The length of court proceedings in Cyprus is a major concern for companies and investors, EC Rule of Law Report finds

Companies and investors in Cyprus have expressed major concern over the length of court proceedings in the country, something they say deters them from relying on judicial proceedings to resolve disputes.

This was noted in the European Commission’s 2024 Rule of Law Report Country Chapter on the rule of law situation in Cyprus. You can view the full report here.

More specifically, the report said, “The clearance rate for administrative cases, which in 2021 was exceptionally low (45.9%), increased to 88%, but remains the lowest in the EU. According to business associations, the length of court proceedings is a major concern for companies and investors, as they introduce a high level of uncertainty and unpredictability, which deters companies from relying on the judicial proceedings to resolve disputes. This situation adversely impacts the business environment.”

On a more positive note, the Commission’s report also said that while “Serious challenges persist regarding the efficiency of justice, in particular for cases before second instance courts,” the major reform of the courts system and the new rules on civil procedure had been a positive development that has been welcomed by all stakeholders.

The justice system underwent a major reform in the second half of 2023.

When it comes to efficiency of the justice system, the European Commission’s report elaborated on the persisting challenges.

According to the report, the disposition time in civil and commercial cases at first-instance courts significantly decreased from 947 in 2021 to 761 days in 2022, but it remains the highest in the EU67.

“For administrative cases, the disposition time in 2022 dropped from 844 days in 2021 (863 days in 2020) to 461 days in 2022, the lowest observed in the last twelve years. The disposition times at second instance courts were 1,736 days for civil proceedings and 2,310 days for administrative (3,132 days in 2021), which were by far the highest in the EU,” it specified.

In 2022, meanwhile, the clearance rate for civil and commercial cases increased to 101% (from 81% in 2021).

“The clearance rate for administrative cases, which in 2021 was exceptionally low (45.9%), increased to 88%, but remains the lowest in the EU. According to business associations, the length of court proceedings is a major concern for companies and investors, as they introduce a high level of uncertainty and unpredictability, which deters companies from relying on the judicial proceedings to resolve disputes. This situation adversely impacts the business environment.”

The implementation of measures aiming to reduce the excessive length of proceedings continues at a fast pace, the report went on to acknowledge.

“The backlog project, financed under the EU Recovery and Resilience Facility, is on track and has shown already positive results. The project requires that specific proportions of backlog cases be cleared within specific timeframes. According to the Department of Reform of the Supreme Court, the targets set in the National Resilience and Recovery Plan have already been reached and exceeded,” it elaborated.

The European Commission, in addition, noted that the Supreme Constitutional Court is expected to soon complete the adjudication of all the backlog cases assigned to it and has proposed to take over the examination of additional cases assigned to the administrative section of the Court of Appeal.

“The functioning of the Court of Appeal and the entry into force of the new procedural rules is expected to contribute further to reducing the length of proceedings, in particular for cases at second instance. Judges have, however, raised concerns as to their ability to maintain this pace given the difficulties in recruiting new judges,” it underlined.

Elsewhere in its report, the European Commission elaborated on the reform that had taken place.

“New levels of jurisdiction and new courts were established and, following the timely appointment of all judges, the newly established Supreme Constitutional Court and Court of Appeal started adjudicating cases July 2023, contributing to alleviating some of the heavy workload of the Supreme Court,” it said.

The report noted that new rules on civil procedure also entered into force, allowing for more flexibility and providing judges with more powers to structure the debates and avoid unnecessarily postponements and delays.

It also pointed out that the Commercial and Admiralty Courts have not started functioning, as no judges have been appointed yet.

“All stakeholders, including judges, judicial staff and lawyers, have welcomed the reform, while they agree that it is too early to assess its full impact. Several other reforms, such as the creation of an independent Court Service and the revision of the arbitration law in civil and commercial matters, are ongoing;” the report acknowledged, but went on to say that their implementation pace “is rather slow.”

The report noted that efforts to improve the low level of digitalisation within the justice system were continuing, “while challenges persist, including in the deployment of the new electronic case management system.”

“The 2024 EU Justice Scoreboard shows improvement in the level of digitalisation of justice in several areas, including the use of digital technology by courts and prosecution40, the adoption of procedural rules allowing the use of digital technology in proceedings and the availability of secure electronic communication for courts and prosecution services. Furthermore, the use of remote hearings to facilitate children’s participation to proceedings and plans to develop tools for the online publication of judgments are positive developments. However, criminal proceedings continue to lack any digital solutions, as well as proceedings before the Administrative Court of International Protection and the Supreme Constitutional Court,” the report said.

Regarding civil and administrative proceedings, the already delayed deployment of the highly anticipated e-justice system, in January 2024, according to the European Commission’s report, “Came with serious stability and functionality. The vast majority of the cases allocated to the Court of Appeal are civil appeals pending before the Supreme Court since 1 January 2018. The new procedural rules entered into force in September 2023. Among the key innovations is that the judges (and not, anymore, the parties) have the main responsibility for the case management.”

You can view the full report here.