International arbitration law and rules in Switzerland

  1. 1. THE LEGAL FRAMEWORK
    1. 1.1 The Swiss Code on Private International Law
    2. 1.2 The Swiss Rules as institutional rules
  2. 2. THE SCOPE OF APPLICATION AND GENERAL PROVISIONS OF THE SWISS CPIL
    1. 2.1 The scope of application
    2. 2.2 General principles
    3. 2.3 Transitional provisions
  3. 3. THE ARBITRATION AGREEMENT
    1. 3.1 Formal requirements
    2. 3.2 Arbitrability
    3. 3.3 Separability
    4. 3.4 Substantive validity
  4. 4. COMPOSITION OF THE ARBITRAL TRIBUNAL
    1. 4.1 Constitution of the arbitral tribunal
    2. 4.2 Constitution of the arbitral tribunal in multi-party proceedings
    3. 4.3 Challenging arbitrators
    4. 4.4 Responsibility of arbitrators
    5. 4.5 Arbitration fees
    6. 4.6 Immunity of arbitrators
  5. 5. JURISDICTION OF THE ARBITRAL TRIBUNAL
    1. 5.1 Competence to rule on jurisdiction
    2. 5.2 Power to order interim measures
  6. 6. CONDUCT OF ARBITRAL PROCEEDINGS
    1. 6.1 Commencement of arbitration
    2. 6.2 General procedural principles
    3. 6.3 Seat, place of hearings and language of arbitration
    4. 6.4 Multi-party issues (intervention and joinder)
    5. 6.5 Oral hearings and written proceedings
    6. 6.6 Default by one of the parties
    7. 6.7 Evidence
    8. 6.8 Appointment of experts
    9. 6.9 Confidentiality
  7. 7. MAKING OF THE AWARD AND TERMINATION OF PROCEEDINGS
    1. 7.1 Choice of law
    2. 7.2 Timing, form, content and notification of award
    3. 7.3 Settlement
    4. 7.4 Power to award interest and costs
    5. 7.5 Termination of proceedings
    6. 7.6 Effect of the award
    7. 7.7 Correction, clarification and issue of a supplemental award
  8. 8. ROLE OF THE COURTS
    1. 8.1 Jurisdiction of the courts
    2. 8.2 Stay of court proceedings
    3. 8.3 Preliminary rulings on points of jurisdiction
    4. 8.4 Interim protective measures
    5. 8.5 Obtaining evidence and other court assistance
  9. 9. CHALLENGING THE ARBITRAL AWARD BEFORE THE COURTS
    1. 9.1 Overview
    2. 9.2 Jurisdiction
    3. 9.3 The appeal
    4. 9.4 Exclusion of appeal
  10. 10. RECOGNITION AND ENFORCEMENT OF AWARDS
    1. 10.1 Domestic awards
    2. 10.2 Foreign awards
Most arbitrations in Switzerland are international. Only a small minority of agreements between two Swiss companies includes an arbitration clause. The two Swiss hubs for commercial arbitration are Zurich and Geneva. However, the place dealing with the most arbitration cases is Lausanne, as this is the seat of the Court of Arbitration for Sports (CAS).

1.1 The Swiss Code on Private International Law

1.1.1 Switzerland codified its rules on international arbitration in articles 176-194 (Chapter 12) of its Federal Code on Private International Law of 1987 (Swiss CPIL).

1.1.2 Domestic arbitration is governed by articles 353-399 of the Federal Civil Procedure Code (CPC), unless the parties agree to submit their dispute to Chapter 12 of the Swiss CPIL. 1 CPC, art 353.

1.1.3 This overview covers the rules of Chapter 12 of the Swiss CPIL as the source of rules governing international arbitration.

1.1.4 Chapter 12 is tailored to the needs of the international business community and affirms Switzerland’s longstanding tradition as a leading jurisdiction for international commercial arbitration.

1.1.5 The law emphasises party autonomy by allowing parties to determine the applicable procedural rules. Parties may create their own procedural rules or contractually refer to the procedural rules of a chosen arbitral institution, for example the Swiss Rules, 2 For the full text of the Swiss Rules of International Arbitration (2012), see
https://www.swissarbitration.org/Arbitration/Arbitration-Rules-and-Laws.
 the ICC Arbitration Rules 3 For the full text of the ICC Arbitration Rules (2017), see
https://cdn.iccwbo.org/content/uploads/sites/3/2017/01/ICC-2017-Arbitration-and-2014-Mediation-Rules-english-version.pdf.pdf.
 or the UNCITRAL Arbitration Rules (1976). 4 For the full text of the UNCITRAL Arbitration Rules (1976), see
http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules/arb-rules.pdf.

1.1.6 In October 2018, a draft bill for the revision of Chapter 12 of the Swiss CPIL was presented to the Swiss parliament. The planned amendment aims to align the legislation with the case law established by the Swiss Federal Supreme Court since the CPIL came into force around 30 years ago. In addition, a number of unresolved issues will be addressed and the draft bill proposes that appeals against arbitral awards can be submitted to the Swiss Federal Supreme Court in the English language. 5 Draft bill on the revision of Chapter 12 of the Swiss CPIL and explanatory report on the draft bill, both published by the Swiss Federal Council on 24 October 2018. The revision is likely to pass the parliament and enter into force around 2021.

1.2 The Swiss Rules as institutional rules

1.2.1 The Swiss Rules of International Arbitration (Swiss Rules) 6 For the full text of the Swiss Rules of International Arbitration (2012), see
https://www.swissarbitration.org/Arbitration/Arbitration-Rules-and-Laws.
(the applicable procedural rules if adopted by the parties) are the result of harmonisation efforts undertaken by the Chambers of Commerce of Zurich, Geneva, Basle, Berne, Lausanne and Lugano. As of 1 January 2004, the Swiss Rules replaced each Chamber’s arbitration rules, among them the International Arbitration Rules of the Zurich Chamber of Commerce. Since 2008, the Swiss Rules also govern disputes under the auspices of the Chamber of Commerce of Neuchâtel.

1.2.2 The Swiss Rules are based on the UNCITRAL Arbitration Rules (1976), 7 For the full text of the UNCITRAL Arbitration Rules (1976), see
http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules/arb-rules.pdf.
to which changes and additions have been made. Certain modifications were necessary to adapt the UNCITRAL Arbitration Rules (1976) for institutional arbitration.

1.2.3 The Swiss Rules came into force on 1 January 2004 and were revised as of 1 June 2012 (2012 Swiss Rules). Besides several minor changes and amendments, a procedure for emergency relief was introduced to the revised rules. The 2012 Swiss Rules apply to all arbitral proceedings started on or after June 2012.

1.2.4 The Swiss Rules allow the parties a lot of flexibility and provide an excellent basis for disputes to be resolved quickly and cost-effectively. The Swiss Rules have become well-established rules and, each year, around 100 new cases are brought under the Swiss Rules. A key factor for its success is the swift administration of the cases by the Swiss Chambers’ Arbitration Institution, which has gained a strong reputation for its professional and very efficient work.

