Commercial Arbitration

Last verified on Thursday 2nd April 2020

Commercial Arbitration: Switzerland

Diane Vallée-Grisel and Gianluca Mastro

Brown&Page

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Switzerland’s initial reciprocity reservation (article I(3) of the Convention) was withdrawn upon the enactment of Chapter 12 of the Swiss Private International Law Act (PIL Act) governing international arbitration in Switzerland.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

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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, which only remains applicable in relations with Iraq, which is not a party to the 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), which provides for ICSID awards to be enforced as if they were final court judgments in the country where enforcement is sought (article 54(1) of ICSID Convention). In practice, this provision has hardly had any significance since article 194 PIL Act came into force and imposed the application of the NYC to the enforcement and recognition of all foreign awards in Switzerland (see question 1). The same comment applies to the provisions in the over 120 Bilateral Investment Promotion and Protection Agreements to which Switzerland is a party (112 of which being currently in force) that deal with the recognition and enforcement of arbitral awards.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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

Since 1 January 1989, international arbitration has been governed by Chapter 12 PIL Act (articles 176–194), titled International Arbitration. Chapter 12 applies to any arbitration where “the seat of the arbitral tribunal is in Switzerland and if, at the time of the conclusion of the arbitration agreement, at least one of the parties had neither its domicile nor its habitual residence in Switzerland” (article 176(1) PIL Act).

Articles 176–194 PIL Act afford maximum flexibility and autonomy to the parties with minimum court intervention, while ensuring equal treatment of the parties and their right to be heard in fair adversarial proceedings (articles 182(3) and 190(2)(d) PIL Act).

A draft Bill for a “light revision” of Chapter 12 PIL Act and an explanatory supporting report were issued on 24 October 2018 by the Swiss Federal Council (Switzerland’s federal government body). The draft Bill is currently being debated in parliament. The draft Bill aims to translate a number of key principles developed in case law into statutory rules such as, for example, the right to apply for the revision of an award (see, question 42). The idea behind the proposed amendment of PIL Act is to improve predictability and clarity in the process and the attractiveness of Switzerland as an internationally acknowledged leading arbitration venue. It is currently expected that the revised Chapter 12 will enter into force in or about January 2021.

The provisions contained in Chapter 12 PIL Act 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 PIL Act 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.

Until 1989, international and domestic arbitration were governed by the 1969 inter-cantonal arbitration Concordat, which continued to govern domestic arbitration until it was replaced on 1 January 2011 by articles 353–399, Part 3, of the Federal Code of Civil Procedure (CCP). Part 3 CCP provides a modern legal framework well-suited for domestic arbitration, which largely replicates the approach and practice developed in international arbitration.

Parties to domestic cases may opt out of articles 353–399 CCP in favour of Chapter 12 PIL Act (article 353(2) CCP). To be valid, the exclusion should be expressly provided in the arbitration clause or agreement. The Federal Tribunal has clarified that parties may validly opt out of the CCP up until an award is issued and subject to the arbitral tribunal’s prior agreement.

Similarly, parties to international arbitration cases may decide to opt out of Chapter 12 PIL Act in favour of articles 353–399 CCP (article 176(2) PIL Act). To be valid, such exclusion must be in writing and specifically exclude Chapter 12 PIL Act. A mere reference in the arbitration clause to the application of specific procedural rules or law (eg, a clause providing for the application of the “FIFA regulations and the Swiss Civil Code”, or “Swiss law governing domestic arbitration”) is not sufficient to amount to an effective opting out of Chapter 12 PIL Act. 

Given the legal and practical effect of opting-out provisions, parties considering such clauses would be well advised to take professional advice before entering into any such agreement.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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. Among those located in Geneva are 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), the last of which also offering arbitration services that are not limited to its members. 

The seat of the Court of Arbitration for Sports (CAS) is in Lausanne, further along Lake Léman, in Vaud, as is also the case for each of its Arbitration Panels. Thus, regardless of the effective venue of CAS arbitration, it is subject to Chapter 12 PIL Act when at least one party has neither a domicile nor a habitual residence in Switzerland, and by the CCP when all parties are either domiciled or have a habitual residence in Switzerland.

