Elias Neocleous & Co LLC

Nestled in the eastern Mediterranean, Cyprus has long been a sought-after destination for investors seeking a strategic business foothold in Europe and beyond. With its rich history, favorable business infrastructure, strong economy, and appealing opportunities, Cyprus remains an attractive jurisdiction for both domestic and foreign entrepreneurs, organizations, and corporations.   Business environment Changes in 2025 versus 2024 - What has changed in the last year that has impacted the way business is conducted? Over the past year, Cyprus has experienced several significant developments that have impacted the business environment:   Economic Indicators and Fiscal Policy Credit Rating Upgrades: In November 2024, Moody's upgraded Cyprus' credit rating from Baa2 to A3, reflecting improved investment appeal. com Inflation and Fiscal Surplus: Inflation stabilized at approximately 2.2% in 2024, down from 3.9% in 2023. The country also maintained a strong fiscal surplus, contributing to economic stability. cyprus-mail.com Tourism Sector Record-Breaking Tourism Figures: In 2024, Cyprus welcomed over 4 million visitors, generating revenues exceeding €3 billion. This surge underscores the sector's robust recovery and its significance to the national economy. com.cy Energy Sector Natural Gas Exploration: ExxonMobil commenced gas drilling off the Cypriot coast in January 2025, aiming to enhance energy diversification and security. Reuters Gulf Energy Collaborations: Cyprus entered discussions with energy companies from Persian Gulf states regarding natural gas exploration licenses, indicating a strategic move to bolster the energy sector. com What are the advantages of your country as a business location? Cyprus boasts a strategic geographical position, situated at the crossroads of Europe, Asia, and Africa, making it a prime location for businesses seeking entry into these lucrative markets. This unique positioning presents a wealth of opportunities for international enterprises. Additionally, Cyprus offers an appealing tax system with one of Europe's lowest corporate tax rates at 12.5% and an extensive network of double tax treaties. Further, the country has introduced a favorable Intellectual Property (IP) regime that provides tax incentives for companies holding IP rights, reducing their effective tax rate as low as 2.5% on IP-related profits. Such tax advantages make Cyprus an enticing choice for foreign investors seeking to optimize their financial profiles. Additionally, the country is included on the OECD’s whitelist of jurisdictions and has also received positive credit rankings in 2023 from Fitch (BBB), Moody’s (Baa2) and S&P (BBB). Cyprus also finds its long-term credit rating 3 grades above the minimum investment threshold, specifically at BBB High and BBB+ by DBRS Morningstar and the Germany-based agency Scope Ratings. The island further stands out due to its well-developed infrastructure, including modern telecommunications, global ports, and international connectivity. A skilled and educated workforce, proficient in English, strengthens Cyprus's appeal for companies seeking to establish their operations. The nation's economy has displayed resilience, exhibiting consistent growth and recovery following the economic challenges spurred by the Covid-19 pandemic. Beyond this, Cyprus diversifies its business sectors, extending well beyond traditional domains like tourism and real estate. Thriving in sectors such as ICT, fintech, shipping, renewable energy, entrepreneurship & innovation, investment funds, filming, and higher education, Cyprus's economic prospects remain robust. Moreover, its straightforward legal system simplifies business establishment and operation. Furthermore, Cyprus offers accessible residency programs for foreign investors, allowing them to secure residency through varied investment opportunities. Lastly, Cyprus's European Union (EU) membership opens doors to the EU's market and free trade with other member states, enhancing its business attractiveness on a global scale. What are the business structures in your country? Private limited liability company by shares Such a company has share capital, and the liability of its members is limited by its memorandum of association to any unpaid amount, for the shares they hold. A private limited liability company by shares must have at least one (1) shareholder but no more than fifty (50), exclusive of any persons who are or have formerly been in the employment of the company and are or still continue to be members of the company. A private limited liability company cannot offer its shares for subscription to the public. This is the most common type of company. Public limited liability company by shares This company has share capital and the liability of its members is limited by its memorandum of association, to any unpaid amount, for the shares they hold respectively. A public limited liability company may invite the public to subscribe for its shares and may be listed on the stock exchange. The number of members of a public company must be at least seven (7). The minimum authorized and issued capital of a public company, which is offered for subscription, must be twenty-five thousand, six hundred and twenty-nine euros (€25,629). Limited liability company by guarantee without share capital This type of company does not have share capital and its members act as guarantors rather than shareholders. The liability of its members is limited by its memorandum of association, up to the amount that the members have undertaken to contribute respectively to the assets of the company in case of dissolution. Limited liability company