2. THE SCOPE OF APPLICATION AND GENERAL PROVISIONS OF THE SWISS CPIL

2.1 The scope of application

2.1.1 The scope of Chapter 12’s application is broad. Articles 176-194 of the Swiss CPIL apply to all arbitral proceedings where the seat of arbitration is in Switzerland if, at the time the arbitration agreement was concluded, at least one of the parties was domiciled or had its ordinary residence outside Switzerland. 8 Swiss CPIL, art 176(1).

2.1.2 In purely domestic disputes articles 353-399 of the CPC apply unless the parties expressly agree that, instead of the CPC, Chapter 12 of the Swiss CPIL shall govern their dispute. 9 CPC, art 353 Conversely, in international cases, the parties can explicitly agree that articles 353-399 of the CPC are to apply instead of articles 176–194 of the Swiss CPIL. 10 Swiss CPIL, art 176(2).

2.1.3 The seat of arbitration is determined either by the parties themselves (in the arbitration agreement or later), by the arbitral institution designated by them or, failing any determination, by the arbitrators. 11 Ibid, art 176(3).

2.2 General principles

2.2.1 Swiss international arbitration law reflects the major judicial and legislative developments in the area of international arbitration over the past few decades. It is based on the following general principles:

  • wide scope of application;
  • broad concept of arbitrability and favourable approach towards the validity of arbitration agreements by limiting formal requirements;
  • emphasis on party autonomy by allowing the parties to determine the applicable procedural and substantive law;
  • the equal treatment of the parties and the right to be heard;
  • recognition of the finality of the award;
  • significant restrictions on intervention by state courts and grounds to challenge an award in the state courts; and
  • the option to exclude actions for setting aside the award.

2.3 Transitional provisions

2.3.1 The Swiss CPIL does not state to what extent it applies to arbitration agreements completed before the enactment of the Swiss CPIL on 1 January 1989. The Swiss Federal Supreme Court has ruled that an arbitration agreement completed before this date must conform to the requirements of the formerly applicable law on international arbitration (Inter-cantonal Convention). However, where such an arbitration agreement meets the requirements under the Inter-cantonal Convention, the conduct of any arbitral proceedings arising out of that agreement and commenced after 1 January 1989 will be governed by Chapter 12 of the Swiss CPIL. 12 Swiss Federal Supreme Court, 27 April 1993, BGE 119 II 179.

3. THE ARBITRATION AGREEMENT

3.1 Formal requirements

3.1.1 In relation to the formal requirements of an arbitration agreement, Swiss law avoids any reference to domestic or foreign legislation and, instead, establishes an independent substantive rule. Under article 178(1) of the Swiss CPIL, inspired by the Model Law (1985), 13 For the full text of the Model Law (1985) see
http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf.
an arbitration agreement must be made in writing, by telegram, telex, fax or any other means of communication by which the agreement is evidenced in writing in order to be formally valid. Nowadays, an email printout should also suffice. In other words, a document actually signed by both parties is not necessary.

3.1.2 The 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL proposes that arbitration agreements shall be valid even if the formal requirements are fulfilled only by one party. Under the proposed amendment, an arbitration agreement shall be validly entered into if the arbitration clause is contained in a written offer which is orally or tacitly accepted by the other party.

3.2 Arbitrability

3.2.1 Pursuant to article 177(1) of the Swiss CPIL, a dispute relating to any economic interest can be the subject matter of arbitral proceedings, regardless of whether the substantive law governing the underlying contractual relationship relies on a narrower definition of “objective arbitrability”. 14 Swiss Federal Supreme Court, 23 June 1992, BGE 118 ii 356. The arbitral tribunal does not have to inquire into the substance of the applicable substantive law in order to determine whether a claim is arbitrable. 15 Swiss Federal Supreme Court, 23 June 1992, BGE 118 ii 355. In this context, Chapter 12 of the Swiss CPIL introduced a provision for objections raised by states and state-controlled organisations against the arbitrability of disputes. Article 177 of the Swiss CPIL provides that if a state or a state-controlled organisation or enterprise is a party to an arbitration agreement, it cannot invoke its own national law in order to contest either its capacity to be a party to arbitral proceedings or the arbitrability of a dispute covered by the arbitration agreement. 16 Swiss CPIL, art 177(2).

3.3 Separability

3.3.1 The validity of an arbitration agreement cannot be contested on the grounds that the main contract is not valid or that the arbitration agreement concerns a dispute which has not yet arisen. 17 Swiss CPIL, art 178(3), as confirmed by Swiss Federal Supreme Court, 2 September 1993, BGE 119 ii 384. The validity of the arbitration clause has to be determined separately.

3.4 Substantive validity

3.4.1 Apart from the requirement that the arbitration agreement must be in writing, 18 Swiss CPIL, art 178(1). See discussion at paragraph 3.1.1 above. the prerequisites of a valid arbitration agreement are governed by article 178(2) of the Swiss CPIL. This provision gives preference to the arbitration agreement’s validity by providing that the agreement is valid if it conforms either to:

  • the law chosen by the parties;
  • the law governing the subject matter of the dispute, in particular, the law governing the main contract; or
  • Swiss law.

3.4.2 With respect to the question of whether there was a consensus between the parties to submit their dispute to arbitration, the Swiss Federal Supreme Court tends to be rather restrictive. If in doubt, it often decides in favour of state court proceedings. 19 Swiss Federal Supreme Court, 15 March 1990, BGE 116 Ia 56 and 16 October 2001, BGE 128 III 50. This restrictive approach does not apply in sport matters where the Swiss Federal Supreme Court is liberal (and sometimes overly-liberal) in endorsing arbitration clauses, even where such clauses can only be found in the regulations of an association to which the contract makes just a general reference. 20 Swiss Federal Supreme Court, 22 March 2007, BGE 133 III 244-245; 18 April 2011, case no. 4A_640/2010 (unpublished); 20 January 2010, case no. 4A_548/2009 (unpublished); 9 January 2009, case no. 4A460/2008 (unpublished).

3.4.3 Once the Swiss Federal Supreme Court confirms that there is a valid arbitration agreement, it generally favours a broad scope of application. 21 Swiss Federal Supreme Court, 27 February 2014, BGE 140 III 139; 8 July 2003, BGE 129 III 675 and 7 November 2011, BGE 138 III 36.

4. COMPOSITION OF THE ARBITRAL TRIBUNAL

4.1 Constitution of the arbitral tribunal

4.1.1 Pursuant to article 179(1) of the Swiss CPIL, arbitrators will be appointed, removed or replaced in accordance with the agreement of the parties. The parties may also refer to the procedural rules of an agreed arbitral institution, such as the Swiss Rules.

4.1.2 If there is no agreement between the parties, or if the rules of the selected arbitral institution are silent, the parties may request the assistance of the state court in the seat of arbitration, which will then act in accordance with the relevant provisions of the CPC. Where the parties have agreed that a state court shall appoint the arbitrator, the judge must make the appointment, unless a summary assessment shows that there is no valid arbitration agreement between the parties. 22 Swiss CPIL, art 179, para 2 and 3; Swiss Federal Supreme Court, 27 February 1992, BGE 118 Ia 26.

