Simon Gabriel, Axel Buhr, Andreas Schre­gen­berg­er and Rox­ane Schmidgall: Inter­na­tion­al Arbi­tra­tion – Switzer­land, Law & Prac­tice. Glob­al Prac­tice Guide, Cham­bers and Part­ners, Lon­don 2023. Arti­cle (PDF).

Overview:

1. Gen­er­al
2. Gov­ern­ing Legislation
3. The Arbi­tra­tion Agreement
4. The Arbi­tral Tribunal
5. Juris­dic­tion
6. Pre­lim­i­nary and Inter­im Relief
7. Pro­ce­dure
8. Evi­dence
9. Con­fi­den­tial­i­ty
10. The Award
11. Review of an Award
12. Enforce­ment of an Award
13. Mis­cel­la­neous

Arbi­tra­tion in Switzerland

1. GEN­ER­AL

1.1 Preva­lence of Arbitration

Switzer­land is one of the lead­ing places of arbi­tra­tion world­wide. The local hubs are Gene­va (in the French-speak­ing part of Switzer­land) and Zurich (in the Ger­man-speak­ing part). There is also some inter­na­tion­al arbi­tra­tion activ­i­ty in Lau­sanne (the seat of the Court of Arbi­tra­tion for Sport, CAS), Lugano (in the Ital­ian-speak­ing part), and Basel (a phar­ma­ceu­ti­cal hub in the Ger­man-speak­ing part of Switzerland).

The impor­tance of Switzer­land as a place of arbi­tra­tion stems from Switzerland’s tra­di­tion­al neu­tral­i­ty, its cul­tur­al diver­si­ty as reflect­ed by the four offi­cial lan­guages of the coun­try and, most impor­tant­ly, the qual­i­ty and integri­ty of the legal profession.

Switzer­land as a place of arbi­tra­tion is often cho­sen togeth­er with Swiss sub­stan­tive law because the lat­ter has influ­enced the mak­ing of the laws of some coun­tries in South-East­ern Europe and beyond, the most promi­nent among them being Turkey. Swiss sub­stan­tive law is, there­fore, in many cas­es both neu­tral and famil­iar to both par­ties in a dis­pute – this being an advan­tage that few sub­stan­tive laws have. Oth­er advan­tages of Swiss sub­stan­tive law are its flex­i­bil­i­ty and the high pri­or­i­ty of par­ties’ agreements.

Fur­ther­more, Switzer­land also has a tra­di­tion of effi­cient­ly admin­is­ter­ing small and mid-size dis­putes, with the Swiss Rules of Inter­na­tion­al Arbi­tra­tion stip­u­lat­ing that dis­putes up to a val­ue of CHF1 mil­lion are dealt with in expe­dit­ed pro­ceed­ings with­in six months. The expe­dit­ed pro­ceed­ings are increas­ing­ly cho­sen by par­ties also for larg­er dis­putes when time is of the essence.

More­over, Switzer­land pro­motes effi­cient inter­na­tion­al arbi­tra­tion because an arbi­tral award that was ren­dered by a tri­bunal with its seat in Switzer­land can only be set aside for very lim­it­ed rea­sons, and only the Swiss Fed­er­al Tri­bunal (the high­est Swiss judi­cial author­i­ty) is com­pe­tent to hear such a case. There is even the pos­si­bil­i­ty to exclude any chal­lenge pro­ceed­ings (see 11.2 Excluding/​Expanding the Scope of Appeal).

Final­ly, the recent­ly enact­ed ​“revi­sion light” of the Swiss lex arbi­tri con­tained in the 12^th Chap­ter of the Pri­vate Inter­na­tion­al Law Act (PILA), which entered into force on 1 Jan­u­ary 2021, con­firmed and strength­ened the unique­ly lib­er­al and arbi­tra­tion-friend­ly tra­di­tion of Switzer­land. On the insti­tu­tion­al side, the con­ver­sion of the for­mer Swiss Cham­bers’ Arbi­tra­tion Insti­tu­tion (SCAI) into the Swiss Arbi­tra­tion Cen­tre and the revi­sion of the Swiss Rules of Inter­na­tion­al Arbi­tra­tion (the ​“Swiss Rules”), which entered into force on 1 June 2021, help to main­tain Switzerland’s stand­ing as a major arbi­tra­tion venue (see 1.3 Arbi­tral Insti­tu­tions).