by guarantee with a share capital This company has share capital and the liability of its members is limited by its memorandum of association, on the one hand, up to any unpaid amount for the shares they hold, and on the other, up to the amount that its members have respectively undertaken to contribute to the assets of the company in case of dissolution. This type of company can be either private or public company. If it is a public company, it can invite the public to subscribe for its shares. Variable capital investment company This company is a limited liability company by shares. The main characteristic of this type is that, according to its memorandum of association and the rules governing its operation, its shares do not have a nominal value but rather a variable value. The company can be incorporated after it receives a relevant license from the Cyprus Securities and Exchange Commission (CySec) to operate as Collective Investment Funds (CIF). A variable capital investment company (VCIC) can take the form of either a private or a public company, depending on the type of collective investment fund (CIF) that such variable investment company will take (UCITS, AIF, AIFLNP, RAIF). The number of members of a private company can range from one (1) to fifty (50) members while the number of members of a public company must be at least one (1). General Partnership In a general partnership, all partners are general partners and therefore every partner is jointly and severally liable with all the other partners for the debts and obligations of the partnership that arise while he/she is a partner. A general partnership must have at least two (2) partners. Limited Partnership A limited partnership must comprise of one (1) or more persons who will be the general partners and shall be responsible for all the debts and obligations of the partnership, as well as one (1) or more persons who shall be the limited partners who will contribute a certain amount or property, valued at a specific amount to the partnership and to which persons a specified number of shares may be assigned. Limited partners are not liable for the debts and obligations of the partnership beyond the amount they have contributed. A limited partnership may have a share capital and be limited by shares. Regardless of whether it has share capital or not, a limited partnership is not considered as a legal entity with an independent legal personality.   Economy Currency strength Cyprus adopted the Euro as its official currency on 1 January 2008. The Euro is one of the top 10 strongest currencies in the world and is the official currency of 20 out of the 27 countries that form the European Union. Euro coins and banknotes entered circulation in 2002, and the currency is free-floating. Inflation rates Inflation (HICP) in September 2023 is estimated to have increased by 4.3% compared with an increase of 3.1% in August 2023. For the period January-September 2023 the HICP is estimated to have increased by 4.4% compared to the corresponding period of the previous year. Main trade sectors Tourism remains a cornerstone of Cyprus' economy, with 2024 marking a record-breaking year for visitor arrivals and revenue. The sector has fully rebounded from the impacts of the COVID-19 pandemic, with over 4 million tourists generating more than €3 billion in revenue. The government continues to promote Cyprus as a premier travel destination, leveraging its rich history, picturesque landscapes, and strategic Mediterranean location. Real estate remains a strong driver of economic activity, attracting both domestic and foreign investment. Cyprus' property market saw continued resilience, with 19,155 property transfers worth €4.3 billion in 2024 [In-Cyprus]. Limassol, in particular, remains a hotspot for commercial and residential property development, with high-end projects catering to international buyers. The government has introduced new incentives for foreign investors, further stimulating demand. The financial services sector continues to thrive, with banks, insurance companies, and investment firms benefiting from Cyprus' favourable regulatory and tax environment. The funds industry has seen exponential growth, attracting a diverse range of international investors. The ship management industry also remains robust, contributing significantly to the economy. Shipping revenues reached €1.26 billion in 2023, accounting for 4.23% of the country’s annual GDP [Kathimerini]. The energy sector has witnessed notable advancements, particularly in natural gas exploration and renewable energy. ExxonMobil commenced gas drilling off the Cypriot coast in early 2025, reinforcing Cyprus' role as an emerging energy hub. Investments in solar power and green energy initiatives continue to grow, aligning with the country's sustainability goals and EU directives. Technology and innovation have become major economic drivers, with Cyprus emerging as a regional leader in fintech, ICT services, and start-ups. The tech sector contributed significantly to GDP growth in 2024, with fintech firms attracting substantial foreign investment. In fact, according to the Cyprus Mail, the ICT sector contributed up to 15 per cent of the country’s GDP and generated approximately €4 billion in revenue in 2024, positioning the country for further growth. . The government remains committed to fostering innovation through tax incentives, funding programs, and business-friendly policies. As Cyprus moves forward in 2025, these key sectors—tourism, real estate, financial services, shipping, energy, and technology—will continue to shape the nation’s economic landscape, reinforcing its status as a dynamic and attractive destination for business and investment.   