George Z Georgiou & Associates LLC
George Z. Georgiou & Associates LLC is a dynamic, professional full-service civil law firm, consisting of experienced multi-lingual lawyers and legal consultants. Founded in 2005 by George Z. Georgiou, the Firm has quickly grown and is recognised as one of Cyprus' leading practices.Show more
Arbitration & ADR
The Supreme Court recently ruled that only part of a court judgment that had upheld an arbitrator's decision would be set aside. The appellants had raised a number of objections in their appeal, including that the summons to recognise and enforce the arbitral award had been filed improperly as the hearing had not been conducted in the same manner as a lawsuit, the parties had not agreed to refer the dispute to an arbitrator and the arbitrator had not had the legal authority to issue a mortgage disposal order.
In a recent Supreme Court case, the appellants appealed to the court to set aside or annul the first-instance court judgment which had upheld an arbitrator's decision. The Supreme Court agreed with the appellants' position on the matter and stated that the first-instance court had failed to deal with the examination of the legitimacy of the arbitration proceedings and the manner in which the arbitrator had conducted the proceedings.
In a recent Limassol District Court case, the applicants applied for the dismissal and replacement of an arbitrator. They argued that the relationship between the arbitrator and the respondents' main witness in the arbitration proceedings and his brother would lead a reasonable person to find that there was a real likelihood of bias. As a result, the applicants argued that the relationship between the parties constituted misconduct in arbitration proceedings.
In a recent Limassol District Court case, the applicants requested the registration and enforcement in Cyprus of a Russian arbitral award. Τhe court found that the applicants had failed to provide evidence of whether Russia was a contracting state to the New York Convention and that the award's translation did not fulfil the convention's requirements. As a result, the application to register and enforce the arbitral award was rejected.
The Nicosia District Court recently issued an order which referred a dispute to arbitration. The order stipulated that the arbitrator should deliver a final decision within nine months. One of the parties applied to the court for an extension of the arbitration procedure. The court rejected the application on the ground that only the arbitrator had the right to apply for such an extension.
The Limassol District Court recently concluded that an appeal pending before the English courts does not suspend an order's enforcement or diminish the validity of an arbitral award. The applicants had applied for the recognition and enforcement of an arbitral award issued in May 2016. The court held that the order was final and that there had been no abuse of process; the respondents' request to set aside the award was therefore rejected.
In a recent Limassol District Court case, the applicants applied for the recognition and enforcement of an arbitral award issued by the Chamber of Commerce and Industry. The respondents had previously applied to the Cypriot courts to set aside and annul the arbitral award pursuant to the International Commercial Arbitration Law. In their objection to the application for the recognition of the award, the respondents advanced additional grounds to those raised in their earlier application to annul the award.
The District Court of Limassol recently issued a judgment in relation to an application filed by the Cooperative Bank of Limassol in 2016. The applicants had sought a court order to cross-examine the affiant on certain paragraphs of his affidavit, which supported a 2014 application for the registration and enforcement of an arbitral award in Cyprus.
Third-party funding is uncommon in Cyprus. Opinions vary on whether such activities are permissible since this issue has not yet been put before the courts. The Cyprus courts could adopt similar principles to those of English law in relation to this matter in order to allow third-party funding in litigation or alternative dispute resolution proceedings. However, those seeking to adopt such a procedure must be careful since the Cyprus courts might be reluctant to allow it.
The applicant in a recent case applied to the Limassol District Court for the registration and enforcement of an arbitral award which had been issued by the London Court of International Arbitration (LCIA). This case sheds light on the interpretation and application of Article V(1)(c) of the New York Convention and clarifies that an arbitral award, including an award for costs, is registrable before the courts even in cases where the LCIA has no jurisdiction.
In a recent Supreme Court case, the appellants challenged a first-instance court judgment which had refused the registration and execution in Cyprus of a foreign arbitral award issued by the International Commercial Arbitration Court. The appellants claimed that the first-instance judge had erred in concluding that the requirement under Article IV(1)(a) of the New York Convention had not been fulfilled.
