Commercial Arbitration

Last verified on Wednesday 12th May 2021

Commercial Arbitration: Switzerland

Diane Vallée-Grisel

Brown&Page

Infrastructure

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Switzerland

Switzerland is a party to the New York Convention (NYC), which was ratified on 1 June 1965 and entered into force on 30 August 1965.

Switzerland’s initial reciprocity reservation (article I(3) NYC) was withdrawn in 1989 upon the enactment of Chapter 12 of the Swiss Private International Law Act (PILA) governing international arbitration in Switzerland. Since then, all foreign awards are recognised and enforced in Switzerland by application of the NYC provisions, regardless of reciprocity (article 194 PILA).

Answer contributed by Diane Vallée-Grisel

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Switzerland

Switzerland is a party to the 1923 Geneva Protocol on Arbitration Clauses in Commercial Matters. The Protocol will nevertheless cease to have any effect for Switzerland once Iraq, the last contracting state to have ratified the NYC, will officially become a party to the NYC (article VII(2) NYC).

Switzerland is also a party to the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), article 54(1) of which provides for ICSID awards to be enforced as if they were final court judgments in the country where enforcement is sought. In practice, this provision, as well as those dealing with the recognition and enforcement of foreign awards contained in the over 120 Bilateral Investment Promotion and Protection Agreements to which Switzerland is a party (112 of which are currently in force), have hardly had any significance since article 194 PILA came into force and imposed the application of the NYC to all foreign awards, wherever issued (see question 1).

Answer contributed by Diane Vallée-Grisel

3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Switzerland

International arbitration – defined as an arbitration where (i) the seat of the arbitral tribunal is in Switzerland and (ii) at least one of the parties to the arbitration agreement, at the time of its conclusion, did not have its domicile, habitual residence or seat in Switzerland (article 176 PILA) – is governed by Chapter 12, articles 176-194 of the Swiss Private International Law Act (Chapter 12 PILA). Despite having been enacted more than 30 years ago (on 1 January 1989), Chapter 12 PILA is, to this day, still regarded as a modern and innovative arbitration law. Indeed, Chapter 12 PILA affords maximum flexibility and autonomy to the parties with minimum court intervention, while ensuring their equal treatment and right to be heard in fair adversarial proceedings (see articles 182(3) and 190(2)(d) PILA).

The provisions contained in Chapter 12 PILA were originally drafted prior to the adoption of the UNCITRAL Model Law and were finalised while discussions regarding the Model Law were still under way. Chapter 12 PILA is not, therefore, based on the Model Law but is a stand-alone statute. It is much more concise than the Model Law, but there are no material differences between the two.

Chapter 12 PILA underwent a “light” revision effective as from 1 January 2021 to translate a number of key principles developed in case law into statutory rules, further reinforce party autonomy and improve predictability and clarity in the arbitral process. The revision also introduced the possibility for parties to file submissions in English before the Swiss Federal Tribunal (article 77(2bis) of the Swiss Federal Tribunal Act).

Domestic arbitration is governed by Part 3, articles 353–399 of the Federal Code of Civil Procedure (Part 3 CCP), which provides a modern legal framework, well-suited for domestic arbitration and largely replicating the approach and practice developed in international arbitration. Noteworthy differences between Part 3 CCP and Chapter 12 PILA include, inter alia, contrasting definitions of arbitrability between both statutes (see question 8), express provisions on certain topics in one where the other is silent (eg, joinder and third-party notice; see question 9) and differences in the grounds upon which an award may be challenged (see question 41) or revised under both statutes.

The parties may freely opt in favour of the application of Chapter 12 PILA or Part 3 CCP in the arbitration agreement or a subsequent agreement (articles 353(2) CCP and 176(2) PILA). In both cases, the parties’ agreement must meet the same statutory form requirements as those set out for the arbitration agreement (see articles 353(2) CCP and 176(2) PILA) and clearly and unambiguously exclude the application of Chapter 12 PILA or Part 3 CCP. The reference in an arbitration clause to the application of the “FIFA regulations and the Swiss Civil Code” or a mere choice of arbitration rules (such as, eg, the ICC Rules of Arbitration) to govern the arbitral proceedings does not amount to a valid opting-out according to the Federal Tribunal. Given the legal and practical effects of opting-out provisions, parties considering such clauses would be well advised to seek professional advice before entering into any such agreement.

Answer contributed by Diane Vallée-Grisel

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Switzerland

Several international associations or bodies relevant to international arbitration are based in Switzerland. These include, inter alia, the Arbitration Centre of the World Intellectual Property Organization (WIPO), the Dispute Settlement Bodies of the World Trade Organization, the United Nations Compensation Commission and the International Air Transport Association (IATA) located in Geneva and the Court of Arbitration for Sports (CAS) located in Lausanne.

The Swiss Chambers’ Arbitration Institution (SCAI), founded in 2004 by the Chambers of Commerce of Basel, Berne, Geneva, Lausanne, Lucerne (Central Switzerland), Lugano, Neuchâtel and Zurich, offers widely used means of dispute resolution based on the Swiss Rules of International Arbitration (Swiss Rules). 

The current version of the Swiss Rules came into force on 1 June 2012 and introduced some interesting new features, such as the possibility to obtain emergency relief from an emergency arbitrator, who must issue her or his decision within 15 days and who cannot act as an arbitrator in the subsequent or concurrent arbitration (article 43 Swiss Rules (version of 2012)). The Swiss Rules have been revised and the 2021 version of the Swiss Rules will enter into force on June 1, 2021.

The Arbitration Court established by the SCAI manages arbitrations conducted under the Swiss Rules. It is composed of experienced international arbitration practitioners and is assisted in its work by the Secretariat. By submitting their dispute to arbitration under the Swiss Rules, parties confer on the Arbitration Court the authority to supervise the arbitral proceedings, which includes the power to extend the term of office of the arbitral tribunal, to decide on the challenge of an arbitrator or to act as an appointing authority.

Answer contributed by Diane Vallée-Grisel

5. Can foreign arbitral providers operate in your jurisdiction?

Switzerland

Foreign arbitral institutions can freely operate in Switzerland. For instance, Geneva and Zurich are among the most frequently chosen venues or seats in ICC arbitrations. These cities are also popular venues for LCIA or ICDR cases and increasingly so for ad hoc UNCITRAL investment or other treaty cases (eg, for Energy Charter Treaty cases).