Legal system How does the legal system operate? What should clients be mindful of when doing business in your jurisdiction? Cyprus is primarily a common law jurisdiction with a justice system which is based on the adversarial model. This is a legacy from its period as a British colony.  Much of Cypriot legislation is based on the UK laws in force at the time Cyprus ceased to be a colony.  It is updated and amended regularly to ensure alignment with all relevant EU Guidelines and Directives.  Where there is no applicable Cypriot legislation, English common law and equity are applicable, and English authorities have persuasive force.  The courts are bound by the doctrine of precedent according to which where the common law has been interpreted by the Supreme Court of Cyprus in a particular way, the subordinate courts will be bound by that interpretation. This offers the parties to a commercial action the advantages of consistency, predictability, and efficiency.   Foreign investment restrictions Regulatory environment Cyprus, as an EU member state, operates within a regulatory framework that encompasses various sectors, each designed to promote economic growth, protect the rights of consumers and investors, and ensure compliance with international standards. In the financial realm, the Cyprus Securities and Exchange Commission (CySEC) oversees banking, insurance, and investment services, aligning the country with EU directives to maintain financial stability. The nation's competitive tax environment, with a low corporate tax rate and extensive double taxation treaties, positions Cyprus as an attractive hub for international businesses, and the government actively combats tax evasion and money laundering. Moreover, Cyprus upholds robust labor regulations and fosters fair working conditions, while consumer protection measures are in place to safeguard consumers' rights. The regulatory landscape here extends to environmental protections, legal systems, and data privacy, with an overarching commitment to EU standards. Cyprus also ensures a conducive environment for business operations and investment. The Department of Registrar of Companies and Official Receiver facilitates the registration of various business entities, welcoming foreign investment. In the real estate and construction sectors, regulations maintain construction quality and safeguard buyer rights, while in the telecommunications and IT domains, regulatory bodies ensure competition, service quality, and data protection. These efforts are complemented by a robust legal system based on English common law principles, providing the legal foundation for contracts, property rights, and dispute resolution. In response to global concerns, Cyprus has implemented comprehensive measures in areas such as anti-money laundering and counter-terrorism financing, aligning its regulations with international standards and EU directives. Additionally, the country complies with the General Data Protection Regulation (GDPR), ensuring the privacy and security of personal data. In healthcare and pharmaceuticals, Cyprus adheres to EU standards in the delivery of healthcare services and the regulation of pharmaceutical products. Overall, Cyprus' regulatory environment reflects its commitment to maintaining a thriving economy, protecting individual rights, and adhering to international norms in various sectors of governance. Direct investment The Cyprus government has an established record of seeking to encourage foreign direct investment into the country in order to diversify its economy. The tax system has played an important role in these efforts and consequently the  Cyprus tax regime has evolved into being one of the most attractive in Europe for individuals, investors and businesses. Restrictions on foreign capital There are currently no restrictions on ownership and investment in Cyprus. Foreign exchange controls Cyprus imposes no capital restrictions but as with other EU countries, travelers to the island must declare cash sums exceeding EUR10,000 upon arrival.

Before delving into Cyprus’ contemporary corporate and commercial landscape, it is essential to understand the historical context that has shaped the country as a business hub. The island's strategic location has made it a sought-after territory throughout history, with influences from various civilizations. The British colonial era, which lasted from 1878 to 1960, further impacted Cyprus's legal and economic structures. In 1960, Cyprus gained independence, and its journey towards establishing a stable and thriving business environment began. The subsequent decades saw the development of a diversified economy, with a focus on services, trade, and tourism. Joining the European Union in 2004 and adopting the euro in 2008 marked significant milestones, reinforcing Cyprus's position in the global economic arena.   