A recent Supreme Court decision concerned an application to set aside an admiralty action based on the arbitration clause in the guarantee agreement signed by the parties concerned. The court relied on the doctrine of abandonment and decided that the arbitration clause had been abandoned with the parties' consent. As a result, the defendants were estopped from claiming that they had not abandoned their right to activate the arbitration clause and their claim was dismissed.
Lukoil Mid-East Limited filed an application with the Nicosia District Court for the recognition and enforcement in Cyprus of a London Court of International Arbitration award. Terra Seis Cyprus Limited objected on the grounds that the substantive and procedural prerequisites for the recognition and enforcement of the arbitral award in Cyprus had not been met. The court thus considered whether the requirements under Section IV of the New York Convention had been satisfied.
In a recent district court case the applicants applied to register and enforce an arbitral decision issued by the Russian International Commercial Arbitration Court. The respondents argued that recognition of the award was contrary to public policy, but this was rejected by the court. Practitioners should consider how rarely the public policy defence is used and ensure that they can prove the existence of exceptional circumstances which warrant court intervention and protection.
In a recent Nicosia District Court case the applicants applied to register and enforce a Russian International Commercial Arbitration Court arbitral award. The court examined whether the applicants had complied with the requirements of Article IV of the New York Convention. It decided that there was no ground for refusing enforcement and allowed the application for recognition and enforcement of the award in Cyprus.
In a recent district court case the applicants applied to register and enforce an arbitral award issued in their favour by the London Court of International Arbitration. The respondents objected to the registration and enforcement of the award, arguing that the principle of res judicata was applicable, as the same arbitral award had not been recognised and enforced in an earlier case before the Cypriot courts.
The Nicosia District Court recently set aside two arbitral awards after it found that the arbitrator had misconducted himself in the proceedings. While instances of arbitrator misconduct are limited, the obvious disregard for procedure which restricts the fair treatment of parties will always be upheld by the courts. Practitioners should therefore endeavour to assist arbitrators to ensure that due procedure is followed.
In a recent case the applicant applied for the registration in Cyprus of two arbitral awards issued against the respondents. The respondents challenged the application on the grounds that the relevant documents had not been translated by an official, sworn translator, as required by law. The court agreed and rejected the application. Practitioners must ensure compliance with the provisions for the translation of arbitral awards during the application stage.
An arbitration award may be enforced under the International Commercial Arbitration Law, which covers all matters related to international commercial arbitration. Under the law an arbitral award is recognised as binding, irrespective of the country in which it was issued. The party seeking execution must file an application at court with an original copy of the arbitral award and the arbitration agreement.
The Cypriot courts have adopted a pro-arbitration approach and usually give effect to arbitration agreements. However, there are instances in which one party may be allowed to circumvent an arbitration agreement and take advantage of the court's jurisdiction. An effective arbitration clause or agreement should be in writing, be broad in scope and be as clear and unambiguous as possible.
The Supreme Court recently confirmed its pro-arbitration approach regarding applications for a stay of proceedings in a decision concerning a loan agreement with an arbitration clause stating that disputes between the parties would be resolved by the Norwegian Arbitration Court. The court rejected the claimant's argument that the arbitration clause was void due to uncertainty.
In a recent judgment, the Supreme Court held that the legal scope of the term 'arbitrator misconduct' does not cover the legal interpretation of documents. According to Article 20(2) of the Arbitration Law, an arbitration award may be set aside where an arbitrator has misconducted himself or herself or the proceedings, or when the award has been improperly procured.
The Supreme Court recently issued a certiorari decree to repeal an arbitration judgment from a Korean court. The applicant argued that a civil court decree which enforced the Korean ruling was unlawful, as a decision from a foreign court is recognised only when at least one of the parties stays within the territory of the civil court. The parties in question were registered in China and Korea.
In Uralmetprom v Besuno Ltd, the Supreme Court held that an application based on an arbitration award which had not been registered or recognised in Cyprus was destined to fail, since the award was not enforceable. The case concerned the filing of an application to wind up a company on behalf of a creditor whose capacity as such was based on an arbitration ruling which was not registered or recognised in Cyprus.
In a recent case the applicant requested an interlocutory order preventing the first respondents from disposing of assets of the second respondent's company until a full hearing before arbitration forums in Stockholm and London. The first respondents disputed the Cypriot court's jurisdiction to grant such orders as the applicants sought orders against respondents that were not parties to the arbitrations under consideration.