Switzerland has traditionally been one of the preferred venues for the settlement of inter-state disputes, in particular in Geneva, which also hosts the United Nations. Geneva is also a frequent venue for hearings in investment treaty cases or ad hoc cases involving states or state entities, regardless of the actual seat of the arbitral tribunal.

Answer contributed by Diane Vallée-Grisel

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Switzerland

Courts at both the cantonal and the federal levels may have jurisdiction in relation to arbitration-related matters. Not only are they generally supportive of arbitration, they are also particularly well versed in international arbitration matters due to their wealth of experience in the field.

The Federal Tribunal, the country’s highest court, has exclusive jurisdiction over actions to set aside international arbitral awards rendered in Switzerland (article 191 PILA). This is also the case for domestic arbitral awards, unless otherwise provided by the parties’ agreement (articles 389 and 390 CCP). The Federal Tribunal’s case law is a reference in international arbitration matters. It is regularly cited by foreign courts and is generally highly considered by international scholars and practitioners.

The Justices sitting in the First Civil Court of the Federal Tribunal (which deals with arbitration matters, excluding enforcement of arbitral awards) are among the leading jurists in the field and have significantly contributed to the harmonious development of international arbitration law through their decisions. This affords the predictability and certainty that parties are seeking when selecting a seat in Switzerland and certainly also contributes to the popularity of Swiss venues among international arbitration users.

Cantonal courts at the seat of the arbitration act as supporting courts to appoint arbitrators (article 179(2) PILA; see question 21), decide on the challenge of an arbitrator where the parties have not determined the procedure for such challenge (article 180a(2) PILA; see question 24) and assist with the taking of evidence when requested (article 184(2) PILA; see question 30). They may also be called upon to enforce provisional or protective measures ordered by arbitral tribunals (article 183(2) PILA; see questions 25 and 30).

Answer contributed by Diane Vallée-Grisel

Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Switzerland

Pursuant to both article 178(1) PILA and article 358(1) CCP, an arbitration agreement shall be valid if made in writing or in any other manner that can be evidenced by text. The agreement must necessarily (a) express the parties’ clear, non-equivocal intent to refer their dispute, whether past, present or future, to arbitration in lieu of litigation and (b) precisely identify the parties giving their consent to arbitration. Article 178(4) PILA (which came into force on 1 January 2021) provides that an arbitration agreement may be included in a unilateral act (eg, a will, a foundation or a trust) or in a company’s by-laws.

Under certain specific circumstances, a valid arbitration agreement may result from an exchange of drafts containing an arbitration clause during the course of negotiations, provided that the parties’ intent to arbitrate all differences regarding the contract under negotiation can be established. In such a case, should negotiations fail, a dispute relating to such negotiations (eg, culpa in contrahendo) could be arbitrated on the basis of the arbitration clause contained in the exchanged drafts.

As regards substantive validity, an arbitration agreement must conform either to the law chosen by the parties, the law governing the subject matter of the dispute, or to Swiss law (article 178(2) PILA).

Article 178(3) PILA expressly provides that the validity of an arbitration agreement cannot be contested on the ground that the arbitration clause or agreement concerns disputes that have not yet arisen. Accordingly, arbitration agreements usually cover future disputes that fall within the ambit of the arbitration clause or of the contract or complex of contracts containing the arbitration agreement.

Answer contributed by Diane Vallée-Grisel

8. Are any types of dispute non-arbitrable? If so, which?

Switzerland

As a general rule, in international arbitration, all disputes or matters of a pecuniary nature may be subject to arbitration (article 177(1) PILA).

Article 177(1) PILA is a substantive private international law rule applicable to all international arbitrations seated in Switzerland, regardless of the parties’ national laws or of the law governing their contract. Arbitrators sitting in Switzerland must therefore determine if a claim is of a pecuniary nature pursuant to Swiss arbitration law. This issue can give rise to divergent doctrinal views in relation to claims that, for example, are reserved by statute to the exclusive jurisdiction of specific courts under the law governing the contract or the dispute, or claims that are pecuniary in nature but not at the free disposal of the parties. Specific legal advice should be sought as early as possible for such cases.

According to case law, an arbitral tribunal may examine the arbitrability of a case ex officio, even when the issue is not raised by the respondent.

Article 177(2) PILA provides that a state or an entity controlled by a state cannot rely on its own law to challenge its capacity to be a party to an arbitration or the arbitrability of a dispute.

In domestic arbitration, in contrast, the decisive criterion to determine arbitrability is not the pecuniary nature of the dispute but whether the parties can freely dispose of the claim (ie, whether such a claim may be waived; article 354 CCP). The scope of the objective arbitrability as defined under article 354 CCP is, therefore, more restricted than that defined under article 177(1) PILA.

Answer contributed by Diane Vallée-Grisel

9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Switzerland

Chapter 12 PILA is silent on the questions of the participation of a third party through joinder or a third-party notice. As a rule, joinder and third-party notice imply expressed or implied consent to the arbitration by the joined party and a decision by arbitral tribunals on their jurisdiction over such third parties.

The Federal Tribunal has acknowledged in several cases the extension of an arbitration agreement to third parties in cases where such parties had expressly agreed to the arbitration agreement or may be deemed to have agreed to it impliedly through conduct or otherwise. This was affirmed in particular in cases dealing with assignment of contracts, the assumption of a debt, or the incorporation of an arbitration agreement by reference, for instance by reference to general conditions. Other cases have acknowledged the extension of an arbitration agreement to a non-signatory third party that participated in the negotiation and performance of the contract containing the arbitration clause when it could be inferred from such participation that the third party intended to be bound by the arbitration clause. In a decision issued on November 2020, the Federal Tribunal denied such extension in a case where the concerned third party was referred to as a subcontractor in one of the annexes to a supply agreement; the Federal Tribunal found that the involvement of the subcontractor in the performance of the main contract was not unusual given the special features of the contractual arrangements at stake and therefore not sufficient to admit the subcontractor’s implied consent to be bound by the arbitration agreement contained in the main contract.

Article 4(2) of the Swiss Rules (version of 2012) provides that arbitral tribunals may allow the joinder or intervention of a third party when so requested in a pending case, “after consulting with all the parties, including the person or persons to be joined, taking into account all relevant circumstances”. This provision does not, of course, give rise to difficulties when all concerned parties agree to the joinder. However, when there is a concern or an objection raised against such a joinder, the arbitral tribunal must determine whether the joinder is admissible under the lex arbitrii – which is not necessarily the PILA as the Swiss Rules may be used anywhere in the world (article 1(2) Swiss Rules (version of 2012)) – and whether the parties may be deemed to have expressly, or impliedly by reference to the application of the Swiss Rules, agreed to the joinder. Specialist legal advice should be sought in such cases because the result of this assessment largely depends on the specific facts.

