Cyprus: A General Business Law: Dispute Resolution Overview

The Landscape in Cyprus

Cyprus has established itself as a business and tech hub over the past few years. As one of the very few common law jurisdictions within the European Union, which also benefits from various bilateral and multilateral treaties, Cyprus is a jurisdiction that can very often be found within complex corporate structures and involved in high-profile international fraud claims, enforcement actions, cross-border insolvencies and asset-tracing exercises taking place in or through the country. In view of its geographical location, Cyprus has attracted even more large-scale disputes as a result of the conflicts in Ukraine and the Middle East, which have led to the relocation of a large number of companies on the island, especially in the financial services and tech sectors.

Judicial Reforms in Cyprus Meet Initial Targets

The Cyprus legal system has recently undergone radical reforms, aimed to modernise processes and increase efficiency, by tackling the chronic problem of delays in the administration of justice.

A new, extensive and fundamentally amended Civil Procedure Rules (CPR) modelled after the English CPR was introduced in the second half of 2023. All new cases filed in Cyprus are now adjudicated on the basis of the new CPR and are subject to more structured and strict timeframes, to eliminate – to the extent possible – a build-up of further delays in the system.

The Cyprus legal system has also recently embraced technology through the adoption of an electronic justice system, which has transformed the new case records of the court into electronic form, to allow for better and faster scheduling of hearing dates and processing of court appearances. In recent judgments, first instance courts have also demonstrated a willingness to adapt to the technological advancements, by approving requests for the granting of witness testimony via videoconferencing.

The ongoing implementation of the recently introduced judicial reforms has already resulted in a major decrease of the backlog of cases pending over the past few years, with the Supreme Court of Cyprus announcing that the first-year objectives of the reforms have been met.

Modernisation of International Arbitration Law

In 2024, the International Commercial Arbitration Law (Law No 101/1987) was amended to mirror the 2006 revision of the UNCITRAL Model law, modernising Cyprus’s international arbitration framework and harmonising it with international standards. The reforms introduce a far more detailed and flexible regime for interim measures, including clearer rules on emergency and ex parte relief. They also streamline the recognition and enforcement of foreign arbitral awards by relaxing formal requirements, further reinforcing Cyprus’s pro-arbitration stance.

More reforms are expected, with a new unified Arbitration Law set to replace both the domestic arbitration law and the International Commercial Arbitration Law, creating a single modern regime with greater procedural flexibility, limited court intervention, and streamlined enforcement of arbitral awards.

Commercial Court to Handle High-Value Commercial Disputes

The Commercial Court was established through the enactment of the Establishment and Operation of the Commercial Court and Maritime Court Law of 2022 (Law No 69(I)/2022 in May 2022 and is due to commence operations in the coming months.

The Commercial Court will hear commercial claims with a value of over EUR2 million, including disputes relating, inter alia, to:

• business contracts;
• the provision of services;
• the operation of capital markets;
• commercial agency; and
• disputes between regulated entities.

The Commercial Court will also have jurisdiction to try all cases relating to arbitration, competition and intellectual property, irrespective of the value of the claim.

Litigants may elect to confer jurisdiction to the Commercial Court even when the dispute has no connection to Cyprus, while proceedings before the Commercial Court may be conducted in English.

Hence, the Commercial Court is expected to take up a large volume of commercial cases with cross-border characteristics, within the framework of which applications for interim orders are usually pursued for asset recovery purposes.

Impact of Global Geopolitical Tensions

The conflicts in both Ukraine and the Middle East have led to the influx of substantial business in Cyprus, establishing the island as one of the most attractive destinations for the relocation of international businesses.

Cyprus has developed strong links with both Russia and Ukraine, having maintained a number of bilateral treaties covering political, commercial, cultural and legal aspects, resulting in substantial flow of capital. As a result, for a number of years, a significant volume of high-value and complex litigation and fraud cases has been adjudicated in Cyprus, due to the existence of Cyprus structures in companies and groups from the CIS region.

While such structures were, to a large extent, affected by the sanctions imposed on Russian businesses, initially causing negative predictions, a wide range of sanctions-related disputes has emerged, including disputes on contentious issues on asset freeze structures and claims arising out of the operation of sanctions. At the same time, there has been a significant increase in the volume of work (including contentious matters) and interaction between Cyprus and the United States, reflecting the close relationship between the two states on a political level, which is expected to develop further in the coming years.

More importantly, Cyprus has benefited from the subsequent relocation of the operational substance of a number of international companies to the island, together with their employees and their families. Cyprus has attracted foreign businesses seeking alternative domicile due to geopolitical developments, by offering a number of incentives, including a favourable tax regime and various attractive tax schemes. As a result, Cyprus has established itself as an appealing location for the relocation of international businesses, inevitably leading to a significant increase in disputes-related work.

The Rise of Fintech-Related Disputes

Within the broader Cyprus financial landscape, Cyprus has grown as a fintech hub, with the Forex industry contributing to its rise in popularity over the past two decades. Nowadays, the courts are not strangers to fraud claims between Forex companies or between these companies and their clients, something that would have been unfamiliar territory 15 years ago. Lawyers and judges alike have quickly become accustomed to the concept and operations of the Forex industry, after its boom in Cyprus in the early 2010s.

Although still with some hesitation, Cyprus courts are also becoming familiar with digital assets such as cryptocurrencies, operating within the framework of the EU’s comprehensive crypto-asset regulation. In view of the development of the digital finance sector in Cyprus, there has been an increase in disputes involving digital assets, while Cyprus courts are called upon to adapt to the challenges posed by digital assets and be proactive in protecting the victims of crypto fraud. 

Concluding Remarks

The recent reforms and their early implementation leave us optimistic that the delays which have crippled the legal system in the past will be overcome, while the new specialist Commercial Court raises expectations for significantly more efficient handling of international high-value business disputes, capable of serving the needs of the island’s rapidly growing international business sector.