An Unregistered Counterparty Does Not Void Your Contract

Rock FM signed an agreement on 17 October 2017 with a company that presented itself as an independent management entity for neighbouring rights, and paid it 1,050 euro for a licence to broadcast and rebroadcast musical works. The station later took the view that the company held no certificate of registration and so could grant nothing. It terminated the agreement by a letter of 28 March 2018, served on 18 April 2018, and sued for the return of its money and for damages.

On 14 September 2026 the Court of Appeal dismissed the station's appeal, but it did not adopt the reasoning of the court below. The trial judge had found that the respondent was lawfully operating as an independent management entity. The Court of Appeal declined to decide that question. It held that the answer did not matter, because the statute that requires the registration does not forbid the contract.

A licensing requirement is not a prohibition on contracting unless the statute says so, expressly or by necessary implication.

Who this matters to

Any Cyprus business that has signed with a counterparty whose licence, registration or permit later turns out to be missing, and any business on the other end of that argument. It reaches further than music rights. Developers and contractors engage architects, civil engineers, agents, valuers and safety consultants, all of whom hold registrations that can lapse or arrive late. Company directors sign with intermediaries, brokers and service providers on the assumption that the licence on the website is current. When a commercial relationship turns sour, the missing licence is one of the first things the disappointed party reaches for, and this judgment says it is usually the wrong thing to reach for.

The question is what the statute was for

The court took its guidance from Agathokleous and another v. Lappa (1998) 1 A.A.D. 2202, which sets out the division that decides cases of this kind. Where a statute requires a licence mainly to raise revenue or to keep an administrative register in order, the contract made by the unlicensed person is not illegal and the penalty falls on that person alone. Where the statute protects the public by keeping unqualified people out of an occupation, the contract made by an unqualified person is illegal and cannot be enforced.

The English authorities the Cyprus courts have long used show the two sides. In Smith v. Mawhood (1845) 14 M & W 452 a tobacconist who had failed to take out his licence could still recover the price of the tobacco he had sold, because the object of the legislation was not to vitiate the contract but to impose a penalty for the purposes of the revenue. In Cope v. Rowlands (1836) 2 M & W 149 an unlicensed broker could not recover his commission, because the licence existed for the benefit and security of the public in the transactions brokers negotiate, so the penalty implied a prohibition on unadmitted persons acting at all. In Archbolds (Freightage) Ltd v. S. Spanglett Ltd [1961] 1 All E.R. 417 the statute struck at the use of unlicensed vehicles on the road, not at contracts for the carriage of goods, so the carriage contract survived.

The architect who had let the licence lapse

The most useful illustration in the judgment comes from the construction world. In Agathokleous the architect was qualified and entered on the register of the Cyprus Association of Civil Engineers and Architects, but at the time she took on the drawings she did not hold the annual licence required by section 12(A) of Law 41/1962. She obtained it afterwards. The court held that nothing in section 12(A) prevented her from claiming her fee, either expressly or by implication, and it reached that conclusion by reading section 12(A) against section 10 of the same law, which does expressly forbid architects and civil engineers from collecting fees in defined circumstances and punishes a breach far more heavily. Had the legislature intended the same consequence for a lapsed annual licence, it would have said so in the same terms.

The court also noted what a contrary reading would produce. A haulier could lose the freight because the driver exceeded the speed limit, and the loss inflicted on the wrongdoer would exceed the statutory penalty many times over. That is the practical objection to treating every regulatory breach as destroying the contract.

Why this agreement survived

Applying that reasoning, the Court of Appeal gave a series of cumulative reasons. Law 65(I)/2017 does not provide, expressly or by implication, that an independent management entity may not conclude agreements for the broadcast or rebroadcast of musical works, or may not collect a fee under them, merely because it has not been issued with a certificate of registration under Article 13(1)(a). Had the legislature intended that, it would have written it into the law. The sanction it did choose for the failure to obtain the certificate provided for in Article 11 is a high administrative fine, not the invalidation of the entity's contracts.

The facts reinforced the point. The respondent had applied to the competent authority in 2017, with supporting material, for entry in the registers and the issue of a certificate, and none had been issued by the time of the trial in 2021. The evidence showed that when the appellant's own advocates wrote to another rights body in 2017, the competent authority had not yet been constituted and the regulations required to operate the law had not been passed by the Council of Ministers.

Finally, the court looked at what the agreement was actually for. The respondent was acting as an intermediary representing the interests of the owners of musical works, and it granted a licence to broadcast those works. That object offends no statutory provision and no rule of public policy.

Where the line does fall

The court was careful to mark the boundary. It distinguished Skoutelas v. Agapiou (2003) 1 A.A.D. 338, where the agreement was illegal because the party supplied services it was not qualified to supply. That is the category the law does strike down, and it is a question of substance rather than paperwork. A person who is not an engineer cannot save a contract to design a building by pointing out that the statute only imposes a fine. The distinction is between someone who is entitled to do the work and has an administrative step outstanding, and someone who is not entitled to do the work at all.

The court also mentioned the one place the Cyprus legislature has spelled the consequence out. Section 11(4)(a) of the Advocates Law provides in terms that a person practising without an annual licence is barred from bringing or continuing an action to recover fees. That provision exists precisely because, without it, the general rule would run the other way.

What this means in practice

1. A missing registration is not an exit from a contract you regret. Before you terminate on that ground, read the statute and find its sanction. If the sanction is a fine on the other party, you are very likely still bound, and terminating will put you in breach.
2. Look for the prohibition, not the penalty. The test is whether the legislature aimed at the contract or at the offender. A fine, even a heavy administrative one, points to the offender. An express bar on collecting money, as in the Advocates Law, points at the contract.
3. Distinguish paperwork from competence. An outstanding renewal, a pending application or a register that the regulator has not yet set up are administrative matters. A person doing work they are not qualified to do is a different case and the contract will not be enforced.
4. Keep the record of your application. The respondent survived partly because it could show it had applied in 2017 and that the delay lay with an authority that had not been constituted. A party waiting on a regulator should keep the application, the acknowledgement and the correspondence.
5. Count the cost before appealing on illegality. The station was ordered to pay 1,100 euro plus VAT in costs on the appeal alone, against a claim of 1,050 euro, with the costs below on top.

Questions of this kind are decided on the wording of the particular statute rather than on any general rule, which is where commercial contracts and corporate and commercial work meets the licensing regime of the sector involved.

Questions we are asked

Sources

• Rock FM Ltd v. C.N.R. Cyprus Neighbouring Rights Management Ltd, Civil Appeal 263/2020, Court of Appeal of Cyprus, 14 September 2026
• The Collective Management of Copyright and Related Rights and the Granting of Multi-Territorial Licences for Online Uses of Musical Works Law of 2017, 65(I)/2017, CyLaw
• The Architects and Civil Engineers Law of 1962, 41/1962, CyLaw

This article is provided for general information purposes only and does not constitute legal advice.

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