For domestic arbitrations, article 376(1) CCP provides that arbitral proceedings may be conducted by or against multiples parties on condition that (i) these parties are bound by one or several compatible arbitration agreement(s) and (ii) the claims are either identical or factually connected. Article 376(3) CCP also enables a third party to be joined or to intervene in a pending arbitration, subject to the existence of an arbitration agreement between the third party and the parties to the arbitration and to the arbitral tribunal’s consent.

Answer contributed by Diane Vallée-Grisel

10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Switzerland

Consolidation of separate arbitral proceedings may only occur if all parties involved agree to it. It is also generally accepted that consolidation should not delay or adversely affect the efficient management of the arbitral proceedings, which is something that must be assessed on a case-by-case basis.

Answer contributed by Diane Vallée-Grisel

11. Is the "group of companies doctrine" recognised in your jurisdiction?

Switzerland

The “group of companies doctrine” is not recognised as such under Swiss law. Consequently, obligations incurred by a subsidiary are generally not extended to a parent company or to other companies within the same group that are not privy to the contract, unless specifically agreed. However, under certain specific circumstances, such as in case of an assignment of claim or of a contract, or in case of an assumption of debt, an arbitration agreement may be binding on parties or entities of a group of companies that did not sign it or did not originally enter into the contract containing the arbitration agreement (see question 9).  

In addition, contractual obligations of a subsidiary company may be attributed to the parent company when there is confusion between the spheres of influence and activities of the parent and the subsidiary companies. In such relatively rare cases, piercing of the corporate veil (Durchgriff) has been one of the legal theories relied upon by arbitrators – and upheld by case law – to disregard the legal and independent personalities of the parent and the subsidiary companies to hold the parent company as bound by the arbitration clause contained in a contract concluded between its subsidiary and a third party, or to hold the parent company liable for obligations of its subsidiary towards a co-contractor under a contract to which the parent company was not a party. Thus, for example, a non-signatory corporate parent has been held to be bound by an arbitration clause concluded by a subsidiary company when it was proved to have been particularly closely involved in the negotiation and performance of the contract containing the arbitration clause, thereby creating the appearance that it was a party to that agreement. A similar conclusion has been reached in cases where the parent company’s or the subsidiary’s reliance on its distinct legal personality may be held to be constitutive of an abuse of right under the specific circumstances of the case, for example, when the parent company assigns the contract containing the arbitration clause to a subsidiary that is obviously undercapitalised, or continuously intervenes in the business and management of the subsidiary or co-mingles the assets of the two companies.

Answer contributed by Diane Vallée-Grisel

12. Are arbitration clauses considered separable from the main contract?

Switzerland

The separability (or severability) of an arbitration clause from the main contract is acknowledged at article 178(3) PILA, which states that the arbitration agreement cannot be contested on the ground that the main contract is not valid. Separability is also expressly acknowledged at article 357(2) CCP for domestic arbitration.

Given the ambiguous wording of article 178(3) PILA, the Federal Tribunal held in 2016 that the latter provision applies to all cases in which either the invalidity or inexistence of the main contract is raised to oppose arbitration, and not only to cases where the validity of the main contract is at issue, as the text of article 178(3) seems to imply. The literal interpretation of article 178(3) PILA would be too restrictive because the issue of the separability of an arbitration clause may also arise in relation to a non-existent contract. The Federal Tribunal further held that article 178(3) PILA should not be construed as excluding any and all adverse effects of the invalidity or inexistence of the main contract on the arbitration agreement. Indeed, under certain circumstances, the “defect” affecting the validity of the main contract also affects that of the arbitration agreement, for instance when a party does not have the capacity to enter into the main contract or lacks the necessary powers to represent the party that is intended to be bound by the agreement, or when a party enters into the main contract under duress.

The Federal Tribunal also relied on separability to uphold the validity of an arbitration clause contained in drafts of a contract that was eventually not entered into, given the established clear common intent of the parties to arbitrate (see, also, question 7).

Answer contributed by Diane Vallée-Grisel

13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunals jurisdiction and competence?

Switzerland

Article 186(1) PILA, which is a mandatory provision, affirms the competence-competence principle by providing that “the arbitral tribunal shall decide on its jurisdiction”. Its decision may be challenged before the Federal Tribunal (article 190(2)(b) PILA), without suspension of the arbitration proceedings. 

An arbitral tribunal sitting in Switzerland may decide on its jurisdiction notwithstanding the fact that an action having the same subject matter is already pending between the same parties before a state court or another arbitral tribunal, “unless there are serious reasons to stay the proceedings” (article 186(1bis) PILA; see also article 7 PILA). An action brought before a state court for a mere declaration that no valid arbitration agreement exists between the parties would not be admissible in Switzerland.

The same principle applies to domestic arbitration (see article 359(1) CCP).

Answer contributed by Diane Vallée-Grisel

14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Switzerland

The arbitration agreement must identify (or reasonably allow the identification of) the parties that are bound by it, reflect their clear consent to arbitrate and define the disputes that may be subject to arbitration. These three points constitute the essentialia negotii for an arbitration clause or agreement to be valid under Swiss law. Non-essential elements such as the seat or venue for the arbitration, the language of the arbitration, the number of arbitrators and the procedural rules or the law governing the arbitration do not have to be mentioned in the arbitration agreement and do not affect the validity of the arbitration agreement.

For all practical purposes, however, the arbitration agreement should ideally indicate the seat of the arbitral tribunal, the law governing the contract or the dispute, the composition of the arbitral tribunal (sole arbitrator or a three-member tribunal) and the language of the arbitration. In ad hoc cases referring to the UNCITRAL Rules of Arbitration, it is best to provide for an appointing authority in case of difficulty in constituting the arbitral tribunal.

The Federal Tribunal held in January 2020 that an arbitration clause in a “Quality Assurance Agreement” providing for arbitration for “any contract disputes” encompassed all disputes arising from the underlying supply relationship, which was composed of several agreements, some of which contained a similar arbitration clause. Professional advice should therefore be sought with regards to the wording of the arbitration clause under consideration prior to entering into the agreement or complex of agreements related to such provision.

