Gold Magazine March - April 2013, Issue 24 | Page 38

CORPORATE LAW

and wait for a knock on the door are long gone
as Cyprus feels the pressure of other destinations
competing for its business. Angelos Paphitis
knows all about this, which is another reason for
his busy travel schedule. One of the first things
he did when starting the firm was to arrange a
two-week trip to Russia and Ukraine and he still
travels frequently to both countries as well as to
major European capitals.
“It is essential to go out looking for clients,”
he says. “Competition is growing all the time
from new places like Malta and the Netherlands
as well as from the older-established ones such
as Luxembourg, and they have become quite
aggressive in their marketing. Unfortunately, the
big organisations that once allocated large budgets to promoting and sponsoring Cyprus are
no longer doing so. As a result, our competitors
are overtaking us. So each individual firm needs
to do whatever it can to promote itself and the
country. We can no longer afford the luxury of
waiting for clients to come and find us. Since
there has been a reduction in private sector
promotion of Cyprus and increased promotion
in other countries, including negative publicity
about us, we need to do even more”.
The provision of legal services to the corporate sector is an area which, like every other, has
been affected by the global financial crisis. “We
see a lot of restructuring these days and startups
tend to be more solid than they might have
been before,” Paphitis notes. As for the problems in the local banking sector and the broader
economy, they are als o affecting business, notably when it comes to payment:
“It’s actually a chain of problems: the bank
won’t provide a loan facility so the company
owner doesn’t pay the construction company,
for instance, which in turn doesn’t pay the subcontractor who won’t pay the supplier and so it
goes on… I see it every day. The local market
has been badly affected by the situation”.
The legal profession could hardly remain
untouched by such a wide-ranging crisis and,
says Paphitis, people have even started to think
twice and three times before deciding to go to
court: “Just to file a claim you need to pay a
lawyer and clients are now coming to us much
more often and asking us to tell them what their
chances are of winning. No-one wants to lose
more in the course of trying to recoup money
owed. The ‘no win, no fee’ proposition which
is familiar in the UK has never been part of the
Cyprus legal process but it is being brought up
much more often these days”.
One option in dispute resolution is, of course,
arbitration and it is a process that Angelos
Paphitis supports and actively promotes. “There
is now a very good arbitration court in Cyprus
[CEDRAC – the Cyprus Eurasia Dispute Reso����������������������������
lution and Arbitration Centre] with arbitrators
who are well-established and respected professionals,” he explains, adding that “our firm

I BELIEVE THAT
ARBITRATION
WILL GROW IN
IMPORTANCE

AND

POPULARITY

FOR RESOLVING

DISPUTES
BETWEEN
COMPANIES

promotes it by including it in many agreements
that we draft. Its use is not particularly widespread in Cyprus, where people are used to going to court, but because there are now so many
delays in the court system I believe that arbitration will grow in importance and popularity for
resolving disputes between companies”.
Few professionals would deny that the
next 2-3 years are going to be difficult for the
economy but Angelos Paphitis believes in taking
a proactive approach
“The state of the economy depends greatly
on the private sector and on every individual,”
he says. “Some months ago when I realised that
things were heading in the wrong direction,
I immediately arranged half a dozen business
trips. I was not willing to sit around and wait for
things to get worse so I went out and brought
business in”.
The lawyer puts the current state of affairs
down to politics (“I’m glad that I am not
involved in politics because I think it is what
has destroyed Cyprus. No-one is willing
to take necessary but unpopular decisions
because the parties put themselves above the
people”.) and he warns that the recent enactment of the law governing providers of fiduciary services could not have come at a more
crucial time: “Until recently there was no
regulation and there were companies and individuals operating in the sector who didn’t
know the meaning of the word ‘fiduciary’,
let alone the extent of their obligations and
duties! The law was definitely needed and
personally I think it should be stricter. Auditors and lawyers are exempt and although I
am a lawyer I don’t agree with this”.
Recent instances of Russian businessmen
seeking to take legal action against fiduciary

companies have given Cyprus bad publicity,
Paphitis notes. “When they are not happy
with Cyprus they let their local media know
about it so we need to set and maintain the
highest standards”.
Having seen that “the good things about
Cyprus, such as the tax regime, have not
changed for a long time so, theoretically we
are just as good as we were five years ago,”
he is now surprised to be frequently asked
questions about Cyprus and why people
should choose to invest in the island rather
than another jurisdiction. “These questions
are being raised by our competitors and as
a result of this we have held seminars in
Russia and Ukraine in which we analyse the
differences between Cyprus and its competitors such as Luxembourg, the Netherlands,
Malta and Switzerland and I’m happy to
say that people are responding positively to
what they see. Cyprus is by far the best jurisdiction for many things but at a time when it
is crucial to promote the country we seem to
have stopped. A major initiative needs to be
undertaken by everyone involved – CIPA, the
government, the banks and the private sector”.
Angelos Paphitis is confident that “the sky is
the limit” for Cyprus if things are done properly. “I have a great deal of trust in Cypriot
professionals who are very good at what they
do,” he says. “Everyone is talking about Malta
which is far behind Cyprus on a professional
level – I have worked with Malta and I have
seen the difference. However, we need proper
regulation and controls on who can offer what.
When you go online and you see a service being offered for a specific fee and then another
firm offering the same service for one tenth
of this amount, you will not have faith in the
system. There needs to be a proper schedule
of minimum costs, minimum fees, etc. Otherwise we are losing the game by ourselves. The
regulatory and supervisory authorities claim
that they cannot do anything about this but it
is holding Cyprus back”.
Having achieved plenty during his firm’s
first seven years, Angelos Paphitis says that
he simply now wants to maintain the quality
of service that it is providing and to continue
receiving serious business from major groups
of companies in need of representation. “There
is no finish line. We will keep on working as
we do now. Over the past 18 months we have
been involved in a lot more high-profile work,
both in and out of court, and I am confident
that this will continue” he says.
Seeing the firm grow is more than a professional ambition. It is a personal one too. The
firm is, after all, his “baby”. Beyond this, he
says, he is very happy with his life. “There is
basically absolutely nothing I would change.
I’m a very happy man”.

38 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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07/03/2013 11:42