The Chambers of Commerce of Basel, Berne, Geneva, Lausanne, Lugano, Neuchâtel and Zurich founded the Swiss Chambers’ Arbitration Institution in 2004 and adopted widely used uniform arbitration rules titled Swiss Rules of International Arbitration (Swiss Rules). The Swiss Rules are available at https://www.swissarbitration.org/Arbitration/Arbitration-Rules-and-Laws. They may be used not only for cases with a seat in Switzerland but also for cases with a seat abroad (article 1(2) Swiss Rules). They afford complete freedom to the parties to designate their arbitrator(s) and to select the applicable law, the language of the proceedings and the seat of arbitration. A revised version of the Swiss Rules came into force on 1 June 2012. It 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).

Unless the parties have agreed otherwise, the revised Swiss Rules apply to all cases started after 1 June 2012 (article 1(3) Swiss Rules).

The Arbitration Court, established by the Swiss Chambers’ Arbitration Institution 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 and Gianluca Mastro

5. Can foreign arbitral providers operate in your jurisdiction?

Switzerland

Foreign arbitral institutions may freely operate in Switzerland. Geneva and Zurich are among the most frequently chosen venues or seats in ICC arbitration, for example. 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 and Gianluca Mastro

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 cantonal and federal levels may have jurisdiction in relation to arbitration-related matters. They are generally supportive of arbitration. They are also particularly well versed in international arbitration matters because of 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 PIL Act). 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. The Federal Tribunal’s decisions usually are taken without public deliberations by three judges of the First Civil Court. In two recent investment treaty cases, the Federal Tribunal has held public deliberations by all five judges of the First Civil Court. In these cases, there was no unanimity among the three justices that formed the initial panel of the Court. The majority of the five judges who therefore deliberated publicly dismissed the disputing state’s applications to set aside the awards on the ground that the arbitral tribunals had incorrectly assumed jurisdiction.

Cantonal courts at the seat of the arbitration are the supporting courts to appoint arbitrators in case of difficulty (article 179(2) PIL Act; see question 21), to decide on the challenge of an arbitrator in case the parties have not determined the procedure for such challenge (article 180(3) PIL Act; see question 24), and to assist with the taking of evidence when requested (article 184(2) PIL Act; see question 30). They may also be called upon to enforce provisional or protective measures ordered by arbitral tribunals (article 183(2) PIL Act; see question 25).

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 article 178(1) PIL Act, an arbitration agreement is valid if made in writing, by telegram, telex, telecopy or any other means of communication (eg, email, sms) that permits it to be evidenced by a text. The agreement must necessarily (i) express the parties’ clear, non-equivocal intent to refer their dispute, whether past, present or future, to arbitration in lieu of litigation and (ii) precisely identify the parties giving their consent to arbitration.

Under certain specific circumstances, a valid arbitration agreement may result from an exchange of drafts containing an arbitration clause during the course of contract negotiations despite the fact that no contract is eventually concluded, on condition that the parties’ intent to arbitrate all differences regarding the contract under negotiation can be established. In such a case, should negotiations fail and no contract be signed, a dispute relating to such negotiations (eg, culpa in contrahendo) may be arbitrated on the basis of the arbitration clause contained in the drafts exchanged, provided the parties’ consent to arbitrate can be ascertained from the drafts.

Consent to arbitrate is assessed strictly because it implies an important limitation of the judicial remedies otherwise available to the parties. The Federal Tribunal held in January 2018, in connection with the challenge of a CAS award, that a dispute resolution provision referring simultaneously to both domestic commercial courts and the dispute resolution bodies of national and international sport associations (in that case Argentine courts and the dispute settlement bodies of the Argentine football association and of FIFA) could not be interpreted as a valid consent to arbitrate according to the principle of good faith.

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) PIL Act).