When none of the parties is domiciled in Switzerland, the parties may include an express waiver of any action to set aside the award in the arbitration agreement (article 192(1) PILA). In practice, this is rarely done and rather risky because, in such cases, the arbitrators’ decision will not be able to be challenged at all, regardless of what might have happened in the arbitration (however, the award may be opposed at the enforcement stage abroad if the applicable conditions for this are met). A mere statement in the arbitration agreement that the final award shall be final and binding or that any “means of appeal” is waived would not be deemed sufficient to constitute a valid exclusion agreement under article 190(1) PILA.

The 1 January 2021 “light” revision of Chapter 12 PILA has also added the possibility for the parties, when none of them is domiciled in Switzerland, to expressly waive the right to apply for the revision of the award in case (i) new facts or evidence come into light after the issuance of the award; or (ii) grounds that would have allowed the challenge of an arbitrator are discovered after the closing of the arbitral proceedings (article 192(1) PILA; see question 42). Revision cannot, however, be excluded in cases where the award was influenced or affected by criminal acts or misdemeanour.

Answer contributed by Diane Vallée-Grisel

15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Switzerland

Both institutional and ad hoc arbitration are commonly practised in Switzerland. Ad hoc cases are often truly ad hoc, in the sense that they do not refer to the UNCITRAL Rules and when they do, they generally remain completely detached from the Permanent Court of Arbitration (PCA).

Answer contributed by Diane Vallée-Grisel

16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Switzerland

It is always advisable to draft a multi-party arbitration agreement with precise definitions of the parties, to provide for mandatory notification to all other parties of any request to arbitrate and to describe the exact procedure to be followed to constitute the arbitral tribunal. Ideally, multi-party agreements should also provide for an appointing authority that will nominate all arbitrators if a party or a group of parties fails to appoint an arbitrator. Absent an agreement of the parties, the competent cantonal court at the seat of the arbitral tribunal may nominate all arbitrators at the request of a party (see article 179(2) and (5) PILA in force since 1 January 2021 and article 362(2) CCP). 

Multi-party provisions are often best addressed by reference to arbitration rules that deal with this in a comprehensive and clear manner (eg, article 8 Swiss Rules (version of 2012), articles 8 and 12 ICC Rules, article 8 LCIA Rules, article 9 SIAC Rules, among others).

Answer contributed by Diane Vallée-Grisel

Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Switzerland

Arbitral proceedings are commenced by a notice or request for arbitration addressed by the claimant to the respondent or to the arbitral institution chosen by the parties to administer their disputes. There are no limitation periods or mandatory rules as to the form or content of the request in Chapter 12 PILA or Part 3 CCP (the former issue is a matter of the substantive governing law and not one of procedure or arbitration law).

Both article 181 PILA and article 372(1) CCP provide that an arbitration is pending from the moment the arbitrators designated in the arbitration agreement are seized with the claim or when one of the parties initiates the procedure for appointing the arbitral tribunal.

In the case of a multi-tier agreement or clause, the reference to mediation or conciliation prior to arbitration would not be considered to comprise the commencement of arbitration for the purposes of article 181 PILA (and article 372(1) CCP). According to case law, such prior reference to conciliation or mediation must be bona fide complied with, failing which the arbitrators who may have been seized prior to that would lack ratione temporis jurisdiction. 

Answer contributed by Diane Vallée-Grisel

Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Switzerland

Pursuant to article 187(1) PILA, the arbitral tribunal must apply the law or the rules of law chosen by the parties (see also article 381(1)(a) CCP for domestic arbitration). In the absence of such a choice by the parties, the arbitral tribunal is to apply the law or the rules of law with which the case has the closest connection (article 187(1) PILA). The "closest connection" principle embodied in article 187(1) PILA constitutes a specific conflict-of-laws rule from which the arbitral tribunal cannot deviate.

Arbitrators may only decide ex aequo et bono or on equitable considerations, if the parties have expressly authorised them to do so (article 187(2) PILA; see also article 381(1)(b) CCP). An award based on equity failing the parties’ authorisation or agreement would be irregular and could possibly be challenged on the ground that it violates public policy (article 190(2)(e) PILA).

The Federal Tribunal has consistently held that arbitrators subject to Swiss arbitration law must apply the law ex officio and has thus specifically acknowledged the application of the jura novit arbiter principle to such cases.  

Answer contributed by Diane Vallée-Grisel

Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a partys choice of arbitrator?

Switzerland

A party’s choice of an arbitrator is only limited by the grounds for a challenge of the arbitrator under article 180(1) PILA (see article 367(1) CCP for domestic arbitration). In particular, arbitrators must meet the qualifications agreed upon by the parties, be independent and impartial, and remain so throughout the arbitration process. The same degree of independence is expected and required from the co-arbitrators and the chairperson or a sole arbitrator.

Arbitrators must promptly disclose, until the end of the arbitral proceedings, any circumstances that may give rise to justifiable doubts as to their independence or impartiality (see article 179(6) PILA enacted on 1 January 2021; see also article 363 CCP).

Answer contributed by Diane Vallée-Grisel

20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Switzerland

Foreigners may – and very commonly do – act as arbitrators in Switzerland. Depending on the nationality of the arbitrator, a Schengen visa may be required to enter Switzerland for hearings or meetings (Switzerland is a Schengen area member state even though it is not a member of the EU).

There are no Swiss tax consequences when a non-Swiss resident acts as an arbitrator.

Answer contributed by Diane Vallée-Grisel

21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Switzerland

If the mechanism agreed by the parties – directly in the arbitration agreement or by reference to applicable rules of arbitration (eg, articles 12 and 13 ICC Rules, articles 7 and 8 Swiss Rules (version of 2012)) – for the selection and appointment of arbitrators fails, the competent cantonal court at the seat of the arbitral tribunal may appoint them, unless a summary examination of the case shows that no arbitration agreement exists between the parties (article 179(2) and (3) PILA). In the case of multi-party arbitration agreements, the supporting court may appoint all arbitrators (article 179(5) PILA; see question 1.2.10).

Answer contributed by Diane Vallée-Grisel

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Switzerland

Swiss law does not specifically address the question of immunity or liability of arbitrators. The arbitrator’s contract with the parties is a sui generis form of mandate under Swiss law, for which the arbitrator is liable in case of breach. However, such liability is considered to be limited to gross negligence and intentional misconduct when the arbitrators are acting in their judicial capacity.

When the applicable rules of arbitration provide for the immunity of arbitrators, such exclusion of liability is valid under Swiss law, except in cases of gross negligence or wilful misconduct in relation to which liability cannot be excluded.