According to Supreme Court case law, registration of an arbitral judgment in order to be executed is procedural in nature. Therefore, the court is limited to examining the procedural requirements for registration and cannot address any substantive issues related to the correctness of the arbitral award.
In a recent case before the Nicosia District Court, the applicant requested a court order for the registration of an earlier arbitral decision for execution purposes. During the application hearing, the court noted that the Arbitration Act provides for the possibility of registering an arbitral decision, and determines the registration process after permission is granted by the court.
In a recent application before the Nicosia District Court, the applicant sought recognition and enforcement of a decision issued by the International Commercial Arbitration Court (ICAC) at the Chamber of Commerce and Industry of the Russian Federation in December 2011. The respondent filed an objection arguing that an original or true copy of the decision issued by the ICAC had not been submitted together with the application.
The Nicosia District Court recently outlined certain principles related to the institution of arbitration and mentioned various cases that determine the philosophy, spirit, level and manner of approach which the courts should apply when dealing with the identification, registration and execution of arbitration decisions, and also with decisions of international arbitration courts.
Arbitral decisions or awards that have been granted in foreign countries can be enforced in Cyprus by virtue of the International Commercial Arbitration Law, which covers all matters pertaining to international commercial arbitration. An order may be issued by the court in relation to the execution of any foreign arbitral decision once a written application to this effect has been filed by any of the parties.
As a member of the European Community, Cyprus is bound by the Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters. Therefore, a worldwide freezing order or other order issued by an arbitral tribunal of any EU member state will be recognised by the courts of Cyprus without the need for special procedures, subject to certain limitations.
The definition of 'commercial arbitration' under international law was the focus of a recent Nicosia District Court decision. Although the definition is very wide and encompasses a multitude of relationships, including professional cooperation, it is not exhaustive. The court therefore had to consider whether a shareholders' agreement was covered by the definition, despite not being explicitly mentioned in the relevant law.
In a recent judgment, the Nicosia District Court clarified important aspects of the International Commercial Arbitration Law and its application. The law provides a mechanism through which the Cypriot courts are given wide powers to issue interim mandatory, prohibitive and/or freezing orders in aid of international commercial arbitration that has been commenced or is about to commence.
Following the economic crisis, Cyprus witnessed the merging of several cooperative societies, mainly cooperative credit institutions. These mergers reduced the number of cooperative credit institutions from over 300 to just 18. However, in July 2017 a second merger took place which saw the 18 institutions merged into a single entity. Although cooperative societies are limited liability companies, the procedure that must be followed for merging such companies varies significantly.
Employment & Benefits
Cyprus case law has long established that reverse onus in criminal cases does not transfer the burden of proof to defendants; rather, it allows them to create reasonable doubt with respect to their guilt. A recent Supreme Court decision has confirmed this in regard to wage protection and clarified that all criminal courts (ie, not just employment tribunals) must examine the facts that establish employment relationships and interpret employment contracts where said facts are disputed.
The Protection of Paternity Law provides paternity leave only to men who are married to their child's mother before the child's birth or adoption. The House of Representatives recently tried to address this oversight by introducing an amending law, under which all fathers would be entitled to paid paternity leave regardless of their marital status. However, these changes have yet to come into force because the president referred the amending laws to the Supreme Court, claiming that they are unconstitutional.
The Industrial Disputes Tribunal recently issued a decision regarding a person working for the Cyprus Tourism Organisation (CTO) under a series of fixed-term contracts, some of which were referred to as contracts of employment and others as contracts for services. The tribunal ruled that, even when working under an alleged contract for services, the applicant was a CTO employee working under a genuine contract of employment.
Parliament recently introduced new legislation that aims to promote and support breastfeeding in the workplace and enhance the legal protection for working pregnant women and new mothers. One law established the minister of health as the competent authority for the promotion and protection of breastfeeding, while another extended the period during which pregnant women are protected against dismissal and established the right for working mothers to breastfeed or pump and store milk in the workplace.