4.1.3 If the state court refuses to appoint an arbitrator, the ruling can be brought before the Swiss Federal Supreme Court by way of an appeal. 23 Swiss Federal Supreme Court, 25 February 2016, BGE 142 III 232; 20 March 1995, BGE 121 I 81 and 27 February 1992, BGE 118 Ia 23. In contrast, no appeal is available against the appointment of the arbitrator by a state court; only a preliminary or final award later issued by the arbitral tribunal may be challenged in the event that there was an improper appointment of the sole arbitrator or the arbitral tribunal. 24 Swiss CPIL, art 190(2) (a); Swiss Federal Supreme Court, 25 February 2016, BGE 142 III 232 and 11 September 1989, BGE 115 II 296.

4.2 Constitution of the arbitral tribunal in multi-party proceedings

4.2.1 The principle that the arbitral tribunal shall be constituted in accordance with the agreement of the parties also applies in cases where there are more than two parties involved. However, party autonomy is subject to the requirement of equal treatment, which prevents the claimant(s) or the respondent(s) from having an unequal influence on the constitution of the arbitral tribunal. The right to parity cannot be waived, as this would violate the mandatory provision of article 182(3) of the Swiss CPIL, which ensures the parties’ rights to equal treatment. 25 Swiss Federal Supreme Court, 11 November 1981, BGE 107 Ia 155 c 2b and 4.

4.2.2 Typically, multiple parties agree on a three-member arbitral tribunal and allow each side, the claimant(s) and the respondent(s), to nominate one co-arbitrator. Provided that both (groups of) parties can agree on their co-arbitrator, this does not pose a problem.

4.2.3 However, where a group of claimants or respondents are unable to agree on a co-arbitrator, concerns may arise as to whether the claimants and the respondents have an equal influence on the constitution of the arbitral tribunal. Arguably, there is inequality in influence where one party can freely designate its co-arbitrator, while the multiple parties on the other side are unable to do so. This argument is more powerful where the inability of the multiple claimants or respondents to agree on the identity of their co-arbitrator is due to different interests within the group.

4.2.4 According to Swiss case law, this situation does not amount to an unequal treatment of the parties as long as the arbitrators fulfil the requirement of impartiality and independence. 26 Cour de Justice de Genève, 26 November 1982 (unpublished), confirmed by the Swiss Federal Supreme Court, 16 May 1983, case no. P.1703/82 (unpublished). The French Cour de Cassation took the opposite position in the well-known Dutco case. 27 Siemens AG/BKMI Industrieanlagen GmbH v Dutco Construction Company, French Cour de Cassation, 7 January 1992 It is possible that state courts of other jurisdictions will follow the French approach, in particular where multiple parties convincingly state that they are unable to agree on a co-arbitrator due to their differing interests and/or different claims being raised against two or more respondents (as in the Dutco case). For that reason, where a group of claimants or respondents is unable to jointly appoint a co-arbitrator and the parties can plausibly explain that this is the result of their dissimilar positions and/or separate claims, Swiss courts and arbitral institutions should generally adhere to the Dutco decision by directly appointing all arbitrators. In the case of direct appointment of the whole arbitral tribunal, none of the parties has a preponderant influence on the composition of the arbitral tribunal.

4.2.5 Where the parties have agreed on the application of institutional rules, these rules will govern the question of whether, and to what extent, the arbitral institution has the power to name all arbitrators. For example, the Swiss Rules 28 Swiss Rules, art 8(5), see
https://www.swissarbitration.org/Arbitration/Arbitration-Rules-and-Laws.
empower the institution to appoint all arbitrators where a group of parties fails to designate its co-arbitrator.

4.2.6 Where the parties have not agreed on a procedure for appointing the arbitrators without the involvement of a state court, the judge at the seat of arbitration may be requested to take action if multiple claimants or respondents are unable to agree on a co-arbitrator. The judge will act in accordance with the relevant provisions of the CPC. 29 Swiss CPIL, art 179(2). Article 362(2) of the CPC provides that, in the case of a multi-party arbitration, the judge may appoint all arbitrators. In line with this, the 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL proposes to clarify that, in the case of a multi-party arbitration, the state court may appoint all members of the arbitral tribunal. 30 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL, art 179(2bis).

4.3 Challenging arbitrators

4.3.1 Pursuant to article 180(1) of the Swiss CPIL, there are three grounds for challenging an arbitrator:

  1. if the arbitrator does not meet the qualifications agreed upon by the parties;
  2. if there is a ground for challenge under the arbitration rules agreed upon by the parties; or
  3. if the circumstances give rise to reasonable doubts as to the arbitrator’s independence or impartiality.

4.3.2 Any arbitrator must be fully independent and impartial; the same strict standard applies to a sole arbitrator, a chair and any co-arbitrator. 31 Swiss Federal Supreme Court, 29 October 2010, BGE 136 III 605.

4.3.3 The 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL adds a duty to disclose. A person asked to act as arbitrator must disclose immediately any circumstances that might raise reasonable doubts about his or her independence or impartiality. This duty continues throughout the proceedings.

4.3.4 A party may challenge its own arbitrator only if it becomes aware of reasons for doing so, despite due care, after the appointment was made. The party must notify the arbitral tribunal and the other party of the grounds for the challenge without delay. 32 Swiss CPIL, art 180(2).

4.3.5 Where the parties have not agreed on the procedure for challenging an arbitrator, the state court at the seat of arbitration will decide on the challenge. The decision of the state court is final, and it cannot be appealed to the Swiss Federal Supreme Court, neither directly nor indirectly in an appeal against the arbitral award. 33 Swiss Federal Supreme Court, 2 May 2012, BGE 138 III 270; 3 July 2002, BGE 128 III 330 and 13 August 1996, BGE 122 I 370.

4.3.6 If the parties have agreed on a procedure for challenging the arbitrator without the involvement of a state court, the decision of the private institution cannot be the subject of a separate appeal to the Swiss Federal Supreme Court. 34 Swiss Federal Supreme Court, 2 May 2012, BGE 138 III 270 and 18 August 1992, BGE 118 II 361. However it is possible to submit the reasons for challenging the arbitrator (which were not accepted by the private institution) to the Swiss Federal Supreme Court for review when filing an appeal against a preliminary or final award by the arbitral tribunal. The review is based on article 190(2) (a) of the Swiss CPIL, which allows an appeal in the case of improper appointment of the sole arbitrator or improper constitution of the arbitral tribunal, including the lack of independence of an arbitrator. 35 Swiss Federal Supreme Court, 2 May 2012, BGE 138 III 270; 3 July 2002, BGE 128 III 332 and 18 August 1992, BGE 118 II 361.

4.3.7 In the event of a successful challenge or replacement of an arbitrator, the appointment of the substitute arbitrator is subject to the same rules as the appointment of the original arbitrators, unless the parties have agreed otherwise.

