The establishment of the Commercial Court in Cyprus

By Melina Karaolia, M. ELIADES & PARTNERS LLC

While we were planning for the LDR PG meeting to be held at the GGI Regional Conference in Limassol, we thought that the topic of the purpose and functionality of commercial courts, with a particular focus in Cyprus, would be an interesting one. At the time we were first discussing this, the Cyprus Ministry of Justice had deposited a draft bill in Parliament for the establishment of a Commercial Court that would deal with international matters, including in the English language if the parties so choose. The approval of court procedures in the English language would require constitutional amendments.

We were fortunate enough to have developments catching up with us coming closer to the date of the conference. So, on 05 May, the Cyprus Parliament voted and decided to amend the Cyprus Constitution so that the English language can be used as the procedural language during court hearings before the Commercial and Admiralty Courts. Additionally, court pleadings and petitions may be submitted in the English language.

Soon after – actually a day before our LDR PG meeting – the Parliament passed the law for the enactment in Cyprus of the Commercial and Admiralty Courts respectively. This was of course excellent news and a development of our legal system that was long awaited.

The establishment of the Cyprus International Commercial Court is a good indication of the strong current trend in various EU states for establishing commercial courts with the judicial system, focussing on the need for effcient and specific litigation for international disputes by courts that have the required expertise for such a task and can compete with international arbitration institutes.

Under the New Commercial Court Legislation:

A commercial dispute that can be heard by the new Cyprus Commercial Court is one that relates to or is about:

  • Business documents or contracts;
  • The transportation of goods;
  • Trading of oil, gas, and other natural resources;
  • Insurance or reinsurance;
  • Purchase transactions or exchange of shares and stocks or other investment/financial tools or goods;
  • Provision of services, excluding medical services or services related to medical services and dental services;
  • Vehicle construction;
  • Commercial agencies;
  • Some matters relating to competition law and complying with related legislation;
  • Disputes between shareholders of legal entities which are regulated by public authorities;
  • IP and related rights;
  • Arbitration matters.

The claim needs to be for a minimum amount of EUR 2 million (not considering any interest demanded) except in the following cases (where there is no limit in the scale of the claim):

The following is a helpful mind map of the main functions and powers of the Cyprus Commercial Court:

 

cyprus commercial court

 

  1. matters relating to violation of competition law,
  2. IP and related rights, and
  3. arbitration matters.

Given these exceptions, it is obvious that the intention of the legislators was that the Commercial Court (with the exception of banking and finance arbitrations) will deal with all other arbitration related matters and IP rights, which are two of the most common types of international legal disputes. If there is any doubt about the actual amount of the dispute, the Commercial Court may make a decision about what the disputed amount is, following an application submitted in writing by one of the parties.

An important provision of the new law is that it allows the parties to a dispute that is currently before one of the District Courts (which fulfils the criteria to be heard by the Commercial law but for which the court hearings have not yet started) to apply to the Commercial Court to have their dispute and case be heard by the Commercial Court. This could also apply vice versa where the judge of a Commercial Court considers it expedient for the dispute to be heard and be decided by a District Court. This could perhaps be a cause for concern, but we will have to watch and see how the Regulations issued under the law will clarify this matter.

Of course one of the most important provisions in the law for the enactment of the new Commercial Court is that a judge of the Commercial Court could, when the interests of justice so demand, allow the Court hearing and relevant proceedings of a commercial dispute to be conducted in the English language and also submit pleadings and documents in the English language.

This article is based on a presentation delivered by M. Karaolia of M.Eliades & Partners LLC at the LDR Practice meeting during the GGI European Regional Conference in Limassol, Cyprus, on 13 May 2022.


Melina Karaolia

Melina Karaolia

GGI member firm
M. ELIADES & PARTNERS LLC, Advocates - Tax & Business Consultants
Auditing & Accounting, Fiduciary & Estate Planning, Law Firm Services, Tax, Advisory
Nicosia, Cyprus
T: +357 22 66 77 30
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M. Eliades & Partners LLC has a very clear and simple objective: to understand the needs of clients operating in the European and global environment, and to provide them with creative, timely and cost-effective legal and advisory services. The firm serves a broad base of clients principally from the EU, but also from the US, Russia, Asia and beyond, while maintaining worldwide professional relationships through its membership with GGI.

Melina Karaolia is a Partner at M. Eliades & Partners LLC. Her work encompasses a diverse range of corporate and litigation matters. She advises clients on a range of commercial, civil law issues and business law disputes. She is a member of Grays Inn London, the Cyprus Bar Association and the Chartered Institute of Arbitrators.


Published: Litigation & Dispute Resolution Newsletter, No. 16, Summer 2022 l Photo: Grispb - stock.adobe.com

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