Answer contributed by Diane Vallée-Grisel

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Switzerland

In non-administered arbitrations, the arbitral tribunal usually requests advance payments for fees and costs from the parties. These are kept in special accounts (separate from the chairperson’s or his or her firm’s accounts) and an accounting is submitted to the parties at the end of the case or at agreed intervals.

Most arbitral institutions, including the SCAI, provide fundholding services.

If the parties fail to pay the requested advances, the tribunal may order the stay of the proceedings until payment or terminate the proceedings. The Federal Tribunal has ruled that a decision by the arbitral tribunal ordering advance payments of costs or staying the proceedings until such payment is made is a procedural order and not an award. It cannot, therefore, be challenged, unless the arbitral tribunal, with such a decision, implicitly decided on its own jurisdiction. 

Answer contributed by Diane Vallée-Grisel

Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Switzerland

In international arbitration under Chapter 12 PILA (see article 180(1) PILA), an arbitrator may be challenged if: 

  • he or she does not meet the qualifications agreed upon by the parties;
  • there exists a ground for a challenge under the applicable rules of arbitration; or 
  • objective circumstances may give rise to justifiable doubts in the eyes of a reasonable party as to the independence or impartiality of the arbitrator.

According to well-established case law, the parties have a duty to investigate the independence and impartiality of the arbitrators through publicly available information and to immediately raise any fact or circumstance that may constitute a ground for challenge. Failure to do so would amount to a waiver to raise such ground to challenge an arbitrator.

Until the conclusion of the arbitral proceedings, unless otherwise provided by the parties’ agreement, the challenge must be addressed in writing to the challenged arbitrator (and be notified to the other arbitrators) within 30 days of (i) the day on which the requesting party becomes aware of the ground for challenge or (ii) the day on which the latter ought to have become aware of such ground had it exercised due diligence (article 180a(1) PILA). If the grounds for the challenge are disputed by the arbitrator or if the latter fails to respond to the challenge, the requesting party may then, within 30 days of the submission of the challenge, refer it to the competent cantonal courts of the seat of the arbitration (article 180a(2) PILA). The decision of the court at the seat of the arbitration is final and may not be attacked in the context of setting aside proceedings brought against a subsequent award rendered by the arbitral tribunal.

Where the parties have not agreed upon the applicable procedure, challenges are dealt with in the same manner under Part 3 CCP (applicable to domestic arbitration) until the conclusion of the arbitral proceedings (see articles 367 and 369 CCP). Unlike challenges under Chapter 12 PILA, the decision of the court at the seat of the arbitration pursuant to article 369(3) CCP may however be reviewed in the context of setting aside proceedings brought against the first arbitral award issued by the arbitral tribunal following the challenge (article 369(5) CCP).

If, despite having exercised due diligence, a ground for challenge was not discovered until after the conclusion of the arbitral proceedings, the latter may be raised within the framework of the motion to set aside the award if they may be deemed to have resulted in the irregular composition of an arbitral tribunal (article 190(2)(a) PILA or article 393(a) CCP). If this remedy is no longer available, the parties have the possibility to request the revision of the award within 90 days of the discovery of the ground for revision. This possibility, repeatedly recognised by the Federal Tribunal (including in a decision published at the end of December 2020 concerning statements made by an arbitrator on social media) is now expressly provided in article 190a PILA for international arbitration, as was already the case for domestic arbitration governed by the CCP (see article 396 CCP; see question 42).

In cases administered by the SCAI, challenges are decided upon by the Arbitration Court, whose decisions are final (article 11 Swiss Rules (version of 2012)). The Arbitration Court does not have to give reasons for its decisions (article 11(3) Swiss Rules (version of 2012)). Institutional decisions on challenges are mere administrative decisions and thus cannot be appealed before the Federal Tribunal. They can nonetheless be raised before the Federal Tribunal in the context of setting aside proceedings against a final award pursuant to article 190(2)(a) PILA (or article 393(a) CCP in domestic arbitration).

While the IBA Guidelines on Conflicts of Interest in International Arbitration may be considered by the courts or the appointing institution when deciding upon challenges, they are not binding unless the parties have agreed upon their application. Nevertheless, the Federal Tribunal has held that they constitute a useful tool for the development of best practices in international arbitration.

Answer contributed by Diane Vallée-Grisel

Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Switzerland

In the absence of an agreement by the parties to the contrary, the arbitral tribunal may, on motion of one party, order conservatory measures to maintain the status quo or regulate the status of a legal relationship by interim measures for the duration of the proceedings (article 183(1) PILA; see also article 374(1) CCP for domestic arbitration). Arbitrators may order any type of measure, including orders for temporary performance or measures unknown to Swiss law. 

If the parties against which interim measures are ordered do not comply with the order, arbitral tribunals may request the assistance of the court of the seat to enforce the measures (article 183(2) PILA; see also article 374(2) CCP).

The jurisdiction of the arbitral tribunal to order provisional measures is parallel to that of the competent domestic courts. 

Swiss courts do not grant anti-suit injunctions where proceedings are brought elsewhere in breach of an arbitration agreement. Following the principle of competence-competence, they leave the determination of the validity and scope of arbitration agreements to arbitral tribunals. 

Answer contributed by Diane Vallée-Grisel

26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Switzerland

According to the prevailing view in case law and legal commentary, orders for the provision of security for costs constitute interim measures within the meaning of article 183(1) PILA. Such decisions are therefore generally issued as procedural orders, not awards. Accordingly, both the arbitral tribunals and the local courts have parallel jurisdiction to make orders for security for costs. Article 379 CCP for domestic arbitration grants the possibility for the respondent to request that the arbitral tribunal orders the claimant to provide security for the probable respondent’s party costs.

In setting aside proceedings against a final award, security for costs might be ordered against the applicant in certain circumstances (for instance, when the applicant is a national of a country with which there is no convention or treaty on the subject of court costs), provided an application for security is filed by the opposing side prior to any determination on the merits of the application to set aside the award.

Answer contributed by Diane Vallée-Grisel

Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Switzerland

The arbitral tribunal must ensure the equal treatment of the parties and their right to be heard in fair adversarial proceedings (article 182(3) PILA; see article 373(4) CCP for domestic arbitration). Together with the parties, it is bound by the general duty of good faith in procedural matters, which derives from article 2 of the Swiss Civil Code (CC) and requires the parties to cooperate in the establishment of the relevant facts by adducing evidence. Article 2 CC further implies that the parties are to raise any objection they may have to the arbitral tribunal’s jurisdiction or to the conduct of the proceedings without delay (articles 182(4) and 186(2) PILA; see articles 359(2) and 373(6) CCP for domestic arbitration).