Article 178(3) PIL Act 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 and Gianluca Mastro

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

Switzerland

As a general rule, all disputes or matters of a pecuniary nature may be subject to arbitration in international arbitration (article 177(1) PIL Act), which reflects a broad concept of arbitrability. Article 177(1) PIL Act is a rule of private international law applicable to all international arbitrations with seat in Switzerland, regardless of the parties’ national laws or of the law governing their contract. Arbitrators sitting in Switzerland will thus have to determine if a claim is of a pecuniary nature pursuant to Swiss arbitration law. The issue may give rise to divergent doctrinal views when it comes to issues that, for example, are by statute reserved to the exclusive jurisdiction of specific courts under the law governing the contract or the dispute, or claims that are pecuniary but not at the free disposal of the parties. Specific legal advice should be sought as early as possible for such cases.

In a recent case, the Federal Tribunal held that since objective arbitrability pursuant to article 177(1) PIL Act is in effect a statutory restriction to the parties’ autonomy, an arbitral tribunal ought to be allowed to examine the arbitrability of a case ex officio, even when the issue is not raised by the respondent.

Article 177(2) PIL Act 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 (article 354 CCP). Only if they can do so, can the dispute be subject to arbitration. The scope of the objective arbitrability as defined under article 354 CCP is, therefore, more restricted than that defined under article 177(1) PIL Act.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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

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 be bound by 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 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 actually intended to be bound by the arbitration clause.

The PIL Act 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.

In contrast, for domestic arbitrations, article 376(1) CCP provides for the possibility of arbitral proceedings 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 allows the joinder of a third party to a pending arbitration as well as the intervention of a third party in a pending case, on condition that there is an arbitration agreement between the third party and the parties to the arbitration and subject to the arbitral tribunal’s consent.

Article 4(2) of the Swiss Rules 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 PIL Act as the Swiss Rules may be used anywhere in the world (article 1(2) Swiss Rules) – 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.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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

The 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.

Article 4(1) Swiss Rules is innovative on this question and provides for the possibility of consolidating separate arbitral proceedings when the parties are already involved in other arbitral proceedings governed by the Rules. Consolidation may even be ordered by the Arbitration Court (see answer to question 4, in fine) where the parties to the new request are not identical to those in the prior pending proceedings on condition that, taking into account all relevant circumstances, including the links between the cases and the progress already made in the pending arbitral proceedings, a consolidation appears justified. Such is the case, for example, where the disputes are closely connected, with similar underlying facts and similar evidence required, and the pending proceedings would not be delayed by the consolidation. 

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 the case of an assignment of claim or of a contract, or in the case of an assumption of debt (see question 9), 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.  

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 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 in order to hold the parent company as bound by the arbitration clause contained in a contract concluded between its subsidiary and a third party, and/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 and Gianluca Mastro

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 in article 178(3) PIL Act, which states that the arbitration agreement cannot be contested on the ground that the main contract is not valid.

Considering that the content of this provision was not sufficiently clear, the Federal Tribunal held in 2016 that article 178(3) 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) PIL Act 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) PIL Act 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 and Gianluca Mastro

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) PIL Act, 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) PIL Act), 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(1)bis PIL Act; see also article 7 PIL Act). 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.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 necessary essential elements 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 ideally should indicate the seat of the arbitral tribunal (Geneva, Lausanne, Lugano, Zurich, etc), 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 a recent decision that an arbitration clause in a “Quality Assurance Agreement” providing for arbitration for “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) PIL Act). 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 to be sufficient to constitute a valid exclusion agreement under article 190(1) PIL Act. It also remains controversial whether a valid waiver of any action to set aside the award may also imply a waiver of the right to apply for the revision of the award (questions 42 and 43). The Federal Tribunal recently clarified that a valid exclusion agreement pursuant to article 192(1) PIL Act also excluded the possibility to apply for the revision of the award even if the ground for revision relied upon by the applicant is discovered prior to the end of the 30-day time limit to challenge awards (see, question 38). 

The draft Bill for the amendment of Chapter 12 PIL Act (see question 3) provides for an intermediate solution: when none of the parties is domiciled in Switzerland, they may expressly waive the right to apply for the revision of the award if (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. Revision cannot be excluded, however, in cases where the award was influenced or affected by criminal acts or misdemeanour.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 that 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 and Gianluca Mastro

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 fail to appoint an arbitrator.

