Arbitration under Cap. 4: the clause, the award, the court

Cyprus has two arbitration statutes. International commercial arbitration has its own law; everything else runs on the Arbitration Law, Cap. 4, which is the one that governs the arbitration clause in an ordinary Cyprus construction contract, lease or shareholders' agreement. It is short, it is old, and most of what it does happens by default rather than by the parties' design.

Under section 2, "the Court" means the District Court or any judge of it, so the supervisory jurisdiction is local rather than reserved.

The agreement, and what is read into it

Section 3 gives the arbitration agreement a quality contracts do not usually have: unless a contrary intention is expressed in it, it is irrevocable except by leave of the Court. Under section 4(1) it is not discharged by the death of a party.

Section 6 then does the heavy lifting. Unless a contrary intention is expressed, the agreement is deemed to include the provisions of the First Schedule, so far as they can apply. Those provisions are the arbitration most parties actually get:

• if no other form of reference is provided, the reference is to a single arbitrator;
• where the reference is to two arbitrators, they appoint an umpire immediately after their own appointment, and if they give written notice that they cannot agree, the umpire may begin at once;
• the parties, and those claiming through them, submit to examination on oath or affirmation and produce all books, contracts, agreements, accounts, writings and documents in their possession or power that may be required;
• the award is in writing and is final and binding on the parties and those claiming through them;
• costs are in the arbitrators' discretion, who may direct by whom, to whom and in what manner they are paid, and may tax or settle the amount;
• the arbitrators have the same power as the courts to order specific performance of any contract, except a contract relating to land or any interest in land;
• the arbitrators may make an interim award.

The specific performance exception is worth noting before an arbitration clause goes into a property contract: the tribunal cannot give the remedy the buyer usually wants.

Being sued in breach of the clause

Section 8 is the provision with a deadline inside it. Where a party to an arbitration agreement, or someone claiming through them, begins court proceedings about a matter agreed to be referred, any party to those proceedings may apply to the Court for a stay. The application must be made at any time after appearance and before delivering any pleadings or taking any other step in the proceedings.

Two conditions then have to be satisfied before the Court may stay: that there is no sufficient reason why the matter should not be referred in accordance with the agreement, and that the applicant was at the commencement of the proceedings, and remains, ready and willing to do everything necessary for the proper conduct of the arbitration.

The practical consequence is that a defendant who wants the arbitration has to decide immediately. Filing a defence is a step in the proceedings, and it is the step that usually loses the right.

Section 9 runs the other way, giving the Court power to grant relief where the arbitrator is not impartial, or where the dispute referred involves a question of fraud.

What the court can do while the arbitration runs

Section 13(1) allows the Court, on a party's application, to remove an arbitrator or umpire who fails to use all reasonable dispatch.

Section 17 supplies the tribunal's missing coercive power: any party may apply to the Court for a writ of subpoena compelling a person to attend for examination or to produce a document. The limit is stated in the section itself: nobody may be compelled under it to produce a document he could not be compelled to produce at the trial of an action.

Section 18 lets the Court extend the time for making the award, whether or not that time has already expired, which is the answer to an arbitration that has run past its own deadline.

Section 26 and the Second Schedule list what else the Court may order for the purposes of a reference, with the same power as it has for an action: security for costs; discovery of documents and interrogatories; evidence by affidavit; examination on oath before an officer of the Court, including a request for the examination of a witness outside the jurisdiction; the preservation, interim custody or sale of goods that are the subject matter of the arbitration; securing the amount in dispute; the detention, preservation or inspection of property, including authorising entry onto land or a building in a party's possession and the taking of samples or the making of observations or experiments; and interim injunctions or the appointment of a receiver.

Remission, removal and setting aside

Section 19(1) allows the Court from time to time to remit the matters referred, or any of them, for reconsideration. Where an award is remitted, section 19(2) requires the arbitrators or umpire to make their award within three months of the date of the order, unless the order directs otherwise.

Section 20 contains the two serious powers, and they are separate. Subsection (1): where an arbitrator or umpire misconducts himself or the proceedings, the Court may remove him. Subsection (2): where the arbitrator or umpire has misconducted himself or the proceedings, or where the arbitration or the award has been improperly procured, the Court may set the award aside.

Those are the grounds. An award is not set aside because the tribunal reached a conclusion the losing party disagrees with, and the First Schedule's finality provision is the reason.

The award, interest and costs

Section 21 is what makes the whole exercise worth doing. An award made under an arbitration agreement may, by leave of the Court, be enforced in the same manner as a judgment or order to the same effect, and in that case judgment may be entered in the terms of the award.

Section 22: unless the award otherwise directs, the sum it directs to be paid carries interest from the date of the award at the same rate as a judgment debt.

Section 23(1) strikes down a clause that is still drafted: a provision in an arbitration agreement that the parties, or any of them, shall in any event pay their own costs of the reference or the award, or any part of them, is void, and the Law applies as if the provision were not there. A proviso preserves it where it forms part of an agreement to submit a dispute that had already arisen when the agreement was signed.

Section 23(2) covers the award that says nothing about costs: any party may, within fourteen days of the publication of the award or such longer time as the Court may order, apply to the arbitrator for a direction as to who pays them and to whom, and the arbitrator, after hearing any party who wishes to be heard, amends the award accordingly.

Limitation, and when an arbitration begins

Section 24(1) settles the general position: the limitation laws apply to arbitrations as they apply to proceedings before the Court.

Section 24(2) disarms a clause that would otherwise defer the clock. Notwithstanding any term of an arbitration agreement providing that no cause of action arises on a matter required to be referred until an award has been made, a cause of action is deemed, for limitation purposes, to have arisen at the time it would have arisen had the term not been in the agreement.

Section 24(3) then fixes the moment that matters: an arbitration is deemed to commence when one party serves on the other a notice requiring the appointment of an arbitrator, or, where the agreement provides for reference to a person named in it, requiring the reference. That notice is the step that stops time, and it is also the step that interrupts limitation under section 17(d) of the Limitation of Actionable Rights Law 66(I)/2012, which is set out in limitation periods in Cyprus.

Section 31 binds the Republic, except where the Law expressly says otherwise, and section 33 keeps the Law away from proceedings of the Arbitration Tribunal operating under the trade disputes legislation.

Questions we are asked

This article is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com or telephone +357 22 680 330.

Klitos Platis

Advocate, Partner

Kleanthous & Platis LLC, Nicosia · Published 22 August 2026