CYPRUS Law and Practice Contributed by: Kyriacos Scordis, Anna Borovska and Constantinos Kazamias, Scordis, Papapetrou & Co LLC
6.2 Foreign Law and Jurisdiction The Rome I Regulation (EC) No 593/2008 applies in Cyprus and sets out EU-wide rules for deciding the governing law to be applied to contracts in civil and commercial matters, when parties from more than one country are involved, regardless of domicile (Regu- lation (EU) No 1215/2012 (“Brussels Recast”). The parties to a contract are free to choose the govern- ing law, and the applicable law can be amended, as long as all parties consent to it. Therefore, a choice of foreign law as the governing law of a contract in a security contract shall be recognised as long as it is made without duress and is not contrary to public policies of the Republic of Cyprus. However, when security is taken over immovable property in Cyprus, as well as a pledge of shares in a Cypriot company, domestic law will inevitably apply in order to be valid and enforceable. Jurisdiction matters are administered by the Brussels Recast, which applies again only to civil and commer- cial matters. The only reason for a judgment passed in an EU member state not to be accepted, is its rec- ognition being challenged, and for that reason, an assertion that such foreign judgment is enforceable is issued once the official and proper review of the The applicable jurisdiction is usually the one where a defendant is domiciled, irrespective of nationality, and domicile is governed by that member state’s law where a matter is brought before its court. Submission to a foreign jurisdiction would be upheld as long as the jurisdiction clause had been agreed between the contracting parties themselves and specified in the contract. Appearing in the proceed- ings or serving a defence would also be grounds for submission to a foreign jurisdiction. If a defendant does not want to submit to a specific jurisdiction, they must not contest the case on its merits, but should acknowledge service stating that they intend to dis- pute the jurisdiction and make a declaration that the specific member state lacks jurisdiction. related documents has been made. Applicable and Foreign Jurisdictions The Cypriot courts do acknowledge and uphold state immunity, as long as such immunity is not consensu-
ally waived and a state is not acting in a private or commercial capacity. 6.3 Foreign Court Judgments Depending on the country of the foreign court, it is possible for a foreign judgment or arbitral award to be recognised and enforced in the Republic of Cyprus. In order for a judgment to be valid in Cyprus, it must go through the Cypriot courts’ registration system, in order to acquire the same status as a judgment from a national court. Cyprus is party to various multilateral and bilateral international conventions with other countries, which is influential to the recognition and enforcement of foreign judgments. Different procedural mechanisms may be used to recognise and enforce a foreign judg- ment depending on the nationality of the court issuing the judgment or arbitral award. For example, Cyprus is a party to the New York Convention on the Rec- ognition and Enforcement of Foreign Arbitral Awards (1958) (the “NY Convention”) and although a judg- ment from New York would be recognised under the Recognition, Enforcement and Execution of Foreign Judgements Law (121 (I)/2000), enforcement is not immediate. The law provides procedural requirements to be followed and ultimately sets a hearing where the respondent can object to matters concerning jurisdic- tion and substance. When judgments or arbitral awards derive from an EU court, they will be recognised and enforced accord- ingly with the Brussels Regulation and the recognition under national law will be automatic. A judgment given by another EU member state court can be challenged in respect of its recognition under specific circum- stances by the domestic courts, whereas it cannot be challenged in terms of substance. Therefore, Cypriot courts are not in a position to review the substance and/or merits of a judgment. 6.4 A Foreign Lender’s Ability to Enforce Its Rights Aside from contractual restrictions specified in the security/loan agreements or specific debtor protection provisions (such as lending to homeowners for first homes), bankruptcy/insolvency may have an impact,
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