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07 October 2008
In Pell Frischmann Consultants Ltd v the Republic of Cyprus the Supreme Court decided, among other things, that Law 101/87, which adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration, does not apply to contracts to which Cyprus is a party, except with the prior consent and approval of the Council of Ministers.
In addition, the court found that the provisions of the UNCITRAL Model Law do not preclude parties from agreeing to refer their disputes to domestic arbitration.
In the case at hand the foreign company lodged an appeal against the first instance court’s decision to dismiss its application to stay legal proceedings that Cyprus had filed against it for breach of contract. The application for a stay was based on the UNCITRAL Model Law. The first instance court dismissed the application on the grounds that, among other things, Cyprus was not bound to arbitrate for the specific contract because the prior consent or approval of the Council of Ministers had not been obtained.
The Supreme Court, in its appellate jurisdiction, finally approved the first instance court’s decision.
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