The Federal Tribunal held in a decision published in October 2019 that the principle of good faith also imposed an obligation on the parties to take positive actions against an incomplete notification of the award.

Answer contributed by Diane Vallée-Grisel

28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Switzerland

There is no default, strictly speaking, in arbitration and the respondent’s refusal to participate does not paralyse it. Provided that the respondent was given reasonable notice of the start of the case and the opportunity to present its case – and its fundamental procedural rights were thus respected – a default award is valid and enforceable under Swiss law.

Answer contributed by Diane Vallée-Grisel

29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Switzerland

All common types of evidence are admitted (documentary or testimonial evidence, experts, etc.).

The members of the arbitral tribunal must conduct the taking of evidence together. This task may not be delegated to one or two of its members. Arbitrators enjoy broad discretion in the appraisal of the adduced evidence.

The IBA Rules are taken into account where the parties agree on their application, generally by analogy, which is often the case. Although some sympathy has been expressed to some of the principles expressed in the Prague Rules (eg, need to control and limit document production proceedings; expectation by certain users that arbitral tribunals ought to take more control of the proceedings rather than leave their conduct entirely to counsel), it is too early to definitely measure their impact in practice.

Answer contributed by Diane Vallée-Grisel

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Switzerland

The arbitral tribunal (or a party, with the consent of the arbitral tribunal) may request the assistance of the competent courts at the seat with the taking of evidence (article 184(2) PILA). The court may, for example, order a witness domiciled in the canton to attend a hearing or request judicial assistance from other Swiss or foreign authorities.

Since 1 January 2021, an arbitral tribunal seated abroad or the parties to foreign international arbitration proceedings may request the assistance of a Swiss court to enforce an interim measure or facilitate the taking of evidence (article 185a PILA).

Answer contributed by Diane Vallée-Grisel

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Switzerland

While far-reaching pre-trial discovery or extensive document production is not the norm under Swiss law, the parties’ general duty to cooperate in good faith in the proceedings deriving from article 2 CC (which apply in all arbitration cases with seat in Switzerland) may require the production of documents the parties might not have intended to rely upon.

The party requesting production must identify the specific documents and demonstrate that they are material to its case. If so, the arbitral tribunal will generally order production. The tribunal is entitled to draw a negative inference from a party’s refusal to comply with such order, although such refusal seldom occurs in practice.

There is increasing resistance to the systematic application of so-called “Redfern schedules” before the relevant legal issues have been identified, because their use tends to prove extremely expensive for relatively little benefit (it is not uncommon that the majority of the work carried out in relation to such schedules proves to relate to issues that are eventually irrelevant for the resolution of the dispute). Users therefore increasingly tend to prefer to reserve the schedules for complex construction cases or the like, or to use them at a stage in the arbitration where a full round of pleadings has already been exchanged with all supporting documents. This narrows the scope of documents that can legitimately still be requested and reduces costs accordingly.

Answer contributed by Diane Vallée-Grisel

32. Is it mandatory to have a final hearing on the merits?

Switzerland

The respect of the parties’ right to be heard does not make it mandatory to have a final hearing on the merits. Whether there is a hearing or not, post-hearing briefs often constitute the parties’ closing arguments on the merits.

Answer contributed by Diane Vallée-Grisel

33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Switzerland

An arbitral tribunal with its seat in Switzerland may conduct hearings and procedural meetings anywhere suitable or convenient.

Answer contributed by Diane Vallée-Grisel

Award

34. Can the tribunal decide by majority?

Switzerland

In the absence of a contrary agreement by the parties, “the arbitral award shall be made by a majority, or, in the absence of a majority, by the presiding arbitrator” (article 189(2) PILA). In case of diverging views among the arbitrators, the chairperson is empowered to decide alone (ibidem).

Answer contributed by Diane Vallée-Grisel

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Switzerland

Chapter 12 PILA places almost no limits on the relief that may be granted by an arbitral tribunal. Limitations may, however, result from the law governing the contract, the laws of the place(s) where enforcement of the award will be sought or the parties’ agreement. For example, where Swiss substantive law governs the dispute, the arbitral tribunal may fill gaps and even amend or rescind the contract in certain circumstances. It can also grant specific performance but may not award punitive damages as such damages are not available under Swiss law.

Answer contributed by Diane Vallée-Grisel

36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Switzerland

Dissenting opinions may be issued but are not common. They do not form part of the award, even though they may formally be incorporated in the award.

According to the Federal Tribunal, dissenting opinions constitute mere independent views that have no legal significance. Thus, a dissenting arbitrator cannot demand that the opinion be communicated to the parties if it is not attached to the award, unless the parties otherwise agree. Moreover, dissenting opinions are not taken into consideration by the Federal Tribunal within the context of setting aside proceedings. Similarly, individual comments passed on to the Federal Tribunal by arbitrators, including by the president of the arbitral tribunal, in such proceedings and that do not reflect the position of at least the majority of the arbitral tribunal are ignored by the Federal Tribunal.

Answer contributed by Diane Vallée-Grisel

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Switzerland

Unless otherwise agreed in the arbitration agreement, the arbitral award shall be in writing, supported by reasons, dated and signed. The signature of the presiding arbitrator is sufficient (article 189(2) PILA).

The award must also generally comply with the applicable rules of procedure and be in the form agreed upon by the parties (article 189(1) PILA). Contract drafters should address specific form requirements in the arbitration clause whenever it is likely that the award will have to be enforced in a country where specific or unusual formalities are required for the award to be recognised and enforced (eg, the signatures of the arbitrators must be notarised, all pages of the awards signed, etc).

Answer contributed by Diane Vallée-Grisel

38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Switzerland

The most important time limit parties must be aware of is the 30-day deadline from notification to challenge an award pursuant to article 190(4) PILA (see also articles 77 and 100(1) of the Swiss Federal Tribunal Act, which are also applicable to this question). The same deadline applies to a challenge against an award handed down in a domestic arbitration under the CCP (see articles 389 and 393 CCP and articles 77 and 100(1) of the Swiss Federal Tribunal Act). Any later challenge will be dismissed as inadmissible. When the agreed applicable rules provide for the notification of the award by registered mail or courier, the 30-day time limit starts running the day after the award is received.

The Federal Tribunal has held that when the applicable arbitration rules allow email notification or when email notification has been widely used for formal notification throughout an ad hoc arbitration, the time limit to file an application to set aside the award starts running the day following receipt of the electronic copy of the award, regardless of the date at which the parties receive the original hard copy of the award. The onus of proving the date of receipt of the email under cover of which the award is received is on the applicant and may be disputed by the respondent. In case of doubt or when no specific rule on the subject has been agreed, caution commands to calculate the 30 days from the receipt of the email under cover of which the arbitral tribunal or the institution sent the award.