4.4 Responsibility of arbitrators

4.4.1 The arbitrators’ duties and rights towards the parties arise from:

  • the contract between the arbitrators and the parties (the arbitrators’ contract or receptum arbitrii), which is a contract sui generis, with elements of both a service contract and a mandate, entering into force with the appointment of the arbitrators;
  • the provisions of Chapter 12 of the Swiss CPIL; and
  • the parties’ own procedural rules or the institutional rules to which the parties refer in their arbitration agreement and to which the arbitrators have agreed when accepting their nomination.

4.4.2 The arbitrators must ensure equal treatment of the parties and respect the right of both parties to be heard in adversarial proceedings. 36 Swiss CPIL, art 182(3). See also paragraph 6.2.2 below.

4.4.3 The core duty of the arbitrators is the execution of their function as arbitrators. This duty lasts until the conclusion of the arbitral proceedings, unless a situation occurs which entails an early termination of the receptum arbitrii. An arbitrator may only resign for valid reasons. However, in the event an arbitrator is unwilling to continue to execute his function, there is no effective means to force them to do so. Additionally, the parties must not be left with a truncated arbitral tribunal. Accordingly, and unless the parties have agreed to the contrary, an arbitrator declaring his resignation has to be replaced through the application of the provisions in article 179(2) of the Swiss CPIL and article 371 of the CPC, whether or not one considers the unilateral resignation to be valid. 37 Swiss Federal Supreme Court, 30 April 1991, BGE 117 Ia 166 c 6. By contrast, the Swiss Federal Supreme Court does not require the replacement of an arbitrator who does not participate in the deliberations without terminating their mandate. 38 Swiss Federal Supreme Court, 1 February 2002, BGE 128 III 234 c 3.

4.5 Arbitration fees

4.5.1 Chapter 12 of the Swiss CPIL does not address the arbitrators’ fees and expenses. The advance and final allocation of fees and expenses is, therefore, subject to the parties’ discretion in the context of their arbitration agreement. If the arbitration is conducted under the rules of an arbitral institution, such rules will generally have detailed provisions for the arbitrators’ (and the institution’s) fees and expenses.

4.5.2 The Swiss Federal Supreme Court held that the power of the arbitral tribunal to issue an authoritative award does not extend to the arbitrators’ fees and other issues arising out of the contract between the arbitrators and the parties (receptum arbitri). The agreement to arbitrate does encompass the receptum arbitri and the arbitrators cannot authoritatively decide in their own favour. Accordingly, any arbitrators’ fees stated in the award are not authoritative, but are merely an invoice which the arbitrators issue based on the receptum arbitri. Where a party disagrees with the calculation of such fees, this issue must be submitted to the competent state court. 39 Swiss Federal Supreme Court, 10 November 2010, BGE 136 III 597.

4.5.3 Parties and the arbitrators may submit their receptum arbitri to arbitration; ie to agree that any dispute between them arising out of the receptum arbitri shall be decided by a different arbitral tribunal.

4.5.4 The 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL includes a provision which would give the arbitral tribunal the authority to decide on the amount and allocation of the costs and the arbitrators’ fees, without the possibility of an appeal against such a decision. During the consultation process, there have been valid concerns raised against this proposal and it remains to be seen if and to what extent the law will be amended in this respect.

4.6 Immunity of arbitrators

4.6.1 There is no provision in Chapter 12 of the Swiss CPIL which would exempt arbitrators from liability claims by the parties. Therefore, an arbitrator’s liability for wrongful performance of his duties must be determined in accordance with the general legal rules governing liability under Swiss law. Article 97 of the Swiss Code of Obligations stipulates the principle that a party to a contract owes compensation if they do not duly perform the duties under the contract unless they can prove that no fault is attributable to them.

4.6.2 Institutional rules do, however, often limit arbitrators’ liability. Such limitations are valid, except for limitations relating to liability for gross negligence or unlawful intent. In these cases liability cannot be validly excluded.

5. JURISDICTION OF THE ARBITRAL TRIBUNAL

5.1 Competence to rule on jurisdiction

5.1.1 Article 186(1) of the Swiss CPIL provides that the arbitral tribunal is authorised to decide whether it has jurisdiction over the matters brought before it. The arbitral tribunal will decide on its jurisdiction even if there are pending proceedings in existence on the same matter before a state court or another arbitral tribunal, unless there is a strong reason to stay the arbitral proceedings. 40 Swiss CPIL, art 186 (1 bis). For example, an arbitral tribunal might be inclined to stay the arbitral proceedings in the event that, in the already pending proceedings, the respondent did not contest the jurisdiction of the court.

5.1.2 A party’s objection to lack of jurisdiction must be raised prior to any defence on the merits. 41 Ibid, art 186(2). A party may concurrently contest jurisdiction and, subject to those objections, present its first defence on the merits. Generally, the arbitral tribunal will render its decision on jurisdiction in the form of a preliminary award. 42 Ibid, art 186(3).

5.2 Power to order interim measures

5.2.1 Unless the parties have agreed otherwise, upon the request of a party, the arbitral tribunal is empowered to order interim or protective measures. 43 Ibid, art 183(1).

5.2.2 The arbitral tribunal is not entitled to impose sanctions in the event that any interim or protective measures are not complied with. For this reason, if the party concerned does not comply voluntarily with the preliminary or protective measure ordered, the arbitral tribunal may request the assistance of the judge at the place where the interim measure shall be enforced. The judge will apply his own law in order to enforce such measures. 44 Ibid, art 183(2).

5.2.3 Both the arbitral tribunal and the judge may grant interim or protective measures conditional upon the provision of appropriate security. 45 Ibid, art 183(3).

6. CONDUCT OF ARBITRAL PROCEEDINGS

6.1 Commencement of arbitration

6.1.1 Arbitral proceedings are pending as soon as one party submits its claim to the arbitral tribunal designated in the arbitration agreement or, if the arbitration agreement does not designate a particular arbitrator, as soon as one party initiates the procedure to appoint the arbitral tribunal. 46 Ibid, art 181.

6.2 General procedural principles

6.2.1 Under Swiss law, parties have significant autonomy to choose and determine the arbitral procedure and to tailor the procedural rules to their specific needs. Accordingly, Chapter 12 of the Swiss CPIL does not contain specific or detailed (default) rules regarding arbitral procedures. Article 182(1) of the Swiss CPIL states that the parties may:

  • create their own arbitral procedure;
  • refer to existing institutional rules of arbitration such as the Swiss Rules, 47 For the full text of the Swiss Rules of International Arbitration (2012), see
    https://www.swissarbitration.org/Arbitration/Arbitration-Rules-and-Laws.
     the ICC Arbitration Rules 48 Ibid, appendix 3.7.  or the UNCITRAL Arbitration Rules (1976); 49 Ibid, appendix 3.1.  or
  • select a pre-existing body of procedural law, for example the CPC.

6.2.2 Despite the extensive autonomy of the parties regarding procedural issues, the minimum requirements of article 182(3) of the Swiss CIPL must be observed. 50 Swiss Federal Supreme Court, 26 April 2016, BGE 142 III 360 and 7 September 1993, BGE 119 II 388.  The arbitral tribunal must therefore:

  • ensure equal treatment of the parties; and
  • respect the rights of both parties to be heard in adversarial proceedings.

