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16 June 2016
In a recent Nicosia District Court case, the applicants applied to register and enforce a Russian International Commercial Arbitration Court arbitral award from September 5 2014, issued in their favour for $39,454,573.09 and $109,946 in expenses.(1)
The Nicosia District Court found that the facts surrounding the case were the same as in 50 other applications that had been filed with the court by the applicants against various companies.
The applicants had granted loans to various companies that later defaulted on their repayment. Thus, pursuant to an arbitration clause in the loan agreements, the applicants applied to the Russian International Commercial Arbitration Court and were granted arbitral awards. Subsequently, the applicants applied to the Cyprus courts for those arbitral awards to be recognised and enforced.
The respondents objected to the registration and enforcement of the arbitral award arguing that the application did not satisfy the requirements of Article V of the New York Convention.
The court commenced by re-stating the legal framework through which an arbitral award may be enforced in Cyprus, namely through the operation of the International Commercial Arbitration Law (101/1987) and Law 84/1979, which incorporates the New York Convention into Cypriot Law.(2)
Further, the court emphasised the fact that:
The court then examined whether the applicants had complied with the requirements of Article IV of the New York Convention, namely that the application contained:
The court also assessed the application's compliance with the grounds for non-enforcement under Article V of the New York Convention, which are that:
The respondents argued that the recognition of the arbitral award was contrary to public policy in Cyprus. The court dismissed this argument and held that the court in this type of proceedings does not embark on a diagnosis of the substance or wisdom of the award.
Further, the respondents alleged that the application had to be dismissed because the loan agreement used as evidence in the arbitration proceedings was not duly stamped, as required by Cypriot legislation. This omission was held not to invalidate the agreement. The court cited the recently issued judgment in Bank of Moscow, where it was held that:
"given the fact that the law applicable in the procedure of recognition and enforcement is domestic law, there is nothing improper in the decision of the first instance judge to order the stamping of the two loan agreements. Firstly, the stamping requirement did not constitute an additional condition for the registration of the arbitral award, but it arose under domestic law in relation to a procedural issue. The stamping of a document is imperative before it is lodged as evidence in court proceedings."(4)
The court, exercising the powers conferred on it by Article 35(2) of the Stamp Duty Law ordered the applicant to print all necessary documentation.
Having established that the requirements in Article IV were satisfied and that there was no ground for refusing enforcement, the court allowed the application for recognition and enforcement of the Russian arbitral award in Cyprus.
For further information on this topic please contact George Z Georgiou at George Z Georgiou & Associates LLC by telephone (+357 22 763 340) or email (email@example.com). The George Z Georgiou & Associates website can be accessed at www.gzg.com.cy.
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George Z Georgiou