When the applicable rules allow for a two-phase notification of the award (dispositive section first, followed by the fully reasoned award), the 30-day time limit starts running on the day after receipt of the fully reasoned award. An interim decision confirming the arbitral tribunal’s jurisdiction must be immediately challenged, failing which the point is considered as waived by the party that does not do so. The Federal Tribunal further clarified that an immediate challenge against an interim award on jurisdiction is not admissible whenever such decision rejects some but not all the pleas of lack of jurisdiction raised.

Since 1 January 2021, article 189a(1) PILA expressly provides that, absent a contrary agreement, either party may, within 30 days of the notification of the award, request the arbitral tribunal to correct any clerical or computational errors in the award, to interpret certain parts of the award or to issue a supplement to the award. The same deadline applies to the arbitral tribunal should it wish to interpret or correct the award or issue an addendum.

An application to correct an award does not suspend the 30-day time limit to challenge the award (article 189a(2) PILA). If both avenues are considered, the challenge and the application for correction or interpretation must therefore be filed within the same deadline. A renewed 30-day time limit will run for the part of the award that has been corrected or interpreted and for the supplemented award (article 189a(2) PILA).

In domestic arbitration, article 388(2) CCP provides for a double time limit within which interpretation or correction of the award may be sought: the request must be submitted within 30 days from the discovery of the error or of the parts of the award that need to be interpreted and, in any event, no later than one year from the communication of the award.

Answer contributed by Diane Vallée-Grisel

Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Switzerland

There is no general rule that costs follow the event in Swiss arbitration law. Depending on the applicable arbitration rules, practice shows that the losing party usually has to bear a percentage, and sometimes all of the reasonable arbitration and legal costs and expenses incurred by the other side.

Compensation for in-house counsel or management time has been granted in a few cases, but this very much remains a matter of circumstances.

Answer contributed by Diane Vallée-Grisel

40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Switzerland

Under Swiss law, issues of interest are substantive law issues. They are, therefore, to be decided pursuant to the law governing the dispute.

When Swiss law is the applicable law and the arbitral tribunal grants interest, the award shall indicate for each claim, including for claims for costs, the applicable interest rate and the date from which interest starts to run. As Swiss law allows post award interest, awards issued in Switzerland, in particular for disputes governed by Swiss law, usually specifically award interest until full payment.

Answer contributed by Diane Vallée-Grisel

Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Switzerland

Under Chapter 12 PILA, only the violation of fundamental principles of procedural law, due process, or the Swiss legal order may give rise to the setting aside of an award. Article 190(2) PILA sets out the limited grounds for this to happen:

  • the sole arbitrator was not properly appointed or the arbitral tribunal not properly constituted; 
  • the arbitral tribunal wrongly accepted or declined jurisdiction;
  • the tribunal’s decision went beyond the claim submitted (ultra petita), or it failed to decide one of the claims (infra petita);
  • the principle of equal treatment of the parties or their right to be heard in fair adversarial proceedings was not respected; or 
  • the award is incompatible with public policy (substantive or procedural public policy).

The Federal Tribunal has full cognition only in cases relating to the jurisdiction of the arbitral tribunal (article 190(2)(b) PILA). It will review the findings of facts upon which the award is based only where one of the grounds for annulment raised is directed against these findings or when new facts or means of evidence may exceptionally be taken into account in the challenge proceedings (article 99 of the Swiss Federal Tribunal Act). The Federal Tribunal generally does not address the merits of the case except to a very limited extent when it reviews the compatibility of the results of an award with public policy (article 190(2)(e) PILA) or when considering the alleged violation of a party’s right to be heard in relation to unexpected reasons for the arbitral tribunal’s decision that the parties had not foreseen and that had not been addressed in the arbitration (article 190(2)(d) PILA).

Incompatibility with public policy is often used but seldom successfully. An award may only be set aside on this ground if it “disregards the essential and widely acknowledged values that should, according to the prevailing views in Switzerland, constitute the cornerstone of any legal order”. The first case in which the Federal Tribunal set aside an award on the ground of a violation of substantive public policy was in 2012. The case concerned a worldwide banning of a professional football player for an unlimited period of time because he became unable to settle a large amount of damages awarded against him in favour of his former club. The Federal Tribunal held that the award containing this ruling was incompatible with the individual’s personality rights and the prohibition of excessive commitment guaranteed under article 27 CC and thus was incompatible with public policy as defined under article 190(2)(e) PILA.

The notion of incompatibility with public policy is replaced in the CCP (applicable to domestic arbitration) with that of “arbitrariness” (see article 393(e) CCP, which provides that an award may be set aside when “its result is arbitrary because it rests on factual findings that are evidently contrary to the record or on a evident violation of the law or equity”). This allows for broader scrutiny than under article 190(2)(e) PILA.

Answer contributed by Diane Vallée-Grisel

42. Are there any other bases on which an award may be challenged, and if so what?

Switzerland

Pursuant to the newly enacted article 190a PILA (which entered into force on 1 January 2021), a party may request the revision of an award in three situations:

  • if it subsequently discovers material facts or conclusive evidence that, despite having exercised due diligence, it was unable to invoke in the previous proceedings (facts and evidence which postdate the award are excluded);
  • if criminal proceedings have established that the award was influenced, to the detriment of the challenging party, by a crime or misdemeanour, even in the absence of any conviction; or
  • if, despite having exercised due diligence, circumstances that give rise to justifiable doubts as to that arbitrator’s independence or impartiality were not discovered by the party until after the conclusion of the arbitration and no other remedy is available.

The request must be filed before the Federal Tribunal within 90 days of the discovery of the ground for revision (article 190a(2) PILA) and not later than 10 years from the date on which the award came into force. The aforementioned 10-year limitation period does not however apply to cases where the award was influenced by a crime or misdemeanour (article 190a(2) PILA; for domestic arbitration, see articles 396 and 397 CCP).

Answer contributed by Diane Vallée-Grisel

43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Switzerland

Exclusion agreements may only occur when none of the parties is domiciled, resident or has a place of business in Switzerland (article 192(1) PILA).