6.2.3 If these minimum requirements are not met, the final award may be challenged before the Swiss Federal Supreme Court. 51 Swiss CPIL, art 190(2) (d).

6.2.4 Where the parties have failed to set out the applicable arbitral procedure, the arbitral tribunal is free to determine the procedure, either directly or by reference to a body of law or existing arbitration rules. 52 Ibid, art 182(2).

6.2.5 The arbitral tribunal will often consult with the parties at a very early stage of the arbitral proceedings in order to agree on the procedural framework of the arbitral proceedings.

6.3 Seat, place of hearings and language of arbitration

6.3.1 In order to become subject to Swiss law, 53 Ibid, arts 176–194.  the arbitral tribunal must have its official seat of arbitration in Switzerland. 54 Ibid, art 176(1).  This does not prevent the parties from holding any part of the arbitral proceedings elsewhere.

6.3.2 In their arbitration agreement, the parties can choose the language of the arbitration. If the parties have not agreed upon the language, the arbitral tribunal will decide which language to apply to the proceedings.

6.4 Multi-party issues (intervention and joinder)

6.4.1 Where a third party is brought (either by the claimant or the respondent) into the arbitration through a third-party notice, where a third party actively brings an intervention claim, or where arbitral proceedings between (partially) different parties are consolidated, the two-party arbitration converts into a multi-party arbitration.

Third-party notice and third-party intervention

6.4.2 Unlike Chapter 12 of the Swiss CPIL, some institutional rules address the issues of third-party notice and third-party intervention. For example, the Swiss Rules 55 Swiss Rules, art 4(2), see
https://www.swissarbitration.org/Arbitration/Arbitration-Rules-and-Laws.
provide that where one or more third persons request to participate in arbitral proceedings already pending under the Swiss Rules, or where a party to arbitral proceedings under the Swiss Rules requests that one or more third persons participate in the arbitration, the arbitral tribunal shall decide on such request, after consulting with all parties, including the person or persons to be joined, taking into account all relevant circumstances.

6.4.3 In the event of a third-party notice, the notified party cannot be forced to participate in the arbitration unless it is provided with the same rights regarding the appointment of the arbitral tribunal as the original parties to that arbitration.

6.4.4 Where a third party actively brings an intervention claim, as a general rule, such intervention should only be admitted by the arbitral tribunal if, in addition to any other requirements, the intervening party is willing to accept the co-arbitrator already appointed by the supported party as their jointly designated co-arbitrator.

Consolidation of two arbitral proceedings

6.4.5 Chapter 12 of the Swiss CPIL is silent on the consolidation of two arbitral proceedings. The Swiss Rules provide that if another arbitration is already pending under the Swiss Rules, the institution may decide that the new case shall be consolidated into the pending arbitral proceedings even if the parties to the new procedure are not (fully) identical to the parties of the existing arbitral proceedings. 56 Swiss Rules, art 4(1), see
https://www.swissarbitration.org/Arbitration/Arbitration-Rules-and-Laws.
In this case, the parties to all proceedings shall be deemed to have waived their right to designate an arbitrator, and the institution may revoke the appointment and confirmation of arbitrators and apply the provisions of the Swiss Rules regarding the composition of the arbitral tribunal. While, prior to its decision, the institution shall consult with the parties and any arbitrator already confirmed, their consent is not required. The institution shall consider all relevant circumstances, including the links between the cases and the progress already made in the pending arbitral proceedings.

6.5 Oral hearings and written proceedings

6.5.1 As discussed at paragraph 6.2.1 above, Swiss law grants the parties autonomy to choose and determine the arbitral procedure according to their specific needs. Chapter 12 of the Swiss CPIL does not therefore contain detailed (default) rules regarding the arbitral procedure. It is for the parties, and subsequently for the arbitrators, to decide whether the arbitral procedure should encompass an oral hearing and/or to what extent the procedure should be in writing. However, the procedure still must comply with the minimum requirements of article 182(3) of the Swiss CIPL (ie the arbitral tribunal must ensure the equal treatment of the parties and respect the rights of both parties to be heard in adversarial proceedings).

6.6 Default by one of the parties

6.6.1 If a party does not participate in the appointment of a sole arbitrator or if it does not nominate its co-arbitrator, the agreement of the parties and/or the institutional rules to which the parties refer will govern the arbitral procedure. Institutional rules such as the Swiss Rules provide that the institution will appoint the sole arbitrator or the co-arbitrator that has not been nominated. If the parties’ agreement to arbitrate does not provide any guidance, the claimant can seek the assistance of the state court at the seat of arbitration. The judge will then appoint the sole arbitrator or the co-arbitrator that was not nominated. 57 Swiss CPIL, art 179, para 2 and CPC, art 362(1).

6.6.2 Unless agreed otherwise by the parties, the arbitral tribunal, once constituted, will move ahead with the arbitration irrespective of the default of a party during the arbitral proceedings. It will depend on the agreement between the parties and subsequently on the decision of the arbitral tribunal whether the default of a party has certain consequences, eg whether a default by the claimant results in the termination of the procedure and/or whether the facts presented by one party are deemed to be true if the other side defaults. In order to prevent an assertion that the right to be heard was not respected, it is crucial that the arbitral tribunal keeps the defaulting party updated on subsequent steps in the arbitration.

6.7 Evidence

6.7.1 Article 184 of the Swiss CPIL gives the arbitral tribunal power to take its own evidence. Subject to rules set out or referred to by the parties in the arbitration agreement, the arbitral tribunal will determine the evidentiary procedure.

6.7.2 Where legal assistance by a state court is necessary (for example, if a witness refuses to appear voluntarily before the arbitral tribunal), the arbitral tribunal may request the assistance of the court at the seat of arbitration. The court will then apply Swiss law.

6.7.3 According to the 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL, if requested to do so, the court may also apply other procedural rules unless there are important reasons not to do so pertaining to the affected party.

6.8 Appointment of experts

6.8.1 On the request of a party or on its own motion, the arbitral tribunal may appoint its own tribunal-appointed expert. In arbitral proceedings, parties often present their own experts. In the event of contradicting expert opinions of the parties, the arbitral tribunal might decide to appoint a tribunal-appointed expert.

6.9 Confidentiality

6.9.1 Privacy and confidentiality of the arbitral proceedings and of the subsequent award is often a decisive factor for parties in selecting arbitration.

6.9.2 However, Chapter 12 of the Swiss CPIL does not provide for a duty of confidentiality. It will therefore be for the parties to agree on the desired level of confidentiality. The agreement can be implicit or explicit. In order to avoid uncertainty at a later stage, the parties should expressly agree that the arbitral proceedings and the award shall be confidential, either by including a provision in their arbitration agreement or by referring to institutional rules which include a confidentiality provision, eg the Swiss Rules.

