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Real Estate Arbitration & Cyprus
3 September 2017
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 and including land law cases (property sales etc etc) arbitration is going to be introduced (waiting mind you for the last 5 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 case nature an appropriate professional is appointed) to provide an independent opinion to the court. The 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 adopt or otherwise 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 Association has embarked into 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 glism of hope dear readers 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 shocking (pleasant) experience 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 now 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 etc). If we are appointed as an arbitrator or real estate matters, we feel that we can decide on compulsory acquisition cases 5 p.m. whereas now for 5 cases p.m. i.e. 60 cases p.a. it will take anything between 4-6 years.
The rules and legislation have not been set out, but we expect that whereas in the ordinary courts, the actual court costs charged is minimal, but on the other hand the numerous postponement (or not) of the lawyers cause the bill to come up to a huge amount. At the end we suggest that the arbitration deal will be much cheaper and of course faster.
This idea was proposed by us 10 years ago in order to provide a special court on the lines of the Lands Tribunal in the U.K. At that time we have visited the then President of the High Court who expressed his support on this approach. However, as most things in Cyprus, the ideas are there, but the execution lucks. A word of caution, since the arbitrator not being 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 as a concept but it is a great shame not to be extensively used because of the wrong people “judges” involved.
A recent decision to introduce an arbitrator between financiers 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.
Specialized courts exist already regarding matters of rent control, family court etc, but a Lands Tribunal/Arbitration proceeding if established correctly, it 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 we expect that the Government with new ideas in order to synchronize 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 Cos who do business in Cyprus place in the contracts of agreement that arbitration will be referred to a U.K. arbitration (most shocking and embarrassing).