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, articles 8 and 12 ICC Rules, article 8 LCIA Rules, article 9 SIAC Rules, among others). Where the performance of a contract may be delegated to a third party or is guaranteed by a third party, it is prudent to insert the same arbitration clause in all agreements and to secure the advance agreement of the third party to a consolidation of all proceedings related to the performance of the main contract.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 a 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 the PIL Act (the former issue is a matter of the substantive governing law and not one of procedure or arbitration law).

Article 181 PIL Act provides 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 PIL Act. According to recent 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 and Gianluca Mastro

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) PIL Act, the arbitral tribunal must apply the law or the rules of law chosen by the parties. 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) PIL Act).

The "closest connection" principle embodied in article 187(1) PIL Act 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) PIL Act). 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) PIL Act).

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 and Gianluca Mastro

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) PIL Act. 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.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 visa may be required to enter Switzerland (which is a Schengen area member state even though Switzerland is not an EU member) for hearings or meetings.

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

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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) – 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) PIL Act). 

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 type 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 and Gianluca Mastro

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.

If the parties fail to pay the requested advances, the tribunal may order the stay of the proceedings until payment or, indeed, 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 and Gianluca Mastro

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

Pursuant to article 180(1) PIL Act, an arbitrator can successfully be challenged if: 

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

Article 180(2) PIL Act limits challenges by providing that “no party may challenge an arbitrator nominated by it, or whom it was instrumental in appointing, except on a ground which came to the party’s attention after such appointment.” This ground “must be notified to the arbitral tribunal and to the other party without delay”. 

Arbitrators are expected to make proper disclosure throughout the process of the facts or circumstances that might be of such a nature as to call into question their independence in the eyes of the parties or that could give rise to reasonable doubts as to their impartiality. According to well-established case law, the parties also 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.

The Federal Tribunal has held that the discovery, after the award was issued, of a ground that would have allowed the challenge of an arbitrator within the applicable 30-day deadline may be constitutive of a valid ground for the revision of the award if the grounds set therefor are met (see question 42).

Absent an agreement to the contrary, the competent cantonal courts of the seat of the arbitration have jurisdiction to decide upon challenges of arbitrators (article 180(3) PIL Act). Their decision is final and cannot be challenged before the Federal Tribunal.

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. The Federal Tribunal has held, however, that they constitute a useful tool for the development of best practices in international arbitration.

In cases administered by the Swiss Chambers’ Arbitration Institution, challenges are decided upon by the Arbitration Court, whose decisions are final (article 11 Swiss Rules). The Arbitration Court does not have to give reasons for its decisions (article 11(3) Swiss Rules). Conversely, the recent 2017 ICC Rules no longer provide that the Court of Arbitration does not have to communicate the reasons for its decisions on challenges for arbitrators (as was the case under the prior version of the Rules) and leaves the question open. The “Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration” published for the last time on 1 January 2019 clarifies that upon request of any party, the Court of Arbitration may (but does not have to) communicate these reasons (see paragraph 14 of the Note).   

Institutional decisions on challenges cannot be appealed because these are mere administrative decisions. They can nonetheless be raised before the Federal Tribunal in the context of setting aside proceedings against a final award if they may be deemed to have resulted in the irregular composition of an arbitral tribunal (article 190(2)(a) PIL Act). 

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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) PIL Act). Arbitrators may order any type of measure, including orders for temporary performance or measures unknown in 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) PIL Act).

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 and Gianluca Mastro

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) PIL Act. 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.

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) and 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 and Gianluca Mastro

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 equal treatment of the parties and their right to be heard in fair adversarial proceedings (article 182(3) PIL Act). 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 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 (article 186(2) PIL Act). The Federal Tribunal held in a recent case that the principle of good faith also imposed an obligation on parties to take positive actions against an incomplete notification of the award.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 and Gianluca Mastro

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 (documents or testimonial evidence, experts, etc.).

The full arbitral tribunal must conduct the taking of evidence and cannot delegate this 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 and Gianluca Mastro

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) PIL Act). 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.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 the “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 and Gianluca Mastro

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 and Gianluca Mastro

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

Switzerland

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

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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) PIL Act). In case of diverging views among the arbitrators, the chairperson is empowered to decide alone.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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

Switzerland

The PIL Act 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 in Swiss law.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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, they 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 which 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 and Gianluca Mastro

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) PIL Act).