The Social Insurance (Amendment) Law was revised in June 2017 to introduce definitions of 'undeclared work' and 'undeclared earnings'. 'Undeclared work' is defined as the insurable employment of an employee or a self-employed person which has not been declared to the Ministry of Labour, Welfare and Social Insurances, while 'undeclared earnings' are defined as the insurable earnings for which an employer has not submitted a statement of earnings and contributions within the required deadline.
A number of new employment-related laws have been adopted in 2017, including the long-awaited Protection of Paternity Law and the Protection of Maternity (Amendment) Law, which introduced the concept of surrogacy. Amendments to existing laws regarding redundancy and smoking in the workplace have also been made.
Parliament recently voted to introduce the Protection of Paternity Law. The law came into force on August 1 2017 and gives fathers in Cyprus the right to two consecutive weeks' paid paternity leave. The law has introduced statutory family-friendly rights to Cyprus for the first time, giving employers the opportunity to incentivise and support parents in their workforce.
The Court of Appeal recently overturned a decision of the Industrial Disputes Tribunal, stating that an employee's termination was not unlawful, but rather due to redundancy in accordance with the Termination of Employment Law. The employee had been served with a notice of termination which stated that her position would be abolished due to changes in the methods of production and modernisation of the organisation.
In a recent Industrial Disputes Court case, four individuals sought the full payment of a provident fund which had been affected by the 2013 bank bailout. In making its decision, the court examined when the applicants' right to receive the provident fund had arisen and whether said amount had been affected by the 2013 bank bailout. It also considered whether the applicants had accepted the consequences of the 2013 bank bailout in writing.
The Court of Industrial Disputes recently examined a case in which two public sector workers claimed reinstatement and compensation for unlawful dismissal following the termination of their fixed-term employment contracts. The applicants argued that due to their length of service, their employment status should have been recognised as permanent under the Fixed-Term Employees (Prohibition on Discrimination) Law (98(I)/2003).
The new EU Pensions Directive (IORP II) recently came into force. The introduction of a number of important features and the widening of the scope of prudential supervision by competent authorities under IORP II is likely to be a challenge for the Cyprus regulator, which will need to recruit additional personnel and make changes to its existing structure in order to perform its supervisory review powers, duties and responsibilities effectively and fulfil the reformed regulatory framework's aims.
In a recent case before the Industrial Disputes Tribunal, the dismissal of a pregnant employee following the takeover of her employer's business was deemed to be discriminatory and thus unlawful. The court's judgment is a welcome precedent for pregnant women, who often become victims of discrimination in the workplace. It also raises awareness of Cyprus's anti-discrimination laws, demonstrating that more needs to be done to enforce them in practice.
Τhe Termination of Employment Law was recently amended to increase the maximum period of protection for employees who are absent from work owing to temporary incapacity from six months to 12 months plus one quarter of the period of incapacity. The new provision does not apply to employees who are liable to dismissal without notice due to misconduct.
Employment legislation has helped to promote diversity in the workplace in Cyprus. Employees and prospective employees are now more aware of their rights regarding discrimination in the workplace, as more information regarding equality is available and employees are better equipped to demand their rights through the appropriate bodies.
The Industrial Relations Tribunal recently considered substantive and procedural issues in the context of a claim for sexual harassment and victimisation. The court focused on whether the actions concerned fell within the definition of 'sexual harassment' and the damages to which the applicant was entitled. The case illustrates the principles that tribunals apply when examining sexual harassment cases and how they are interpreted by employment courts.
In a recent Employment Court case the applicant argued that he was eligible for a contract of indefinite duration. The court held that the applicant had worked for the respondents at the same location and with the same duties on a temporary basis under successive fixed-term employment contracts for over 30 months and was therefore eligible to be regarded as a permanent employee.
In a Court of Industrial Disputes decision, ignorance of an employer's non-approval of an annual leave request was found to constitute infringement of the basic terms of the employment contract. The court confirmed that abusive behaviour on the part of an employee can amount to a breach of the mutual trust and confidence necessary to maintain the employment relationship and justify the termination of employment without notice.
The Labour Court recently examined the employment status of an employee after successive fixed-term contracts and whether he was considered a permanent employee or there were objective reasons to justify his temporary employment. It found that the respondents had failed to present objective circumstances to justify the applicant's fixed-term employment; he was therefore covered by a permanent contract.
