CYPRUS Law and Practice Contributed by: Kyriacos Scordis, Anna Borovska and Constantinos Kazamias, Scordis, Papapetrou & Co LLC
dominant French construction groups and interna- tional airport operators. Undisputedly, PPP is crucial and of major signifi- cance to the Cypriot economy, something that has been demonstrated by the Cyprus National Reform Programme of the Presidency’s Unit for Administrative Reform, that mentioned that a certain PPP unit will be set up within the Public Works Department. Finally, since Cyprus is a member of the EU and stands in line with EU laws and regulations, it is deemed a free- market economy and there are thus practically no legal restrictions in contracting out certain services or utilities to private entities. Current PPP Projects The newly completed integrated casino resort “City of Dreams Mediterranean” in Limassol is one of the big- gest casino projects in Europe, being a consortium of international investors (Melco International) and local investors. The discovery of natural gas around and in the vicin- ity of Cyprus has attracted the attention of multi- national companies like Total, Exxon Mobil, Kogas, Qatar Petroleum and Eni which have started works for the extraction of the gas and to exploit potential oil deposits. Recent financing relates to the creation of an oil terminal and hydrocarbon-related infrastructure. Requirements for PPP Projects The Law on Fiscal Responsibility and Public Finances Framework (20 (I)/2014), as amended, sets out the minimum public sector requirements when dealing with and handling PPP projects. The Law outlines what a “significant project” actually is (in cases where PPP is applicable), the assessment principles, and other applicable specifications and tests that ought to be conducted by the public sector when assessing PPP offers. In addition, the Law on Public Procurement (73 (I)/2016), as amended, is the primary law on public procurement contracts in Cyprus. It effectively inte- grates the EU Procurement Directives 17/2004 and 18/2004 into domestic law, and handles the co-ordi- nation of procedures for the award of public works
contracts, public supply contracts, public service con- tracts and related matters. 8.3 Governing Law The choice of law and dispute resolution mechanism for project documents can vary depending on the parties involved (including financing parties) and their preferences. Cyprus law allows parties to choose the governing law and jurisdiction of their contracts, mak- ing it possible to opt for laws other than Cypriot law and alternative dispute resolution methods. However, agreements on projects located in Cyprus will com- monly be governed by local law. It is permissible for international commercial contracts in Cyprus, especially those involving foreign parties, to use English law as the governing law. Additionally, international arbitration is often favoured as the dis - pute resolution mechanism, providing a neutral and efficient means to settle conflicts between parties. 8.4 Foreign Ownership There are no general restrictions on EU nationals own- ing real property in Cyprus. There are, however, some restrictions for non-EU nationals or companies. A non-EU citizen or a company controlled by a non- EU citizen, foreign company or trust, the beneficiary of which is a non-EU citizen, cannot acquire real estate in Cyprus without prior permission from the Cypriot Council of Ministers (these powers are now vested in the relevant District Officers) under the Acquisition of Immovable Property (Aliens) Law, Chapter 109. Cyprus generally does not impose restrictions on the security of foreign lenders holding or exercising reme- dial rights on liens on real property. Foreign lenders will be subject to the same laws and regulations as domestic lenders when it comes to providing loans secured by real property, subject to the above restric- tions on ownership and need to comply with local leg- islation once the security is exercised. 8.5 Structuring Deals When structuring a project finance deal, aside from the commercial elements, the key legal issues to con- sider include:
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