Real es­tate ar­bi­tra­tion in Cyprus

Financial Mirror (Cyprus) - - FRONT PAGE -

This gov­ern­ment is try­ing to in­tro­duce new ideas and meth­ods in its ef­fort to catch up the 21st cen­tury, from the ex­ist­ing le­gal sys­tem in­tro­duced 150 years ago.

Thanks to the Bar As­so­ci­a­tion and bear­ing in mind the years of de­lays that are ex­pe­ri­enced in the lit­i­ga­tion pro­ceed­ings, a new ap­proach to solve mi­nor dis­putes that in­cludes land law cases (prop­erty sales, etc), ar­bi­tra­tion is go­ing to be in­tro­duced (wait­ing mind you for the last five years since the an­nounce­ment).

Of course, ar­bi­tra­tion al­ready ex­ists in the le­gal sys­tem and so far usu­ally the court judge sug­gests the ap­point­ment of an ar­bi­tra­tor (ac­cord­ing to the na­ture of the case an ap­pro­pri­ate pro­fes­sional is ap­pointed) to pro­vide an in­de­pen­dent opin­ion to the court. The new pro­ce­dure adopted is less costly, in­for­mal and speedy and a case that might take years of hear­ings, etc. in the courts, through ar­bi­tra­tion, a de­ci­sion will be ex­pected within a time frame of, say, max­i­mum 12 months.

As the sys­tem is, how­ever, ei­ther party can ap­peal both to the lo­cal/high court (in the sense that it is up to the judge to con­sider the ar­bi­tra­tor’s de­ci­sion and of course ap­peal later to the high court). So it could drag on again, but at least the bulk of the ar­gu­ments will be dealt with and the facts will be sorted out within a short pe­riod of time.

The Cyprus Tech­ni­cal Cham­ber has em­barked on a train­ing course to ed­u­cate those of its mem­bers who want to deal with such ar­bi­tra­tions to be in the know of the pro­ce­dures. If a new law is passed set­ting out the rules and with the pro­vi­sion of only on le­gal mat­ters an ap­peal can be lodged, the sit­u­a­tion will get much bet­ter.

There is a glimpse of hope for the thou­sand of real es­tate dis­putes and in­clud­ing com­pul­sory ac­qui­si­tions cases to be dealt with within a short pe­riod of time. A case in hand was a re­cent multi mil­lion dis­pute on a breach of con­tract, where the end­less ar­gu­ments were avoided and the ar­bi­tra­tor had to de­cide on the facts by the wit­nesses (ex­perts) on ei­ther party. A pleas­ant sur­prise was the stenog­ra­pher used in the ar­bi­tra­tion pro­ceed­ings, who us­ing a spe­cial ma­chine could record not only ev­ery­thing cor­rectly but at an im­pres­sive speed. In the or­di­nary courts, such ma­chines are not used ex­ten­sively be­cause the stenog­ra­phers, fear­ing for the loss of their jobs, ob­ject to it!

An ar­bi­tra­tor could com­ple­ment his knowl­edge by us­ing his own ex­perts (dur­ing the hear­ing) that are knowl­edge­able on the sub­ject (e.g. fi­nance, val­u­a­tions statis­tics, etc). If we are ap­pointed as an ar­bi­tra­tor or real es­tate mat­ters, we feel that we can de­cide on com­pul­sory ac­qui­si­tion cases five per month, whereas now for five cases a month that show up in court, i.e. 60 cases p.a., it could take any­thing be­tween 4 to 6 years.

The rules and leg­is­la­tion have not been set out, but we ex­pect that whereas in the or­di­nary courts, the ac­tual court cost charged is min­i­mal, on the other hand the nu­mer­ous post­pone­ment by the lawyers cause the bill to come up to a huge amount. At the end I be­lieve that the ar­bi­tra­tion deal will be much cheaper and of course faster.

I pro­posed this idea ten years ago in or­der to pro­vide a spe­cial court on the lines of the Lands Tri­bunal in the U.K. At that time I have vis­ited the then Pres­i­dent of the Supreme Court who ex­pressed his sup­port on this ap­proach. How­ever, as most things in Cyprus, the ideas are there, but the ex­e­cu­tion lacks.

A word of cau­tion, since the ar­bi­tra­tor is not a judge as such and for a pe­riod of 1-2 years it will take time to be ac­cepted in the pub­lic’s mind. A sim­i­lar court re­gard­ing tax mat­ters failed to suc­ceed due to gross in­ef­fi­cien­cies and trial de­lays by the “court”. This is a good tax court in con­cept but it is a great shame not to be ex­ten­sively used be­cause of the wrong peo­ple as “judges” in­volved.

A re­cent de­ci­sion to in­tro­duce an ar­bi­tra­tor be­tween lenders and bor­row­ers is most wel­comed. The ar­bi­tra­tor will hear both sides of a case and try to come up with some sort of an ac­cept­able deal be­tween the two par­ties. These are most wel­com­ing news with the ar­bi­tra­tion up and run­ning and we will re­assess its ef­fec­tive­ness within the year.

Spe­cialised courts ex­ist al­ready re­gard­ing mat­ters of rent con­trol, fam­ily court, etc, but a Lands Tri­bunal/Ar­bi­tra­tion pro­ceed­ing if es­tab­lished cor­rectly, will make life much eas­ier for the Cypriot cit­i­zens and oth­ers, re­duce costs both to the par­ties in­volved and the gov­ern­ment, and it will help make this coun­try a bet­ter place to live.

So, I ex­pect that a new gov­ern­ment will pro­ceed with new ideas in or­der to syn­chro­nise the sys­tem, but then it will meet our be­low-stan­dard MPs who will de­cide based on the var­i­ous pres­sure groups and oth­ers.

A case to note is that be­cause of our in­ef­fi­cient le­gal sys­tem, for­eign com­pa­nies that do busi­ness in Cyprus place in the con­tracts of agree­ment that ar­bi­tra­tion will be re­ferred to a U.K. ar­bi­tra­tion (which is most shock­ing and em­bar­rass­ing).

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