An ideal relocation destination Cyprus boasts a diverse economy, and in November 2024, ratings agency Moody’s upgraded the island’s credit rating to 'A', assigning it a score of 'A3'. This marks Cyprus’ return to the 'A' grade for the first time since 2011. Moody’s credited this upgrade to the country’s significant reduction in its public debt ratio since its peak in 2020, noting that the country ranks among those with the largest debt ratio reductions globally. According to the state statistical service, Cyprus saw growth across several key economic sectors in 2024. The service's latest report, covering economic trends from January to December 2024, included a comparison of data from the past four years, with figures available up to February 11, 2025. Manufacturing production grew by 1.8% from January to November 2024 compared to the same period in 2023. Approved building permits increased by 18.0%, totalling 1.72 million square meters between January and August 2024. Vehicle registrations also rose by 9.1%, with private saloon cars up by 11.2% and light trucks increasing by 36.1%. The Consumer Price Index saw a 1.8% rise compared to the previous year. Tourism showed positive growth, with tourist arrivals reaching 4,040,200, marking a 5.1% increase from 2023. Additionally, in an economic forecast by the European Commission, “Cyprus’ growth is expected to remain robust in 2025 and 2026. Inflation is projected to decelerate and wage growth to stay high, boosting household purchasing power and consumption. The government budget balance is set to remain in surplus, supported by continued strong growth in revenue and moderate increases in expenditure.” Cyprus' strong economic performance, coupled with its improving credit rating, makes it an ideal relocation destination for individuals and businesses alike. The island's diverse economy offers opportunities across key sectors such as manufacturing, real estate, and tourism, all of which have shown significant growth in recent years. With a stable fiscal environment, low inflation projections, and a continued surplus in the government budget, Cyprus presents a secure and attractive option for those seeking to relocate. The growth in wages and household purchasing power, as forecasted by the European Commission, further enhances the appeal of Cyprus as a destination for both expatriates and investors. Its robust economy, favourable business conditions, and high quality of life make Cyprus a compelling choice for relocation. Cyprus's tax regime is a significant driver of its appeal to global businesses. The country's tax system is designed to encourage ongoing investment and promote economic growth. A range of incentives contribute to the creation of a tax-efficient environment for businesses operating in Cyprus. Cyprus offers a highly attractive tax regime for global businesses, with a low 12.5% corporate tax rate, no withholding tax on dividends, and over 60 double taxation treaties. These features make the island a compelling choice for companies looking to operate and invest internationally, providing significant opportunities for tax optimisation. In addition to its favourable corporate tax environment, Cyprus provides various incentives to foster innovation. The island offers tax exemptions for research and development (R&D) activities and features a beneficial IP Box regime. Under this scheme, qualifying companies can benefit from a reduced corporate tax rate on income generated from intellectual property such as patents, trademarks, copyrights, and other intangible assets, making it an ideal location for tech-driven startups. Cyprus also exempts capital gains tax on the sale of shares, enhancing the attractiveness of the island for investors. Furthermore, businesses enjoy favourable tax treatment on dividends, which further incentivizes investment in the country. Regarding VAT, Cyprus imposes a standard rate of 19%, with reduced rates for certain sectors, including tourism. Its strategic location within the EU, combined with a business-friendly regulatory environment, strengthens Cyprus’ position as a prime destination for international enterprises. For expatriates, Cyprus offers appealing tax benefits, such as flat tax rates for high earners and exemptions on certain foreign income. These incentives make the country an even more attractive option for professionals seeking a favourable tax environment. Banking and Financial Services: Expansion and Consolidation The banking and financial services sector plays a pivotal role in Cyprus’s corporate and commercial landscape, with both local and international banks operating within the country. The sector has evolved to provide a comprehensive suite of services, from traditional banking products to sophisticated financial instruments and wealth management services. A key development in 2025 is Alpha Bank's acquisition of AstroBank’s banking operations in Cyprus for over €205 million, a strategic move that strengthens Alpha Bank Group’s presence in the Cypriot market. The transaction, executed through Alpha Bank Cyprus Ltd, is set to be finalized in the fourth quarter of 2025, subject to regulatory approvals. This acquisition marks a significant expansion for Alpha Bank Cyprus, increasing its loan portfolio by more than 60%, deposits by approximately 70%, and total assets by around 65%. As a result, Alpha Bank Cyprus is positioned to become the third-largest bank in the country, with a market share of around 10% in total assets. With Cyprus experiencing strong real GDP growth, the country remains an attractive market for financial institutions seeking expansion. The deal also highlights the growing consolidation trend in the Cypriot banking sector, ensuring a more resilient and competitive financial landscape. Corporate governance and legal framework Cyprus’s legal system is based on English common law principles, providing a familiar and transparent legal environment for investors. The Companies Law, Cap. 113, as amended, governs the establishment and operation of companies in Cyprus. The Cyprus legal system ensures protection of shareholders' rights, with mechanisms in place for dispute resolution and corporate governance. Companies in Cyprus typically adopt a one-tier board structure, with a board of directors responsible for the overall management and decision-making process. The emphasis on accountability and transparency aligns with international standards, fostering investor confidence. Furthermore, Cyprus offers an efficient and streamlined company registration process. The Cyprus Registrar of Companies, operating under the Ministry of Energy, Commerce, and Industry, oversees the registration and regulation of companies. The process is known for its simplicity and speed, facilitating swift establishment and commencement of business operations.   