• How would you describe the current state of the legal services market in Cyprus? What major changes, if any, do you expect to see by the end of the decade?

The legal services market has been undergoing a rapid transformation which is long overdue. This transformation is happening on multiple levels as law firms are adjusting the services that they offer to cater to new types of businesses and investors as well as the general market. Regarding dispute resolution, we see the long-overdue update of the Civil Procedure Rules of the Cyprus Courts, as well as recent developments in the establishment or reconfiguration of new Courts in Cyprus to handle the backlog that has been created in our Courts and regrettably created years of waiting until the final adjudication of cases. All these are factors that are essentially re-setting the legal services market in Cyprus, hopefully for the better.

We expect to see even more widespread and focused use of technology to alleviate stress from the Court system but also from the lawyers, building on positive legal developments ushered in during the pandemic out of necessity. Admittedly, this is an area where the Court system was lagging, despite the widespread use of technology in our profession.

Last but not least, we see the necessary shift of the market to adjust to the situation created by the war in Ukraine and the framework set up by the sanctions regime.

• Compliance with anti-money laundering (AML) and anti-corruption regulations continues to be a much-discussed topic. Where does Cyprus stand on this and what is the role of law firms in maintaining and improving the country’s international image and reputation?

Cyprus has in the past been under scrutiny due to concerns with compliance with anti-money laundering regulations. There have also been additionally concerns about the country’s vulnerability to money laundering due to the influx of foreign investment, which has led the authorities and the industry regulators going at great lengths in order to address these issues.

Cyprus as a jurisdiction has taken brave steps in strengthening its AML framework and improving its reputation by cooperating with international organizations in order to enhance its framework and supervisory mechanisms on multiple aspects whilst our banking system is generally considered as proactive when it comes to compliance policies, upholding EU policies and guidance.

Law firms and lawyers personally are often referred to as gatekeepers for maintaining and upholding compliance standards. This is an accurate statement as legal professional are obliged to be and are at the forefront of anti-money laundering policies in order to safeguard both their business and reputation as professionals and by extent, Cyprus as a reliable business and investment hub.

• What are the main challenges facing Cyprus’ legal sector today and what do you expect from the long-awaited reforms to the judicial system? How do our procedures and mechanisms compare with overall EU standards?

The Cyprus legal sector faces the crucial issue of the large backlog of Court cases, which is causing a cascade of issues for both the public and the profession. Efficiency and modernization programs are underway but may need to be revamped and strengthened in order to address large volumes and the need to have a fair and transparent Court system. Access to justice, a benchmark of any European country, is also by extent hindered due to the large delays in the processing of Court claims.

Additionally, to the above, recent sanctions imposed on Cyprus legal and other professionals by the US and the UK, have critically damaged the reputation of Cyprus as a reliable business hub and caused uncertainty within the legal and general services industry. The indirect consequences from such sanctions are still being felt, whilst there has been no guidance by the Cyprus or EU authorities or any substantial steps to address this issue as well as the multiple pertinent issues that are caused.

As for how Cyprus’ procedures and mechanisms compare with overall EU standards, it is essential to align the country’s legal system with EU principles and requirements in full. The EU emphasizes the importance of an independent, efficient, and transparent judicial system, as well as the protection of fundamental rights and the rule of law. Although the Court system in Cyprus is generally reliable, reforms in Cyprus should aim to meet and exceed these EU standards to enhance the country’s reputation and credibility within the European community.

• Cyprus’ consistent efforts to attract foreign direct investment (FDI) and become a recognised international business centre appear to be bearing fruit. How is the legal profession assisting Cyprus in this endeavour?

Legal professionals play a vital role in attracting, assisting and retaining FDI in Cyprus, as they are often the link to Cyprus through their established networks and associates and in many cases are the first point of contact of any international investor. The services that legal professional offer vary and start form the inception of the business, liaising with governmental authorities as well as providing expertise in the local market and generally guiding foreign investors on the legal frameworks and regulatory requirements. Additionally, Cyprus law firms are often represented in some of the largest business and legal events worldwide, bolstering the status of Cyprus as a recognized and reliable business hub.

• What, in your opinion, needs to be one to minimize the adverse impact on Cyprus of the imposition of international economic sanctions on Russia and rising inflationary pressures? How do you view the short-term future of the local professional services sector?

Cyprus has already reduced reliance on specific countries or regions and continues to focus on expanding trade and investment relations with other nations and regions. By diversifying partnerships, Cyprus can mitigate the impact of sanctions and inflationary pressures.

Additionally, as an EU member state, Cyprus must leverage its position to strengthen economic ties within the European Union and tap new markets. Furthermore, Cyprus should utilize its unique position in the Middle East and attract work from this area. This approach provides access to a larger market and opportunities for economic growth with added ease, in the case of the EU, of doing business due to the single market.

Of course, implementing structural reforms to enhance the competitiveness and resilience of the economy are necessary to help buffer against external shocks. These reforms must focus on improving the business environment, fostering innovation, and investing in key sectors to attract investment.

The local professional services sector has proven its resilience by adapting to changing market dynamics and client needs. However, additional government initiatives in order to embrace digitalization and offer a reliable and solid framework for business to thrive can enhance the sector’s competitiveness and relevance in the global market.