6.9.3 The Swiss Rules state that, subject to a written agreement to the contrary, the parties undertake to keep confidential all awards and orders as well as all materials submitted by another party in the arbitral proceedings, unless a disclosure is necessary:

7. MAKING OF THE AWARD AND TERMINATION OF PROCEEDINGS

7.1 Choice of law

7.1.1 The substantive law to be applied by the arbitral tribunal when assessing the merits of the case may be freely determined by the parties. In the absence of a choice of law by the parties, the arbitral tribunal will apply the law most closely connected with the subject matter of the dispute. 59 Swiss CPIL, art 187(1).  The arbitral tribunal does not have to apply a specific set of conflict of laws rules, but it may apply an independent “closest connection” test in order to determine the applicable law. Yet, in practice, the (abstract) applicable law is often less important than the provisions and the interpretation of the contract between the parties.

7.1.2 The parties may authorise the arbitral tribunal to base its decision purely on equitable considerations, ie to decide ex aequo et bono.60

7.2 Timing, form, content and notification of award

7.2.1 The award must be rendered in conformity with the rules of procedure agreed upon by the parties. 61 Ibid, art 189(1).  This provision again reflects the overriding importance of party autonomy provided for by Chapter 12 of the Swiss CPIL. In the absence of an agreement between the parties, the award will be made by a majority of the arbitrators or, in default of a majority, by the chair alone. 62 Ibid, art 189(2).

7.2.2 The parties may freely determine the form of the award. Unless agreed otherwise, the award must be in writing, accompanied by reasons for the decision, dated and signed. The signature of the chair of the arbitral tribunal is sufficient. 63 Ibid, art 189.  The award must be notified to the parties. 64 Ibid, art 190(1).

7.2.3 Unless agreed otherwise between the parties, the arbitral tribunal may also render partial awards. 65 Ibid, art 188.

7.3 Settlement

7.3.1 The parties may settle their dispute at any time. Upon their request, the arbitral tribunal may record the settlement in the form of a consent award.

7.4 Power to award interest and costs

7.4.1 To the extent sought by the claimant, the arbitral tribunal has the power to award contractual and/or default interest on the claimed amounts.

7.4.2 Presently, Chapter 12 of the Swiss CPIL does not contain any provisions as to the award and allocation of the costs arising from the arbitration between the parties. It is left to the parties to determine compensation and allocation of costs in their arbitration agreement, or to refer to institutional rules containing such provisions.

7.4.3 Where an arbitration agreement does not deal with the award and/or allocation of the costs of the arbitration, the arbitrators will decide on these issues. However, their decision must not be contrary to the outcome of the arbitration. The Swiss Federal Supreme Court voided an award in which the claimant had been unsuccessful for the most part of its claim but, despite this, the respondent was ordered to bear all costs of the arbitration and to fully compensate the claimant. 66 Swiss Federal Supreme Court, 4 September 2008, case no. 4A_288/2008, c 4 (unpublished).

7.4.4 As to the costs of the arbitral tribunal, the Swiss Federal Supreme Court held that the arbitrators can only issue an authoritative award on the allocation of the costs among the parties, but not as to the amount of the fees owed to the arbitrators. 67 Swiss Federal Supreme Court, 10 November 2010, BGE 136 III 597; see paragraph 4.5.2 above.

7.4.5 As mentioned at paragraph 4.5.4 above, the 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL includes a provision which would give the arbitral tribunal the authority to decide on the amount and allocation of the costs and the arbitrators’ fees, without the possibility of an appeal against the decision.

7.5 Termination of proceedings

7.5.1 Proceedings terminate upon notification of the final award to the parties. 68 Swiss CPIL, art 190(1).

7.6 Effect of the award

7.6.1 Upon its due notification to the parties, the award becomes final. 69 Ibid, art 190(1). An action for annulment of the award before the Swiss Federal Supreme Court does not affect the enforceability of the award, unless the Swiss Federal Supreme Court grants a motion to suspend enforcement of the award.

7.7 Correction, clarification and issue of a supplemental award

7.7.1 While Chapter 12 of the Swiss CPIL is currently silent on this issue, the Swiss Federal Supreme Court has affirmed that the correction or clarification of an award, as well as the issue of a supplemental award, is admissible in appropriate circumstances as a matter of general legal principle and established doctrine. 70 Swiss Federal Supreme Court, 7 January 2011, BGE 137 III 85 and 2 November 2000, BGE 126 III 527.

7.7.2 The 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL suggests incorporating the Swiss Federal Supreme Court’s case law into the statute. The proposed new article 189a foresees that, unless the parties have agreed otherwise, each party can apply to the arbitral tribunal within 30 days from the receipt of the award to have obvious errors contained in the arbitral award corrected, or to have individual parts of the decision interpreted or supplemented. By the same deadline, the arbitral tribunal can also provide a correction, interpretation or addition on its own initiative. A request for correction, interpretation or addition does not stop the deadline to file an appeal against the arbitral award. To the extent the award is corrected, interpreted or supplemented, the deadline to file an appeal starts to run anew.

7.7.3 The Swiss Federal Supreme Court has also acknowledged the availability of the remedy of “revision” of an award if a party discovers important facts which could have been brought before the arbitral tribunal, but were not known to that party despite all due diligence at the time. The revision proceedings must be initiated before the Swiss Federal Supreme Court within 30 days of discovering the facts. The Swiss Federal Supreme Court will examine whether the new facts would have led to a different decision of the arbitral tribunal and, if so, refer the case back to the arbitral tribunal to reconsider the award. 71 Swiss Federal Supreme Court, 14 March 2008, BGE 134 III 286; 1 November 1996, BGE 122 III 492 and 11 March 1992, BGE 118 II 204. However, to the extent a party has validly waived its right to file an appeal against an award, it cannot bypass its waiver by filing a request for revision for the same reason. 72 Swiss Federal Supreme Court, 17 October 2017, BGE 143 III 589.

7.7.4 The 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL proposes to incorporate the case law into the statute. The proposed new article 190a(1)(a) stipulates that a party may request a revision if it subsequently learns of significant facts or finds crucial evidence which it was unable to submit in the course of the arbitration proceedings. Facts and evidence that only occurred after the arbitral award are excluded. According to article 190a(1)(b) of the draft, a revision can also be requested if criminal proceedings reveal that a crime has influenced the arbitral award to the disadvantage of the concerned person. The revision proceedings must be initiated before the Swiss Federal Supreme Court within 90 days of discovering the facts, and no later than 10 years after the arbitral award became final. The draft further provides that, with respect to the ground mentioned in article 190a(1)(a), the parties may expressly exclude the possibility of a revision if none of the parties has its seat or residence in Switzerland.

8. ROLE OF THE COURTS

8.1 Jurisdiction of the courts

8.1.1 Pursuant to article 7 of the Swiss CPIL, a Swiss court will refuse to exercise jurisdiction over a dispute if the subject matter of the dispute is arbitrable and if the parties have concluded an arbitration agreement, unless:

  • the respondent has implicitly accepted the jurisdiction of the court by participating in the court proceedings without raising any objection;
  • the court determines that the arbitration agreement is prima facie null and void, 73 inoperative or incapable of being performed; or
  • the arbitral tribunal cannot be constituted for reasons which are obviously attributable to the respondent’s behaviour in the arbitral proceedings.

