Cyprus, a divided island nation, faces an uncertain future on the geopolitical front. The northern region of the country remains occupied by neighbouring Turkey and recent efforts for reunification between the separated Greek and Turkish Cypriot communities have reached a bitter standstill.
Among all the uncertainty, which has arguably become the status quo after 47 years, the country has undergone steady economic growth and enjoys one of the highest GDP per capita rates in the southern and eastern Europe region. A 5.1% contraction in GDP was experienced during 2020 though an almost instant recovery is forecast for 2021 with The European Commission predicting growth of 4.2%.
In terms of economic decline and its death toll, Cyprus has undeniably faired relatively well compared to other SEE nations and the broader continent. Its e-commerce, restructuring, fintech and renewable energy markets have fortunately remained steadfast, or even grown, throughout the pandemic.
‘Covid has brought forward a range of challenges but also opportunities for most clients, especially in transactional work.’
Stavros Pavlou, Patrikios Pavlou & Associates
The government continues to deliberately target overseas investment though was recently forced to scrap its controversial Golden Visa scheme, which rewarded passports for real estate investment and raked in over €10.8bn, in the face of EU pressure and widespread examples of abuse.
Enduring the pandemic in the city of Limassol, a hub for international property investment, has been Stavros Pavlou, managing partner of Patrikios Pavlou & Associates who reports a mixed experience over the past year, stating that Covid has ‘brought forward a range of challenges but also opportunities for most clients, especially in transactional work’.
Starting with the positives, the firm has ‘seen the workload expand to the extent that it became necessary to add more expertise to the team’ and even ‘ended up increasing profits overall’. Such a feat would have seemed almost impossible in March of 2020 and stemmed from the economic benefits of remote working, an abundance of ‘enforcement of pledge and recovery of asset’ instructions from major international banks, as well as a large volume of deals for ‘larger alliances and enterprises that are identifying good opportunities for acquisitions at better prices’.
As for the aforementioned challenges, Pavlou elaborates that ‘several projects were placed on hold’, difficulties were encountered due to not ‘being able to travel to meet clients or attend conferences’ and that, unsurprisingly, ‘the hospitality and retail industries have been battered by the pandemic’. As with Greece and Croatia, Cyprus is yet another country in the region afforded the luxury of a Mediterranean coast though its tourism industry was hit particularly hard during 2020, declining in revenue by as much as 84%.
Perhaps the most prominent takeaway has been the inability of the Cypriot courts, perceived as antiquated due to their ‘operation on the basis of physical presence and paper records’, to adapt to the pandemic. Indeed, from 16 March 2020 until 30 April 2020, a decision was made by the Supreme Court to largely bring the system to a standstill outside of a handful of exemptions such as urgent interim order applications and criminal proceedings in which the accused remained in police custody. The experience has led Pavlou to conclude that the ‘system needs major reforms in terms of digitisation and remote attendance’.
Fortunately, the inefficiencies are widely recognised with ‘great efforts’ being made to modernise. The adoption of technology for remote working and conferencing has evidently been a trend of the global legal market and one of the few positives to emerge from a very difficult 2020.
Cyprus appears to be an especially resonant example of this with Pavlou even predicting that ‘in the long-run, the country will benefit from reforms ushered in by Covid-19 which have simplified and digitalised previously lengthy procedures’ and that ‘independent firms will need to evolve and demonstrate flexibility to advanced technologies in the public sector’. LB