Cyprus: A holder of an International Arbitral Award, before its registration in Cyprus, under the New York Convention, cannot be regarded as a “Creditor”, within the meaning of Section 212 of the Cyprus Companies Law CAP 113.
In a recent case, which our lawfirm handled on behalf of the Respondents, the Supreme Court of Cyprus, decided that a holder of an International Arbitral Award, which has not been yet registered in Cyprus, under the New York Convention (the “Convention”), cannot be regarded as a “Creditor”, within the meaning of Section 212 of the Cyprus Companies Law CAP 113 (the “Law”).
The Appellants, obtained an arbitral award from an Arbitration Tribunal in Moscow, Russia against the Respondent Cypriot Company. The Appellants applied to register the International Arbitral Award in Cyprus, under the Convention, but the Cyprus 1st Instance Court, dismissed their application for registration, because the Applicants failed to present before the Cyprus Court, the original, or certified true copy of the arbitration agreement, as required by Article IV of the Convention.
After the dismissal of the application of the Appellants, for the registration of the Russian Arbitral Award, the Appellants served to the registered office of the Cypriot Company of the Respondents, a formal demand under Section 212 of the Law, demanding the payment of the sum awarded by the Russian Arbitral Award, within 21 days from the date of service of such demand, otherwise the Respondents Cypriot Company, was deemed to be insolvent, and the Appellants were entitled to file a winding up petition against it.
Upon receipt of the formal demand, the Respondents rejected the demand of the Appellants and the Appellants proceeded into the filing of a winding up petition.
The 1st Instance Court dismissed the winding up petition of the Appellants, on the ground that the Appellants, before the registration of the Arbitral Award under the terms of the Convention could not be regarded as “creditors” within the meaning of Section 212 of the Law.
Section 212 (a) of the Law, provides that a creditor, who has an undisputed liquidated claim against a Cypriot company debtor, may serve a written demand at the registered office of the debtor company, requesting the payment of the debt, within 21 days from the service of the demand, and if the debtor company, fails or neglects to comply to the demand, then the company is deemed insolvent, and the creditor may file a winding up petition, against the debtor company.
After the rejection of the winding up petition by the 1st Instance Court, the Appellants filed an appeal, which was rejected by the Supreme Court of Cyprus, on the ground that, a foreign arbitral award, without registration and recognition in Cyprus, does not exist and does not create legal results in Cyprus.
For further information on this topic please contact Mr. Soteris Pittas at SOTERIS PITTAS & CO LLC, by telephone (+357 25 028460) or by fax (+357 25 028461) or by e-mail (email@example.com).
The content of this article is intended to provide a general guide to the subject matter. Specialist advise should be sought about your specific circumstances.