Projects & initiatives €1.3 billion infrastructure investment plan for 2025 The government’s 2025 infrastructure development plan, valued at over €1.3 billion, includes a series of major projects aimed at enhancing connectivity and addressing transportation challenges across Cyprus. In Nicosia, the next phases of the ring road will continue with a budget of €120 million, while the Akaki-Astromeritis motorway is in its final planning stages, with an estimated cost of €107 million. Limassol will see extensive improvements to ease traffic congestion, with projects exceeding €250 million, including the first phase of the Northern Bypass. Significant developments are also planned in other regions. The second phase of the Saittas motorway, valued at €65 million, is set to proceed, alongside the much-anticipated Larnaca Port and Marina project, which will be implemented in collaboration with local authorities. The Paphos to Polis Chrysochous motorway will be developed as a four-lane highway in two phases, with total costs reaching €330 million. Meanwhile, the Free Famagusta District will see infrastructure investments worth €60 million, including the completion of the Liopetri River project by summer 2025. Further expansions include a €50 million upgrade to Latsi harbour and the construction of an industrial port at Vasilikos, a large-scale project budgeted at €350 million. These strategic investments reflect the government’s commitment to modernising infrastructure, improving transportation networks, and supporting economic growth across the island.   Renewable energy and environmental sustainability Numerous opportunities for business ventures also exist in relation to the introduction of the EU Green Deal and the attainment of its sustainability objectives.  Under the plan, greenhouse gas emissions are set to be reduced with key policies including promotion of natural gas and renewable energy sources, increase in carbon sink, improvements of energy efficiency in buildings, industry and infrastructure, and reduction of emissions in the transport, agricultural and waste sector. Aligning with EU policies on reducing greenhouse gas emissions from power generation is crucial for Cyprus. As the country moves toward electricity market liberalisation, significant growth in Renewable Energy Sources (RES) is anticipated in the coming years. In 2020, renewable energy technologies accounted for approximately 11.7% (340 MW) of the island’s total electricity production. Cyprus aims to double its share of renewable energy to 23% between 2021 and 2030. According to the Cyprus Renewable Energy Roadmap (CERA), the country is expected to generate between 25% and 40% of its total electricity from solar power by 2030, highlighting its commitment to sustainable energy development.   Shipping The shipping sector continues to perform well, and its favourable tax tonnage scheme was extended until at least 2029. Further Cyprus has committed to the ‘greening’ of the industry, and this too is pushing boundaries in developing new technologies within the ambit of the EU Green deal and sustainability initiatives. All of these initiatives and developments are filled with potential for market growth and activity, and therefore even in these challenging times, the outlook for legal and other services to support M & A transaction opportunities in Cyprus is promising.   https://cyprus-mail.com/2025/02/13/cyprus-reports-growth-in-key-economic-sectors-for-2024 https://cyprus-mail.com/2024/11/23/cyprus-credit-rating-restored-to-a-grade-by-moodys https://in-cyprus.philenews.com/insider/cyprus-infrastructure-projects-2025-billion-euros/ https://www.investcyprus.org.cy/energy-investing/ https://www.stockwatch.com.cy/en/news/alpha-bank-to-acquire-astrobanks-banking-operations-in-cyprus-for-over-eur205-m#:~:text=The%20deal%20is%20valued%20at,contractual%20agreements%20and%20regulatory%20approvals.

Background Since gaining independence from the UK in 1960 Cyprus has transformed itself into a successful, modern international business centre. A Member State of the European Union (‘EU’) since 2004, it provides a gateway for investment into and from Europe and, due to its geographic location, it enjoys strong commercial ties with Eastern Europe, the Middle East, Asia and Africa. A consequence of this is that commercial disputes frequently involve international parties at corporate and individual level. Additionally, where main court or arbitration proceedings take place in another EU Member State or in a third country with which Cyprus has a bi-lateral agreement or has ratified an international agreement, it is common where a link exists, for the parties to look for provisional measures in Cyprus in support of the foreign court proceedings. The commercial disputes arising are varied and may be linked to issues such as negligence, fraud, contractual disputes, corporate disputes etc. The dominant means of settling large commercial disputes in Cyprus is via litigation, however, recently arbitration and mediation have also gained popularity. Until September 2023 there was often negotiation before and during court proceedings but no legal obligation on or expectation that the parties will engage in such discussions unless they have specifically agreed to do so. However, since