Arbitration is a consensual legal technique for resolution of disputes without the necessity to refer the matter to court. The parties
to a dispute voluntarily refer the matter to an impartial third person (the arbitrator) who will be empowered by the parties to make a decision based on the evidence and the arguments which are presented to him. Once made, the arbitration award will be binding upon the parties and fully enforceable against them. The tool is a highly effective method, employed mainly by those embroiled in a commercial dispute, to swiftly and efficiently manoeuvre out of, what would otherwise be, a deadlock situation.
THE ADVANTAGES OF ARBITRATION
Arbitration has developed as one of the main forms of dispute resolution in certain industries such as shipping and construction and can offer those who choose to use the technique some impressive advantages:
CONTROL – the parties to the dispute can control elements of the dispute resolution that they would otherwise be unable to influence. By way of example, the parties can choose the time and place of proceedings or the language of proceedings, which are traditionally matters over which they would have no authority if they proceeded through the court.
EXPERT DECISIONS – The arbitrator can be chosen according to his/her specific industry expertise. Technical qualifications or
trade expertise are not prerequisites in the selection of a judge in conventional proceedings and such selection power can be considerably beneficial in terms of party confidence in an arbitrator’s decision.
SPEED – arbitration is generally a faster process than taking action through the busy courts.
CONFIDENTIALITY – proceedings are not undertaken in public and therefore parties to arbitration can rest assured that matters will remain out of the public eye.
FINALITY – fewer avenues for appeal mean that the award will most often be final allowing parties to move forward without the risk of ongoing challenge.
COSTS – arbitration is generally considered to be cheaper than proceeding through court action.
ENFORCEMENT – it is easy to enforce decisions by virtue of the New York Convention which has been
ratified by approximately 90 different states worldwide.
ARBITRATION IN CYPRUS
In recent years Cyprus has forged itself as an international centre of excellence for arbitration. It offers a number of advantages as a venue, as follows:
LOCATION – Cyprus is, geographically speaking, extremely well placed to host international arbitrations. Located at the crossroads of three continents it offers extremely easy access via two major newly renovated airports, which host flights to all major worldwide destinations.
WORK FORCE – Cyprus boasts an educated work force on hand to support an arbitration held on the island. A multitude of experts are available, from a variety of industries and speaking a variety of different languages, for use as arbitrators. Behind the scenes, administrators and support staff are well trained to offer necessary support to parties. Experienced legal teams can then guide the process and ensure that the arbitration is undertaken in accordance with the law and as efficiently and smoothly as possible.
VENUES – depending on the size of the arbitration, and the party preferences in terms of style, a variety of different venues are available to host arbitral proceedings in every major city on the island.
LEGAL PROCESS – The legal system in Cyprus is founded on British law and as such a developed approach is taken to the resolution of legal matters.
COSTS – Cyprus is a highly cost effective venue for arbitration, offering quality services at a comparably much lower price than its competitors.
ENFORCEMENT – Arbitral awards are enforceable by virtue of the Cypriot Law on International Arbitration (Chapter 102 (1)) and Cyprus is also a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of the United
Nations 1958 (the “New York Convention”), which means that Cyprus is bound to enforce arbitral awards made in other contracting states. Likewise, awards made in Cyprus are bound to be enforced in the territories of other contracting states.
Arbitration is a highly effective tool for the resolution of commercial disputes and can offer a large number of benefits in comparison to pursuing matters through conventional court action. In order to ensure that arbitration is an option when disputes occur, care should be taken during the commercial contract drafting stage in order to ensure that arbitration is a valid
possibility. When arbitration is considered to be an appropriate course of action, Cyprus offers a beneficial location in terms of venue. Cyprus’ geographical location, educated workforce, choice of venues, straight forward legal process and low running costs all contribute to its growing reputation as an international centre of excellence for arbitration.
Michael Chambers and Co. LLC is experienced in running international arbitrations. We are able to draft arbitration clauses for
inclusion in international commercial contracts and can assist clients with undertaking arbitration on the island of Cyprus. If you wish to speak to one of our lawyers, then please contact us.