arbitration and mediation. We are able to conduct both domestic and international disputes.
To commence arbitration proceedings, there must be an arbitration agreement between the parties, which is usually irrevocable and therefore binding, unless it contains a contrary provision or a court order is issued. The agreement should be in writing.
The way evidence is given in ADR, admission or documents produced during the ADR, whether the ADR is protected from disclosure by privilege or if the ADR is confidential, depend on the form of ADR and the particular set of procedural rule the parties have agreed to apply.
If the parties commence legal proceedings in any Court against an arbitration agreement, the Court has a discretionary power to stay the proceedings under Article 8 of the domestic arbitration law for referral to an arbitrator.
Alternatively, the parties can voluntarily refer their dispute to an independent third party who helps them negotiate in order to find a settlement via mediation.
We would advise clients to include a detailed arbitration clause in their commercial agreements covering their requirements for a well-organised, efficient and final resolution of the dispute on a cost- effective basis.