September 2023, with the implementation of the new Civil Procedure Rules, the parties in a dispute are obliged to engage in discussions with the aim to amicably settle such disputes before proceeding to the pursue of a Claim before the Courts of Justice. Alternative dispute resolution methods (“ADR”) are a relatively new concept, other than in the construction and co-operative institutions sectors, but they do exist. Cyprus is primarily a common law jurisdiction with a justice system which is based on the adversarial model. This is a legacy from its period as a British colony. Much of Cypriot legislation is based on the UK laws in force at the time Cyprus ceased to be a colony. It is updated and amended regularly to ensure alignment with all relevant EU Guidelines and Directives. Where there is no applicable Cypriot legislation, English common law and equity are applicable, and English authorities have persuasive force. The courts are bound by the doctrine of precedent according to which where the common law has been interpreted by the Supreme Court of Cyprus in a particular way, the subordinate courts will be bound by that interpretation. This offers the parties to a commercial action the advantages of consistency, predictability and efficiency. Problems Despite the apparent attractiveness of the Cypriot legal system to national and international business it has, since the 2008 financial crash, been heavily criticized as an obstacle to the commercial growth of the island. It should be stressed that this criticism does not stem from a real or perceived lack of integrity or independence on the part of the judges. Rather, it is directed at the enormous backlog of cases pending before the courts and the average time it takes to get a final judicial decision in any given case. Whilst the courts are generally efficient in determining applications for interim relief, final adjudication in a case can commonly take between three and six years to obtain. A functional review of the justice system in 2017/18 supported by the EU Structural Reform Support Service (SRSS)[1] found that the length of court proceedings was among the longest in the EU, and the level of backlogs in litigious civil and commercial cases among the highest. Such delays run contrary to the democratic nature of the EU which, along with the Cypriot government, citizens, and businesses adopts the view that ‘justice delayed’ is ‘justice denied’. Working with the EU and its representative bodies Cyprus determined that problems in the justice system were primarily caused by: A large increase in cases and appeals being brought before the courts as a consequence of events linked to the financial crash. A lack of support resource within the system. The use of legal officers to support judges in the research and drafting of judgements was very limited. An increase in the complexities of the cases brought before the courts. An unrestricted right of appeal. Reliance on a paper based system with very minimal use of ICT for internal or external communication resulting in significant inefficiencies and, inter alia, a management information deficit. Next steps The reaction of the Cyprus government to the findings of the SSRS was twofold. Firstly It determined that there was an urgent need to begin addressing the backlog of existing cases. Secondly, it realised that the entire justice system was in need of radical reform. Case Backlog To help facilitate a reduction in the backlog the first step taken was a decision to increase the overall capacity of the justice system by increasing the number of judges. The House of Representatives passed a 2019 budget which included the creation of 32 new judges. Following on from this a pilot project was introduced in the Paphos District Court. The project involved the assignment of seven experienced judges to a ‘task force’ dedicated to reducing the case backlog. The theory was that the experience level of the judges would allow them to assess the cases with relative speed. The pilot was deemed to be beneficial and was expanded in September 2021 to cover all districts. In addition, an amendment was made to Civil Procedure Rules which established a ‘small track’ procedure. This allowed for the introduction of a simplified process for claims under €3,000 which has now been increased to €10,000. This increased the case management options available to judges by allowing them to give summary judgments on the lower value cases and thereby accelerating the speed with which they could be dealt with. Reform of Justice System It was clear from a series of EU backed reviews that a wholesale redesign of the system was required. This required detailed planning and necessitated the involvement and ‘buy in’ of all stakeholders in the system. Consequently, and with the support of the European Commission for Democracy through Law, a period of comprehensive consultation and review took place with the cooperation of all stakeholders. The result of this exercise was the production, in 2021 of a coherent plan (the Plan) to reform the Cypriot justice system with the object of building a modern, accessible and efficient system. The key pillars of the plan are: New Civil Procedures Rules Training for judges Reform of the court structure Introduction of technology In its entirety the plan represents a seismic change for the Cypriot justice system. The plan is now in the process of implementation and many parts of it feature in the post covid ‘Recovery and Resilience Programme of Cyprus’ (the ‘RRP’). New Civil Procedures Rules The Civil Procedures Rules (the ‘CPR’) which were in use until the end of August 2023, were substantially in the form of the