The behaviour of an employee during the investigation of a sexual harassment complaint that she had made against her manager was crucial in the dismissal of her application for damages for unlawful termination and discrimination. The court found that the applicant's refusal to provide supporting evidence to her claim amounted to abusive behaviour resulting in breach of the duty of mutual trust.
Salaries in Cyprus are negotiated by employers and employees or their representatives through individual or collective agreements. Compensation and benefits for employees include a minimum wage for certain occupations set annually by the Ministerial Council, a cost-of-living allowance adjusted every six months in accordance with inflation and discretionary bonuses.
An employer intending to take collective redundancy action must notify and engage in consultations with employee representatives as soon as possible in order to reach a settlement agreement. The employer must also give notice to the minister of labour and social insurance of any proposed redundancies at least one month before the intended date of termination.
The Constitution contains a general anti-discrimination provision, but age, disability and sexual orientation are not covered therein. The law provides that differential treatment on grounds of age does not constitute discrimination if it is objectively and reasonably justified by a legitimate objective – in particular, with regard to policy in the fields of employment, the labour market and vocational training.
It is advisable that employers include training about sexual harassment in a policy declaration, even though this is not required by law. Training which focuses on how to prevent and deal with incidents of sexual harassment, as well as on the liability of perpetrators in such incidents, should be offered to employees.
The Nicosia Employment Court recently examined a pilot's claim in relation to the reduction of his salary and benefits by his employer. The court decided that this reduction was unlawful, as it was unilaterally implemented. The airline has now closed due to financial difficulties.
The Employment Court was recently asked to consider whether a nurse at Nicosia General Hospital had been sexually harassed, had not been protected and/or had been treated unequally under the Equal Treatment of Men and Women in Employment and Vocational Training Law.
In a recent case a supplier of fruit and vegetables (Respondent 1) had a contract with a supermarket chain to supply and sell fruit and vegetables in its supermarkets all over Cyprus. The contract was terminated and Respondent 1 proceeded with the dismissal of 70% of its employees. The applicant was one of the employees dismissed by Respondent 1 on grounds of redundancy.
This week George Z Georgiou & Associates outlines the issues that employers should consider before introducing a 'bring your own device' policy in Cyprus. Internal directions, guidelines, handbooks and confidentiality agreements – both for the duration of the employment contract and thereafter – will be crucial tools in implementing the successful roll-out of this model.
The Nicosia Employment Court recently considered a former employee's entitlement to money from a retirement benefit fund. The case centred on whether the applicant, who had voluntarily resigned, was entitled to receive the balance of his credit from Account B of the fund (to which the employer had contributed on his behalf). The court had to decide whether the fund's rules and regulations were in accordance with law.
The Supreme Court recently ratified a first-instance decision and ruled that termination of a former bank property manager for disciplinary offences was lawful. The court confirmed that a reasonable employer would have terminated his employment, given that a lawful disciplinary procedure had been followed by the bank and the employee had been given the right to be heard by the bank disciplinary committee.
In a recent case before the Employment Court the applicant had filed a claim seeking compensation and increased damages for unlawful dismissal from his former employer. Taking into account the facts and evidence, the court concluded that the termination of the applicant's employment was not due to redundancy; thus, the dismissal was unfair and the applicant was entitled to damages.
A recent decision considered the differences between fixed-term contracts and contracts of employment for an indefinite period. The court ruled that since the applicant was employed for a continuous period of over 30 months under fixed-term contracts, he would fall into the latter category of employees. His contract would therefore be regarded as an indefinite employment contract and was thus protected by legislation.
The Employment Court recently upheld a claim for unlawful termination of a university professor. Despite finding that the university had followed its statutes and regulations fully and had investigated allegations against the applicant using a reasonable procedure, the court found that the university had failed to terminate the applicant's employment within a reasonable period of time after hearing of the complaints.
The Employment Court recently ruled on whether a former employee was entitled to a claim of constructive dismissal following suspension of her employment. The onus was on the applicant to prove that she had lawfully terminated her employment as a result of the respondent's conduct. In its ruling, the court held that the respondent had exercised a disciplinary authority beyond that granted to it by the contract of employment.