8.1.2 According to the Swiss Federal Supreme Court, when a jurisdictional defence based on the arbitration agreement is raised, the Swiss court’s power to review the arbitration agreement is limited if the arbitral tribunal has its seat in Switzerland. The Swiss court must deny its jurisdiction unless a summary review of the arbitration agreement leads to the conclusion that one of the grounds of article 7 of the Swiss CPIL is fulfilled. 74 Swiss Federal Supreme Court, 6 August 2012, BGE 138 III 682 and 29 April 1996, BGE 122 III 139. In contrast, if the arbitration is to take place outside Switzerland, the arbitration agreement must be examined by the Swiss court with full power of review. 75 Swiss Federal Supreme Court, 6 August 2012, BGE 138 III 682 and 16 January 1995, BGE 121 III 41.

8.2 Stay of court proceedings

8.2.1 According to the legislation, in cases where arbitral proceedings have been initiated prior to court proceedings, the court should stay its proceedings until the arbitral tribunal has decided on its jurisdiction. 76 Once the arbitral tribunal has confirmed its jurisdiction, the court should dismiss the claim.

8.3 Preliminary rulings on points of jurisdiction

8.3.1 Lack of jurisdiction must be asserted at the very beginning of the proceedings. The arbitral tribunal is competent to decide for itself whether it has jurisdiction over the matters brought before it (competence-competence). The arbitral tribunal will decide on its jurisdiction notwithstanding any pending proceedings on the same matter before a state court or another arbitral tribunal, unless the arbitral tribunal sees a strong reason to stay the arbitral proceedings. 77 Swiss CPIL, art 186 (1 bis).

8.3.2 In general, the arbitral tribunal will render its decision on jurisdiction in the form of a preliminary award. 78 Ibid, art 186(1) and (3). The arbitral tribunal’s preliminary award on jurisdiction can be challenged directly before the Swiss Federal Supreme Court, which will review de novo whether the arbitral tribunal has properly accepted or declined jurisdiction over the matters in dispute. 79 Ibid, art 190(2) (b). In case the arbitral tribunal decides on its jurisdiction by interim award, only such interim award on jurisdiction (and not the final decision) may be challenged on the ground that the arbitral tribunal lacks jurisdiction. 80 Swiss Federal Supreme Court, 28 August 2014, BGE 140 III 477; 18 September 2003, BGE 130 III 76 and 23 June 1992, BGE 118 II 355.

8.3.3 According to the Swiss Federal Supreme Court, even if the arbitral tribunal issues an interim or partial award without specifically addressing the question of jurisdiction, a party that has made a timely challenge to the arbitral tribunal’s jurisdiction is requested to file its challenge against the first preliminary ruling and must not wait for the final award. The Swiss Federal Supreme Court has found that by filing a preliminary or partial decision, the arbitral tribunal implicitly affirms its jurisdiction. 81 Swiss Federal Supreme Court, 18 September 2003, BGE 130 III 80, and 17 February 2000, case No. 4P 168/1999 (unpublished).

8.3.4 In contrast, a decision in which the arbitral tribunal only tentatively or partially deals with its jurisdiction cannot be challenged before the Swiss Federal Supreme Court. Only once the arbitral tribunal decides the question of jurisdiction in a final way – by either admitting or denying jurisdiction – can the decision be challenged before the Federal Supreme Court. 82 Swiss Federal Supreme Court, 20 July 2017, BGE 143 III 466.

8.4 Interim protective measures

8.4.1 As long as the arbitral tribunal is not constituted, an application for interim measures may be filed with the state court. According to opinion supported by most Swiss scholars, the state courts and arbitral tribunal have alternative jurisdiction after constitution of the arbitral tribunal, unless the parties have explicitly agreed to the contrary. 83 A Furrer/D Girsberger/I Ambauen, Handkommentar zum Schweizer Privatrecht (3rd ed, 2016), Art 183 CIPL para 13; B Berger/F Kellerhals, International and Domestic Arbitration in Switzerland (3rd ed, 2015), para 1278; R Mabillard, Basle Commentary to the Swiss CIPL (3rd ed, 2013), art 183 para 5; F Vischer, Zurich Commentary to the Swiss CIPL (2nd ed, 2004), art 183 para 3.

8.4.2 Where the arbitral tribunal orders injunctive relief, but the party concerned does not voluntarily comply with such an interim measure, the arbitral tribunal may request the assistance of the competent state court, which will apply its own procedural law. 

8.4.3 Both the arbitral tribunal and the state court may make the granting of interim or protective measures conditional upon provision of appropriate security. 84 Swiss CPIL, art 183(2).

8.5 Obtaining evidence and other court assistance

8.5.1 If court assistance is necessary with respect to the taking of evidence in connection with arbitral proceedings, the arbitral tribunal (or a party with the consent of the arbitral tribunal) may ask the state court at the place of the arbitration for assistance. The state court will apply its own procedural law.86 According to the 2017 draft bill on the revision of Chapter 12 of the Swiss CPIL, upon request, the state court might also apply other procedural rules unless this is against the serious interests of the concerned person. The arbitral tribunal may also ask the state court to issue letters of request to the judicial authorities of other countries according to international conventions, in particular the Hague Convention on Taking Evidence Abroad of 1970.

8.5.2 The judge at the seat of arbitration also has jurisdiction when further assistance from judicial or administrative bodies is necessary. 87 Ibid, art 185.

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9. CHALLENGING THE ARBITRAL AWARD BEFORE THE COURTS

9.1 Overview

9.1.1 The rules of Chapter 12 of the Swiss CPIL on challenging awards are precisely tailored to the requirements of the international business community:

  • the Swiss Federal Supreme Court is designated as the only judicial authority competent to hear actions for the annulment of awards. 88 Ibid, art 191. The procedure before the Swiss Federal Supreme Court has proven to be very quick. In most cases, the final decision of the Swiss Federal Supreme Court is issued no later than three to six months after the filing of the appeal;
  • the grounds for annulment are very restrictive. 89 Swiss CPIL, art 190(2). Even with regard to these limited grounds for annulment, case law shows that the Swiss Federal Supreme Court is extremely reluctant to quash awards and the rate of success of appeals filed with the Swiss Federal Supreme Court is low; 90 F Dasser / P Wójtowicz, “Challenges of Swiss Arbitral Awards – Updated and Extended Statistical Data as of 2015”, ASA Bulletin (2/2016), p. 280; P Lalive, “L’article 190 al 2 LDIP a-t-il une utilité?”, ASA Bulletin (4/2010), pp. 726-734.  and
  • if all the parties are not resident in Switzerland, it is possible to waive the right to bring any action for annulment of the award with the Swiss Federal Supreme Court. 91 Swiss CPIL, art 192.

9.2 Jurisdiction

9.2.1 An action for annulment of an award has to be brought before the Swiss Federal Supreme Court in the form of an appeal. 92 Swiss CPIL, art 191 in connection with the Swiss Federal Statute on the Swiss Federal Supreme Court (BGG), art 77. The appeal must be presented to the Federal Supreme Court within 30 days after service of the award. 93 BGG, art 100(1).