Civil Procedures Rules that operated in England and Wales in 1958. The revision of the CPR was one of the most significant reforms included in the Plan. The project was undertaken by a team of international experts who worked in collaboration with a Rules Committee established by the Supreme Court. A revised set of rules drafted by them was then subject to consultation with the Cyprus Bar Association and the Judge’s Association. Following this, on 19 May 2021 the new CPR were approved by the Supreme Court and came into force on 1st of September 2023. This reform has had a material impact on the efficiency of the courts, as it is structured in such a way that many disputes could be resolved at a pre-trial stage and unsubstantiated legal procedures are discouraged. In addition, firm compliance with the new CPR has achieved the granting of justice is a much faster pace and without the delay currently experienced, with significant reduction of legal costs. Training for Judges Obviously, the introduction of the new CPR and the adoption of new technologies will only be successful if judges are adequately trained in their use. Consequently, following the enactment of the relevant law 14 August 2020 a training school for judges was established. This formalises training for the new justice system and will also support ongoing training of judges. It is envisaged that, in line with many other professions, judges are now required to engage in continual education for their period of tenure. This move to a higher level of professionalism follows on from a decision taken by the Supreme Court in 2019 to publish the criteria for the recruitment of judges and for the promotion of judges. Said criteria were set following a study undertaken by the DG Reform of the European commission. Within the framework of the RRP a commitment was made to ensure that at least 110 judges had completed annual training on the new CPR and various other agreed topics and skill by the 4th quarter of 2025. According to the Ministry of Justice and Public Order this target had already been surpassed by 31 January 2023. Reform of Court Structure Prior to the proposed reforms, the Supreme Court sat at the apex of the court system in Cyprus. The Supreme Court consisted of 13 members, and it exercised both original and appellate civil and criminal jurisdictions. It was vested with authority as: Supreme Constitutional Court. Supreme Administrative Court. Admiralty Court. Appellate Court. A court with exclusive jurisdiction to hear and determine petitions concerning the interpretation and application of the electoral laws. A court with exclusive jurisdiction to issue prerogative writs (e.g. habeas corpus, mandamus, prohibition, quo warranto, and certiorari). No special leave to file an appeal was required. The Supreme Court, in its appellate jurisdiction, was not bound by any determination on a question of fact made by the trial court, and it had power to review all the evidence, draw its own inferences, hear or receive further evidence and give any judgment or make any order which the circumstances of the case may have justified, including an order for retrial. The wide jurisdiction of the Supreme Court and the increasingly specialized knowledge required to deal with many of the cases before it created perfect conditions to foster a bottleneck in the justice system. Changes were required to disperse the workload and ensure that the more complex cases were dealt with by judges with the appropriate skills and expertise. On 7 July 2022, the House of Representatives voted (the 22nd amendment) for: The separation of the Supreme Court into two Supreme Courts: one Supreme Constitutional Court with 9 judges and one Supreme Court with up to 7 judges. The creation of a new Second Instance Court, i.e. the Court of Appeal (Appellate Court). The Appellate Court will hear appeals from the First Instance Courts (administrative, civil and criminal) and will be comprised of up to 16 judges. The new Supreme Court will act as a third level appellate court hearing cases referred to it by the Appellate Court. Additionally, on 12 May 2022, the ‘Establishment and Operation of Commercial Court and Admiralty Court Act 2022’ (‘the Act’) was passed. The Act establishes a dedicated Commercial Court which will have jurisdiction to hear and determine at first instance all commercial disputes where the amount or value in dispute is at least €2,000,000. Excluded will be claims or counterclaims in personal injury cases and claims, counterclaims, or registration of an arbitral award in relation to banking or financial matters. The Act also establishes an Admiralty Court which, once operational, will have jurisdiction to hear Admiralty cases as defined in the Act. Given the rising importance of Cyprus as an international business and shipping hub, the introduction of these dedicated courts should significantly decrease the pressure on the Supreme Court. Also significant is that, prior to the passing of the Act, the House of Representatives approved an amendment of Article 3 of the Constitution of the Republic of Cyprus to allow the use of English in both courts when to do so would be in the interests of justice. Greek will remain the official court language but a Judge of either court may, at the request of one of the parties, allow the use of English, including for the submission of documents and evidence. Since English is more widely spoken than Greek this should again increase efficiency by removing the need to always involve translators and certified translations of documentary evidence. Originally it was intended that the new court structure should become operational on 1 January 2023. This