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) PIL Act). 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 and Gianluca Mastro

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 specified by article 190 PIL Act (see, also, articles 77 and 100(1) of the Swiss Federal Tribunal Act, which are also applicable to this question). 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 for filing 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 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 which 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.

Although the PIL Act does not contain any specific provision on interpretation or correction of the award (contrary to the CCP, which addresses this issue in detail at article 388), the Federal Tribunal has held that arbitral tribunals have the power and jurisdiction to correct or interpret an award even in the absence of a provision to this effect in the arbitration rules or a specific agreement by the parties. The time limit within which an application for the interpretation or correction of an award is to be lodged is disputed: the prevailing view amongst commentators is that the same time limit as that applicable to applications to set aside awards should apply by analogy; others consider that the time limit should start running only upon the discovery of a mistake in the award that is to be corrected. The pending Bill for the amendment of Chapter 12 PIL Act (see question 3) clarifies that applications for the interpretation or correction of awards must be filed within 30 days from the communication of 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. In case both avenues are considered, the challenge and the application for correction or interpretation must be filed within the same deadline.

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.

In arbitration administered by the Swiss Chambers’ Arbitration Institution, articles 35 and 36 of the Swiss Rules provide that the request for interpretation or correction must be made within 30 days from the receipt of the award.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 and Gianluca Mastro

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 and Gianluca Mastro

Challenging awards

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

Switzerland

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) PIL Act sets out the limited grounds for this to happen:

  • a) the sole arbitrator was not properly appointed or the arbitral tribunal not properly constituted; 
  • b) the arbitral tribunal wrongly accepted or declined jurisdiction;
  • c) the tribunal’s decision went beyond the claim submitted (ultra petita), or it failed to decide one of the claims (infra petita);
  • d) the principle of equal treatment of the parties or their right to be heard in fair adversarial proceedings was not respected; or 
  • e) 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) PIL Act). It only reviews the findings of facts upon which the award is based 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) PIL Act) 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) PIL Act).

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) PIL Act.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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

Switzerland

An award may be revised in cases where it may have been influenced by a criminal action or misdemeanour or where the applicant subsequently learned of important facts or conclusive new evidence that could not be raised before the issuance of the award and which would have changed its outcome. The PIL Act is silent on this question. The Federal Tribunal has held that the conditions for revision of an award are the same as those applying to its own judgments (article 123 of the Swiss Federal Tribunal Act; see, also, question 24 with regard to ground for revision). 

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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) PIL Act).

The waiver of article 192(1) PIL Act must be in non-ambiguous 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 an advance waiver 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) PIL Act are met since the athletes’ consent to such a waiver 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 and Gianluca Mastro

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 PIL Act). 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 and Gianluca Mastro

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 PIL Act).

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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:

a) 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);

b) 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

c) 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 which 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 and Gianluca Mastro

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 and Gianluca Mastro

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 and Gianluca Mastro

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 and Gianluca Mastro

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.

In April 2017, Switzerland became the third state (following Mauritius and Canada) to ratify the 2015 Mauritius Convention on Transparency, which triggered its coming into force on 18 October 2017. Pursuant to article 2 of the Convention, the 2014 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration shall apply:

  • to any investor-state arbitration, whether or not initiated under the UNCITRAL Arbitration Rules, in which the respondent is a party that has not made a relevant reservation and the claimant is of a state that is a party that has not made a relevant reservation. 
  • It shall also apply to an investor-state arbitration, whether or not initiated under the UNCITRAL Arbitration Rules, in which the respondent is a party that has not made a reservation relevant to that investor-state arbitration and the claimant agrees to the application of the UNCITRAL Rules on Transparency. The latter Rules aim at ensuring transparent investor-state arbitration proceedings with publicly accessible documents, public hearings and scope for amicus curiae submissions.

Answer contributed by Diane Vallée-Grisel and Gianluca Mastro

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 and Gianluca Mastro

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