The waiver of article 192(1) PILA must be in unambiguous terms and in writing. According to case law, a provision in the arbitration agreement that the award be “final and binding” is not sufficient to constitute a valid exclusion agreement. The Federal Tribunal has also held that advance waivers contained in sport federations’ by-laws cannot be validly raised against athletes in setting aside proceedings, even when the formal requirements of article 192(1) PILA are met. Indeed, the athletes’ consent to such waivers cannot be deemed to have been freely given because they have no choice but to agree to the content of such by-laws if they want to compete. This question remains a topic of much discussion and may not be definitely settled.

Waiving the right to apply for the revision of the award is addressed in question 14, to which reference is made.

Answer contributed by Diane Vallée-Grisel

Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Switzerland

The recognition and enforcement of foreign arbitral awards in Switzerland are governed by the NYC (article 194 PILA). Article V(1) NYC sets out the grounds for non-enforcement, which are taken into account only to the extent that they are raised and proven to exist by the party opposing the enforcement of the award. These grounds are interpreted restrictively by Swiss courts, which assume a pro-enforcement stance.

According to article V(1)(e) NYC, a party can object to the enforcement of a foreign award on the basis that the award has not yet become binding on the parties, or has been set aside or suspended.

To our knowledge, the Federal Tribunal has not yet issued any decision regarding an application to enforce an arbitral award that had been set aside in its country of origin. Based on current case law regarding the application and interpretation of article V(1)(e) NYC, it is doubtful that the Federal Tribunal would go as far as allowing the enforcement of an award that was set aside at the seat of the arbitration, unless extraordinary circumstances were to exist. It is more likely that the Federal Tribunal would consider, as it has reaffirmed in recent cases, that the recognition of a foreign award does not aim at attributing to that award in the state where recognition is sought other effects than those existing in its state of origin. 

Answer contributed by Diane Vallée-Grisel

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Switzerland

Swiss courts have consistently adopted an enforcement-friendly stance, construing the grounds for a refusal to enforce an award narrowly and always by reference to the NYC (article 194 PILA).

Answer contributed by Diane Vallée-Grisel

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Switzerland

Immunity of states or state entities from enforcement is not absolute but limited to what is necessary to protect the exercise of their sovereign powers (iure imperii) in Switzerland.

Enforcement of foreign awards is generally carried out through attachment proceedings, the award being recognised during the course of the proceedings. The following three cumulative conditions must be met to obtain enforcement over the assets of a state or state entity in Switzerland:

  • the award relates to a claim arising from a legal relationship which could also be established in the same or similar form between two private parties, the state or the state entity acting like any private party (iure gestionis);
  • the assets against which enforcement is sought are not dedicated or assigned to sovereign tasks and are not immune from enforcement; if they are assigned to sovereign tasks, there must have been an express waiver of immunity by the concerned state or state entity; and
  • there is a sufficient connection between the act or transaction out of which the claim against the state or state entity arises and Switzerland. Such connection is not considered as given under current case law when the link between the claim and Switzerland consists solely in the location of the debtor’s assets in Switzerland. The fact that the seat of the arbitral tribunal that issued the award was in Switzerland does not constitute a sufficient link, either.

If these conditions are met and enforcement is granted, the assets may be seized provided there is no bilateral or other treaty between the concerned state and Switzerland containing specific provisions rendering the assets in question immune from enforcement (eg, article 22 of the 1961 Vienna Convention on Diplomatic Relations).

Answer contributed by Diane Vallée-Grisel

Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Switzerland

Arbitration is not confidential by law. However, it is considered to be private and should not be publicised. Arbitrators are bound by a general duty of confidentiality with respect to the proceedings, which is implicit in their contract with the parties. This does not, however, apply to the parties themselves or to third parties involved in the arbitration (witnesses or expert-witnesses). It is for the parties to provide for confidentiality in their agreement with third parties or to agree on the general confidentiality of the arbitration, either expressly or by reference to arbitration rules containing confidentiality obligations.

Swiss counsel have a professional duty of secrecy regarding all aspects of their work, including arbitration. To breach it constitutes a criminal act.

Answer contributed by Diane Vallée-Grisel

48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Switzerland

Documents do not become confidential by the mere fact that they were produced as evidence in an arbitration. To the extent that the parties did not agree that they should be kept confidential, and provided that they were lawfully obtained, such documents can, in theory, be relied upon in other proceedings. This remains, however, a controversial issue for which specific advice should be sought. In any event, counsel who are members of a Swiss Bar are always subject to the professional obligation and duties of secrecy discussed in question 47.

Answer contributed by Diane Vallée-Grisel

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Switzerland

Counsel are bound by the professional rules of conduct governing their profession and by the ethical rules of their bar. The arbitral tribunal’s duty to grant equal treatment to the parties is likely to trigger the application of the stricter of counsels’ differing ethical standards.

To act as arbitrator is not within the scope of an attorney’s traditional activities according to case law. This could imply that an attorney acting as arbitrator would not be subject to the professional rules applying to attorneys acting as counsel. Such is not the case, however, and in practice attorneys acting as arbitrators do abide by the same rules.

The distinction between an attorney’s activities as counsel and as arbitrator has been used by certain professional liability insurance companies to exclude such activities from the scope of ordinary insurance policies covering professional liability for attorneys.

Based on recent experience and discussions, the 2013 IBA Guidelines on Party Representation in International Arbitration do not yet seem to have been widely embraced by practitioners. To our knowledge, there has been no case dealing with these Guidelines so far.

Answer contributed by Diane Vallée-Grisel

50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Switzerland

Swiss law adheres to the principle jura novit curia or jura novit arbiter in international arbitration, allowing the arbitral tribunal to appreciate the legal implications of the facts before it and base its decisions on legal rules other than those invoked by the parties. However, in compliance with the requirements of the parties’ right to be heard in adversarial proceedings, arbitrators must put the legal rules or considerations they may intend to use to the parties before making a decision in all cases where the parties could not reasonably have considered such rules as pertinent to the resolution of the dispute.

Answer contributed by Diane Vallée-Grisel

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Switzerland

Third-party funding is permitted under Swiss law. The Federal Tribunal has held that the former provision of the Lawyers Act in the Canton Zurich that prohibited third-party funding was incompatible with the parties’ economic freedom, which is a fundamental constitutional right.

There are no specific statutory rules governing third-party funding. Consequently, there is no statutory obligation to disclose a funding agreement should the applicable arbitration rules not provide for it. In practice, this issue may be addressed at the outset or during the course of proceedings either upon application by the party or parties or in some cases upon the initiative of the arbitral tribunal, for instance to verify possible conflicts of interest depending on the funding third party.

Answer contributed by Diane Vallée-Grisel

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