1.2 Key Industries

Key indus­tries that usu­al­ly appre­ci­ate arbi­tra­tion as a dis­pute res­o­lu­tion method are the phar­ma­ceu­ti­cal indus­try, the con­struc­tion indus­try and com­mod­i­ty traders, as well as exporters and importers of tech­ni­cal equipment.

In all these indus­tries, the case­load is on the rise, as a result of the dis­rup­tion of sup­ply chains caused by the ter­mi­na­tion of trade rela­tion­ships by the war in Ukraine.

The increas­ing use of sanc­tions as a geopo­lit­i­cal tool affects a grow­ing num­ber of con­trac­tu­al rela­tion­ships, and the num­ber of relat­ed cas­es is like­ly to fur­ther increase. The legal con­se­quences of sanc­tions remain a con­tentious issue, fre­quent­ly debat­ed in many arbi­tra­tions, both on a pro­ce­dur­al lev­el and as a mat­ter of sub­stan­tive law. The fun­da­men­tal right of access to jus­tice rais­es new and del­i­cate issues for arbi­tra­tion as a dis­pute res­o­lu­tion mech­a­nism, which are yet to be ful­ly resolved.

The finan­cial indus­try in Switzer­land is not yet a fre­quent user of arbi­tra­tion and it will be inter­est­ing to fol­low the devel­op­ments in this regard. In par­tic­u­lar, a rise in fin­tech cas­es involv­ing com­pa­nies from Switzerland’s cryp­to val­ley, a world-lead­ing blockchain hub, is anticipated.

1.3 Arbi­tral Institutions

The lead­ing arbi­tra­tion insti­tu­tions are the Inter­na­tion­al Cham­ber of Com­merce (the issuer of the ​“ICC Rules”) and the Swiss Arbi­tra­tion Cen­tre (the issuer of the ​“Swiss Rules”).

In May 2021, the Swiss Arbi­tra­tion Cen­tre was estab­lished by the Swiss Arbi­tra­tion Asso­ci­a­tion (ASA) and the can­ton­al cham­bers of com­merce that for­mer­ly con­sti­tut­ed SCAI. As a one-stop shop, the Swiss Arbi­tra­tion Cen­tre aims to make Swiss arbi­tra­tion more acces­si­ble for inter­na­tion­al users, who some­times found the pre­vi­ous dual­ism confusing.

In June 2021, the revised Swiss Rules entered into force (replac­ing the ver­sion of 2012). Being based on the UNCI­TRAL Arbi­tra­tion Rules, the Swiss Rules pro­vide for an arbi­tra­tion pro­ce­dure that com­bines inter­na­tion­al best prac­tices with use­ful inno­va­tions and a com­par­a­tive­ly light insti­tu­tion­al frame­work. Only a few sub­stan­tial amend­ments were made and the key fea­tures of the Swiss Rules remained the same (“light touch admin­is­tra­tion”, mul­ti­par­ty pro­ceed­ings, expe­dit­ed pro­ceed­ings and emer­gency arbi­tra­tion). Key changes include the following:

