The arbitration clause in any agreement such as the provision of services, contracting, sale or rental of immovable property or agreement with any other object, is the basis for referring a dispute that may arise between the contracting parties for resolution in arbitration. A common clause provides that in the event of a dispute or controversy arising between the parties as to the interpretation of the agreement or as to anything contained therein or arising out of the agreement or as to the rights, obligations or duties of the parties, then such dispute shall be referred to arbitration under the Arbitration Law, Cap. 4. The contents of such a clause also constitutes an arbitration agreement within the meaning of Section 2 of Cap. 4 and shall be deemed to include the provisions set out in the First Schedule to the Law, so far as they are applicable to the reference under the arbitration agreement (Section 6).
The arbitration clause is valid and enforceable and the Court will give effect to the intention of the parties to resolve their dispute through arbitration. One of the reasons why the parties come to the inclusion of an arbitration clause in their agreement is their belief that the most appropriate person to resolve the dispute is an expert who has the requisite training, expertise and experience in the subject matter of their agreement.
The procedure that a party may follow for the appointment of an arbitrator is to serve the other parties with a written notice to appoint an arbitrator (Section 10 (1)(2)). If the appointment is not made within seven clear days after the service of the notice, the Court may, on an application by the party who gave the notice, appoints an arbitrator, who shall have the like powers to act in the reference and make an award as if he had been appointed by consent of all parties. The Court in its order, in addition to appointing a suitable person with academic qualifications, knowledge, experience and expertise as arbitrator, shall also determine the parameters for the conduct of the arbitration as provided for in the provisions of the First Schedule to the Law.
The procedure to be followed before the arbitrator is similar to that followed by the civil Courts. The decision of the arbitrator shall be in writing and shall be final and binding on the parties and persons claiming through them respectively. The costs of the arbitration shall be left to the discretion of the arbitrator, who may order to whom and by which of the parties they shall be paid, the manner of their payment and may determine or settle the amount of the costs to be paid or any part thereof.
Pursuant to Article 21 of Cap. 4, an award on any arbitration agreement may, by leave of the Court, be enforced in the same manner as a judgement or order to the same effect and in such case, judgement may be entered in terms of the award. A sum directed to be paid by an award shall, unless the award otherwise directs, carry interest as from the date of the award and at the same rate as a judgement debt (Section 22).
In addition to being in writing, the award must be signed by the arbitrator and indicate the date of its issue, as well as the seat of the arbitration so that the local jurisdiction of the Court can be determined. The award should also contain a reference to the agreement of the parties, the arbitration clause, the dispute that arose and the appointment of the arbitrator. In addition to the background of the case, the award shall also contain its reasoning and the conclusion of the award itself.
The party in whose favour the award was issued, despite its binding nature, may apply to the Court for registration and enforcement of the award, so that a judgment with the same effect as the award can be registered and enforced. Therefore, the applicant will be able to take steps to enforce the judgement and collect the amount due to him from the counterparty debtor in case of non-payment. Where a decision is issued by consent a stay of execution may be ordered in accordance with the timetable determined by the parties.
George Coucounis is a lawyer practicing in Larnaca and he is the founder of GEORGE COUCOUNIS LLC, Advocates & Legal Consultants, email address: [email protected]
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