deadline was later extended to 1 July 2023 to allow more time for the recruitment and training of additional judges and court staff. Whilst targets set out in the RRP have been exceeded the Supreme Court, the Justice Minister and the Attorney General agreed that fully staffing the new courts on the original deadline would have resulted in understaffing of the lower courts. Introduction of Technology Widespread introduction of technology into the justice system is essential if the system is to become and remain efficient and effective. The failure to engage with technology led to a catastrophic situation during the Covid 19 lockdowns where the courts were forced to close because they lacked both equipment and expertise to function remotely. The Plan therefore incorporated the introduction of an i-justice platform as an interim step towards full engagement in the EU wide e-justice project. The platform was launched on 21 July 2021 as a pilot version with the objective of streamlining legal processes. The pilot was judged to be a success and use of the platform for commercial cases became obligatory from 1 February 2022. The full implementation of the system was preceded by thorough training and a sufficient period to allow users to build familiarity with the system. Additionally, the Cyprus Bar Association (CBA), organized training points in the local bar associations, so that any difficulties of a technical nature could be resolved immediately and effectively. The I-Justice platform aimed to bring together litigants, advocates, law firms, court staff and clerks, judges, the police and relevant governmental authorities so that justice is administered in an effective and practical digital environment. The platform allows lawyers to: Submit claims remotely. Access electronic case files Pay fees and commissions remotely. Access up to date information about the progress of ongoing cases. Attend court appearances remotely, through the communication portal. Supplemental to the above, on 15 September 2021 the Supreme Court issued a court regulation, the so-called ‘e-Justice Procedural Regulation’. This regulates the handling of cases through electronic communication (emails) with the Court and allows but does not compel judges to handle cases without any physical presence. Use of the i-justice platform greatly simplified and sped up the operation of the court system in general with specific advantages accruing to those seeking to settle commercial disputes. It has eased the transition to the ‘e-justice’ platform which was implemented before the end of 2023. Further modernization will involve the introduction of Digital Audio Recording of minutes to the courtroom which is still to be implemented. This is currently being piloted and should be fully implemented by the first quarter of 2025 and again lead to time savings and greater efficiency. Mission accomplished? There can be no doubt that important progress has been made in the march to deliver a new justice system that will be fit for future generations. The President of the Supreme Court and the President of the House of Representatives have both publicly stated that they expect the backlog of cases to be cleared within a 5-year period[2]. Within the RRP framework a commitment has been given by the Supreme Court to meet specific targets in the reduction of cases and appeals which have been pending for more than two years. An ex-President of the Supreme Court has been appointed to co-ordinate and monitor progress. Some protests by members of the Cyprus were recorded at the introduction of the possibility of summary judgements of small claims but these have not been sustained. The passage of the legislation introducing a new court structure was a significant milestone. Whilst some disappointment has been expressed at the delay in the implementation of the new courts, criticism has been muted. The general perception appears to be that it is better to ensure that all necessary resources are in place from the outset than to risk creating new problems to resolve. It is, however, important for the economic future of Cyprus that the delay does not become a lengthy one. The introduction of formal training requirements for judges can only prove to be beneficial for all stakeholders in the system. The same is true for the use of technology which finally allows the courts to move out of the 20th century. January 2023 saw the delivery of a report following completion of a project related to the establishment of a modern, efficient Court Service to support the management and administration of the courts. It produced recommendations on re-engineering of procedures, organisational and governance structures and staffing requirements. These recommendations are now under consideration by the Supreme Court and the relevant Ministries and effectively form the final part of the ‘jigsaw’. Overall, provided momentum can be maintained, the signs are favourable for the creation of a justice system which is fit for Cyprus in the 21st century and which will be capable of adapting to future requirements. Given that the EU has stressed that lack of reform is deterring investment in the country it seems unlikely that the desire for change will dissipate any time soon.   Footnotes: [1] http://www.supremecourt.gov.cy/Judicial/SC.nsf/All/EBD26B775C1A627DC225843F0041884A/$file/Functional%20Review%20of%20Courts%20System%20of%20Cyprus%20(IPA%20Ireland)%20-%20Final%20Report%20March%202018.pdf [2] https://knews.kathimerini.com.cy/en/news/the-backlog-in-court-cases-will-be-alleviated-in-4-to-5-years https://knews.kathimerini.com.cy/en/news/the-backlog-in-court-cases-will-be-alleviated-in-4-to-5-years