• Mul­ti­par­ty pro­ceed­ings – the con­sol­i­da­tion and join­der pro­vi­sion in the for­mer Arti­cle 4 of the Swiss Rules was one of the most promi­nent fea­tures of the Swiss Rules. The revised Swiss Rules rein­force this fea­ture as they con­tain detailed pro­vi­sions in Arti­cle 6 on ​“Cross-Claim, Join­der, Inter­ven­tion”, gov­ern­ing sit­u­a­tions where addi­tion­al claims are raised among the par­ties, against addi­tion­al par­ties, or by an addi­tion­al par­ty, or where a third par­ty requests to par­tic­i­pate in the arbi­tra­tion with­out rais­ing claims. The pro­vi­sion on con­sol­i­da­tion is con­tained in Arti­cle 7 of the revised Swiss Rules.
• Stream­lin­ing of pro­ceed­ings – in order to enhance the effi­cien­cy of arbi­tra­tion pro­ceed­ings under the revised Swiss Rules, Arti­cle 19.2 of the revised Swiss Rules pro­vides that as soon as prac­ti­cal­ly pos­si­ble after receiv­ing the file, the arbi­tral tri­bunal shall hold an ini­tial con­fer­ence with the par­ties to dis­cuss the organ­i­sa­tion of the pro­ceed­ings. At that con­fer­ence or prompt­ly there­after, the arbi­tral tri­bunal shall pre­pare a pro­ce­dur­al timetable includ­ing the time lim­its for sub­mis­sions and the dates of any hear­ings, as well as an esti­mate of the time required by the arbi­tral tri­bunal for its main deci­sions (Arti­cle 19.3 of the revised Swiss Rules).
• Paper­less fil­ings and remote hear­ings – under the revised Swiss Rules, the fil­ing of hard copies for the Notice of Arbi­tra­tion and the Answer to the Notice of Arbi­tra­tion is no longer required (Arti­cles 3.1 and 4.1 of the revised Swiss Rules). More­over, while this has become a com­mon and accept­ed prac­tice dur­ing the COVID-19 pan­dem­ic, Arti­cle 27.2 of the revised Swiss Rules explic­it­ly pro­vides that hear­ings can be held remote­ly by video­con­fer­ence or oth­er appro­pri­ate means.
• New mod­el clause – the revised Swiss Rules pro­vide for a new mod­el arbi­tra­tion clause.

For the sake of clar­i­ty, it should be not­ed that arbi­tra­tion claus­es refer­ring to the for­mer SCAI remain valid and bind­ing, and arbi­tra­tion pro­ceed­ings ini­ti­at­ed pur­suant to such arbi­tra­tion claus­es will be admin­is­tered by the Swiss Arbi­tra­tion Cen­tre. How­ev­er, it is rec­om­mend­able that new con­tracts include the new mod­el clause.

Final­ly, users ben­e­fit from a new, sin­gle inter­net por­tal pro­vid­ing ser­vices, infor­ma­tion and links that can be accessed at www.swissarbitration. org. This new plat­form replaced the sep­a­rate web­sites of ASA and of SCAI and includes infor­ma­tion from the Swiss Arbi­tra­tion Acad­e­my and the Swiss Arbi­tra­tion Hub. These four organ­i­sa­tions have joined under a new brand, ​“Swiss Arbi­tra­tion”, to empha­sise their close co-oper­a­tion for the ben­e­fit of arbi­tra­tion users world­wide. The Swiss Arbi­tra­tion Acad­e­my pro­vides train­ing for arbi­tra­tion prac­ti­tion­ers and the Swiss Arbi­tra­tion Hub pro­vides ser­vices and infor­ma­tion for the organ­i­sa­tion of hear­ings in Switzerland.

1.4 Nation­al Courts

The Swiss Fed­er­al Tri­bunal is the only state court in Switzer­land com­pe­tent to hear chal­lenges of arbi­tral awards (see 11. Review of an Award). On the can­ton­al lev­el, state courts may inter­vene in the com­po­si­tion of the arbi­tral tri­bunal under lim­it­ed cir­cum­stances (see 4.3 Court Inter­ven­tion) and grant inter­im relief upon request (see 6.2 Role of Courts), both in sup­port­ive func­tion to inter­na­tion­al arbi­tra­tion proceedings.