In a recent case the Supreme Court considered whether a transfer of business had occurred. Under the relevant Cyprus and EU law, all rights and duties of the transferor stemming from the employment contract as it exists at the date of the transfer must be transferred to the transferee. The transferee must retain the same terms and conditions of employment for at least one year after the transfer.
The Nicosia Employment Court recently considered the circumstances under which an employee is entitled to increased damages following unlawful dismissal. The court's decision suggests that increased damages can be awarded only in cases where an applicant can prove that his or her termination had an adverse impact on any aspect of his or her life.
The Supreme Court recently dismissed an appeal in relation to a disputed employment agreement, brought following the appellant's termination due to lack of integrity. In light of this decision, employers should ensure that they have proper contracts in place in order to avoid uncertainty, and that they implement proper disciplinary procedures in accordance with the principles of natural justice.
In a recent case the Court of Appeal ruled on termination as a result of irreparable damage in employment relations. The appellant considered her dismissal to be illegal, unconstitutional and against the rules of natural justice. However, the court concluded that the employer-employee relationship had been irreparably damaged as a result of the events of the case and that the appellant's dismissal was a necessary consequence.
The Employment Court recently ruled on the grounds for termination of employment once the legal retirement age has been reached. The case concerned a director of a foundation whose employment had been terminated when he was 67 years old and therefore past the retirement age for all the foundation's staff members.
The Employment Tribunal has held that an employer had failed to satisfy the burden of proof and that therefore the former employee had been unfairly dismissed. The members of the tribunal unanimously found that the defendant had failed to prove on the basis of objective criteria any reason under the Termination of Employment Law that would have excused the immediate termination of the employment.
Cyprus's largest beverage supplier has recently been experiencing serious financial difficulties. In order to ensure its survival, the company decided to implement stringent measures, but the employees strongly objected. After numerous consultations, final measures were eventually agreed. This case serves as an important reminder that employers should implement measures early and progressively.
There has recently been a large increase in the number of redundancies attributed by employers to the economic crisis. However, it is important to note that redundancies have to be supported by objective criteria and the burden of proof rests with the employer, which must show that the employee has been rightly dismissed due to redundancy reasons.
Two recent rulings by the employment courts regarding exemplary damages have re-established the importance of fair action on the part of the employer. The court has wide discretion to issue an award for damages, ranging from the minimum amount of compensation offered for redundancy to a maximum of two years' wages.
Insolvency & Restructuring
Members of Parliament have proposed legal reforms with the aim of regulating the procedure for the appointment of receivers by debenture holders. The issues under scrutiny are that borrowers have no say during the procedure for the appointment of a receiver, and that issues with the impartiality of the receiver can arise on many occasions. However, the proposal has encountered the resistance of financial institutions.
A district court recently sentenced a company in liquidation that had once been Cyprus's biggest grocery retail company. The sentence concerned the issuance of a cheque with insufficient funds. According to the court, the fact that the company was under liquidation did not negate the fact that a sentence should be proportionate to the offence and act as a deterrent. The case is a useful illustration of how companies in liquidation should be treated when it comes to the imposition of fines.
The annual creditors' meeting of former state-owned air carrier Cyprus Airways recently took place. The state stepped in following the company's collapse and paid the majority of employees the money owed to them. Due to this payment, and by virtue of Section 300 of the Companies Law, the state became a preferential creditor, having made a payment that was owed to preferential creditors as a third party on behalf of the company.
The Supreme Court recently examined the correct application of Rule 56 of the Companies (Winding-up) Rules, which regulates the procedure to be followed by the chair at a creditors' meeting in the case of an objection by a creditor regarding whether a proof of debt by another creditor must be accepted in order to determine the creditor's voting rights.
Law 8(I)/2018 came into force in July 2018, amending the Transfer and Mortgage of Immovable Property Law. The new legislation was applied for the first time in a recent Nicosia District Court case, which is considered to be of great importance in assessing how the courts will interpret the new law in future. The case concerned an auction procedure which had been initiated by the sending of the relevant documents and notices to the mortgagor, which filed a lawsuit against Hellenic Bank to suspend a foreclosure procedure.