CYPRUS: STAY OF WINDING UP PROCEEDINGS AGAINST A CYPRIOT COMPANY DUE TO ARBITRATION AGREEMENT
In a recent decision, in the case ERIN -V- RAYHILL, the District Court of Limassol decided to stay a winding up petition, filed by a shareholder of a Cypriot limited liability Company, requesting the winding up of the Company, on the just and equitable ground, alleging inter alia, deadlock, oppression, etc.
The two shareholders of the Cypriot Company entered into a Shareholders Agreement (“SHA”), regulating their rights, obligations and relationship as shareholders of the Cyprus Company, which inter alia provided that “any dispute arising out of, or in connection with this Agreement, including any dispute regarding its existence, validity or termination, which has not been resolved by the parties, through negotiations, shall be referred to, and finally resolved by the London Court of International Arbitration (LCIA)….”.
There had been numerous unsuccessful attempts by the petitioner to the winding up petition to terminate the SHA, including a claim before LCIA, which resulted to the issue of an award against the petitioner, confirming the validity and enforceability of the SHA.
The Court decided that the issues raised in the winding up petition, were covered by the above LCIA arbitral clause, and that the winding up proceedings to be stayed, in order such disputes to be referred to arbitration before LCIA.
The above decision reconfirms the pro-arbitration bias of the Cypriot Courts
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