9.3 The appeal

9.3.1 Chapter 12 of the Swiss CPIL contains significant limitations on the possibility of challenging an award before the Swiss Federal Supreme Court. Article 190(2)(a)-(e) of the Swiss CPIL provides that an award can only be challenged based on the following five grounds:

  1. improper appointment of the sole arbitrator or improper constitution of the arbitral tribunal (including the appointment of an arbitrator who is not independent); 94 Swiss Federal Supreme Court, 18 August 1992, BGE 118 II 361. As regards the limits to file an appeal, see discussion at paragraphs 4.1.3 and 4.3.5-4.3.6 above
  2. erroneous acceptance or denial of jurisdiction by the arbitral tribunal;
  3. failure to decide all claims brought by the parties or decisions on matters beyond the claims submitted to the arbitral tribunal;
  4. violation of the principle of equal treatment of the parties or the right to be heard; or
  5. the award’s non-compliance with substantive or procedural public policy. 95 Swiss Federal Supreme Court, 13 April 2010, BGE 136 III 345 and 27 March 2012, BGE 138 III 322. These are the only two cases in which the Swiss Federal Supreme Court affirmed a violation of public order. In the first case, the arbitral tribunal had ignored that the case at hand had been decided before and thereby violated the fundamental principle of res judicata. In the second case, the arbitral tribunal was in breach of substantive public order since it had confirmed a FIFA decision banning a professional player for an undetermined time worldwide because he could not pay a large amount of damages awarded to his former club. Swiss Federal Supreme Court, 25 April 1995, BGE 121 III 333.

9.3.2 The fact that the award may be arbitrary does not qualify as a reason for annulment under article 190 of the Swiss CPIL. 96 Swiss Federal Supreme Court, 25 April 1995, BGE 121 III 333.

9.3.3 With regard to the grounds mentioned in article 190(2)(a) and (b) of the Swiss CPIL (ie constitution and jurisdiction of the arbitral tribunal), an interim or partial award can be submitted for challenge to the Swiss Federal Supreme Court. 97 Swiss CPIL, art 190(3). As explained above, the parties must not await the final decision before filing their appeal. 98 Swiss Federal Supreme Court, 18 September 2003, BGE 130 III 76 and 23 June 1992, BGE 118 II 355. In contrast, with regard to the grounds mentioned in article 190(2)(c), (d) and (e) of the Swiss CPIL, only the final award can be challenged. 99 Exception: In the framework of an appeal under article 190(2) (a) and (b) CPIL, the additional grounds of Art. 190(2) CPIL may be invoked as well, insofar as they have to do with the composition or jurisdiction of the arbitral tribunal; Swiss Federal Supreme Court, 28 August 2014, BGE 140 III 477. This is even the case where an interim or partial decision causes a disadvantageous and not easily reparable situation for a party to the arbitral proceedings. 100 Swiss Federal Supreme Court, 18 September 2003, BGE 130 III 76.

9.3.4 If the challenge is well-founded, the Swiss Federal Supreme Court may issue a new decision replacing the award, but only if the arbitral tribunal erroneously denied or affirmed jurisdiction or was wrongly composed. 101 Appeal grounds of article 190(2) (a) and (b) of the Swiss CPIL; Swiss Federal Supreme Court, 29 October 2010, BGE 136 III 605.  In all other cases, the Swiss Federal Supreme Court will remit the matters in question to the arbitral tribunal for reconsideration. 102 BGG, art 77(2).

9.4 Exclusion of appeal

9.4.1 According to article 192 of the Swiss CPIL, the parties may either waive the right to have the award set aside, or they may limit this right to one or several of the five aforementioned grounds for annulment, provided that two requirements are met:

  1.  none of the parties has its domicile, habitual residence or business establishment in Switzerland; and
  2. the waiver is expressly mentioned in the arbitration agreement or is contained in a subsequent written agreement. Due to the requirement for an “express term”, the mere reference to a set of procedural rules excluding the right of appeal is not sufficient. However, an explicit reference to article 192 of the Swiss CPIL is not necessary. 103 Swiss Federal Supreme Court, 17 October 2017, BGE 143 III 589 and 4 February 2005, BGE 131 III 173 The Swiss Federal Supreme Court has held that the right to challenge was validly waived by an arbitration agreement in which the parties referred to the UNCITRAL Arbitration Rules (1976) 104 For the full text of the UNCITRAL Arbitration Rules (1976), see
    http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules/arb-rules.pdf.
    and added that the decision of the arbitral tribunal “shall be final and binding on the parties who exclude all and any rights of appeal from all and any awards insofar as such exclusion can validly be made”. 105 Swiss Federal Supreme Court, 4 February 2005, BGE 131 III 173.

9.4.2 While, under the conditions mentioned above, the parties can exclude all grounds for annulment in Switzerland as the state of origin of the award, the award remains subject to judicial review according to articles IV and V of the New York Convention 106 For the full text of the New York Convention (1985) see
https://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/New-York-Convention-E.pdf
 in the countries in which the award is being enforced. In the event that the parties validly exclude an appeal and later seek enforcement of the award in Switzerland, the enforcement procedure is also governed by the New York Convention. 107 Swiss CPIL, art 192(2). For the full text of the New York Convention (1985)
https://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/New-York-Convention-E.pdf
This ensures that, irrespective of the country, there will be a review by the court enforcing the award in accordance with articles IV and V of the New York Convention.

10. RECOGNITION AND ENFORCEMENT OF AWARDS

10.1 Domestic awards

10.1.1 Each party may, at its own expense, deposit a copy of the award with the state court at the seat of arbitration. Upon request by a party, the state court will issue a declaration as to its enforceability. Alternatively, at the request of a party, the arbitral tribunal will certify that the award was made in accordance with the provisions of Chapter 12 of the Swiss CPIL. This certificate has the same effect as depositing the award with the state court. 108 Swiss CPIL, art 193.

10.1.2 Subject to the article 192(2) of the Swiss CPIL, any award issued by an arbitral tribunal having its seat of arbitration in Switzerland will be enforceable anywhere in Switzerland. 109 Swiss Constitution, art 122(3).

10.2 Foreign awards

10.2.1 Pursuant to article 194 of the Swiss CPIL, the New York Convention governs the recognition and enforcement of all foreign awards in Switzerland. By including an express reference to the New York Convention in article 194 of the Swiss CPIL, the Swiss legislature broadened the applicability of the New York Convention unilaterally, in that it now applies regardless of whether the country of origin of the award is a signatory of the New York Convention. Any and all foreign awards will therefore be recognised and enforced in Switzerland pursuant to the provisions of the New York Convention.

10.2.2 If a foreign state court exercises jurisdiction over a dispute despite the existence of a valid arbitration agreement in accordance with article II of the New York Convention, the foreign state court’s decision will not be recognised in Switzerland. 110 Swiss CPIL, art 25(a); Swiss Federal Supreme Court, 19 December 1997, BGE 124 III 83.

Philipp J. Dickenmann, LL.M.
Partner
Zurich