That said, there are no com­mer­cial courts (nei­ther on a fed­er­al nor on a can­ton­al lev­el) specif­i­cal­ly des­ig­nat­ed to deal with inter­na­tion­al com­mer­cial dis­putes (or arbi­tra­tions) in Switzer­land. In this con­text, how­ev­er, the Swiss leg­is­la­ture cur­rent­ly envis­ages a minor revi­sion of the Swiss

Civ­il Pro­ce­dure Code (CPC). Pur­suant to the revised law, the Swiss can­tons will be enti­tled to des­ig­nate their com­mer­cial courts as com­pe­tent to specif­i­cal­ly decide inter­na­tion­al com­mer­cial dis­putes pro­vid­ed cer­tain con­di­tions are met, includ­ing obtain­ing the nec­es­sary con­sent from the par­ties. In March 2023, the Swiss Par­lia­ment approved the respec­tive amend­ments. The revised CPC is not expect­ed to come into force until Jan­u­ary 2025 or lat­er. Upon its enact­ment, it will have to be seen in prac­tice whether the same types of dis­putes that are cur­rent­ly resolved by means of inter­na­tion­al arbi­tra­tion will increas­ing­ly be heard before Swiss can­ton­al com­mer­cial courts.

2. GOV­ERN­ING LEGISLATION

2.1 Gov­ern­ing Legislation

Inter­na­tion­al arbi­tra­tion pro­ceed­ings in Switzer­land are gov­erned by the 12^th Chap­ter of the PILA, which, since the revi­sion, com­pris­es 24 arti­cles (Arti­cle 176 to Arti­cle 194 of the PILA, the so-called Swiss lex arbitri).

The PILA is not direct­ly based on the UNCI­TRAL Mod­el Law on Inter­na­tion­al Com­mer­cial Arbi­tra­tion (the ​“Mod­el Law”), although it is evi­dent that the drafters of the PILA were aware of the ideas and con­cepts of the Mod­el Law, and some Swiss schol­ars even state that the spir­it of the Mod­el Law can be recog­nised in many pro­vi­sions of the PILA.

2.2 Changes to Nation­al Law

On 1 Jan­u­ary 2021, a minor revi­sion of the Swiss inter­na­tion­al arbi­tra­tion law (ie, the 12^th Chap­ter of the PILA) (see 1.1 Preva­lence of Arbi­tra­tion) came into force.

In 2022, no legal changes were made to the Swiss inter­na­tion­al arbi­tra­tion law.

3. THE ARBI­TRA­TION AGREEMENT

3.1 Enforce­abil­i­ty

From a for­mal point of view, the arbi­tra­tion agree­ment is required to be evi­denced by text (so-called text form, Arti­cle 178.1 of the PILA); there­fore, arbi­tra­tion agree­ments in emails, instant mes­sag­ing apps, or tele­fax com­mu­ni­ca­tions are for­mal­ly valid in Switzerland.

In a recent land­mark deci­sion (deci­sion of the Swiss Fed­er­al Tri­bunal No 145 III 199), the Swiss Fed­er­al Tri­bunal con­firmed that the text form require­ments are con­gru­ent with those of Arti­cle II.2 of the Unit­ed Nations Con­ven­tion on the Recog­ni­tion and Enforce­ment of For­eign Arbi­tral Awards, New York, 10 June 1958 (the ​“New York Con­ven­tion”). It fur­ther held that, in line with Arti­cle II.2 of the New York Con­ven­tion, an arbi­tra­tion agree­ment can bind non-sig­na­to­ries; eg, in a sce­nario where a non-sig­na­to­ry is involved in the per­for­mance of an agree­ment and implic­it­ly declares, by its con­duct, that it intends to be par­ty to the arbi­tra­tion agree­ment. Sim­i­lar­ly, the Swiss Fed­er­al Tri­bunal con­firmed that an arbi­tra­tion agree­ment can be implic­it­ly extend­ed and bind a non-sig­na­to­ry with­out the exten­sion being evi­denced by text.

From a sub­stan­tive point of view, the min­i­mal require­ments for an arbi­tra­tion agree­ment are as follows:

• it pro­vides for an agreed exclu­sion of the state court juris­dic­tion in favour of arbi­tral jurisdiction;
• it relates to a defined dis­pute (eg, ​“all dis­putes aris­ing out of or in con­nec­tion with” a cer­tain con­tract); and
• it details a defin­able arbi­tral tribunal.

Fur­ther­more, it should be not­ed from a sub­stan­tive point of view that an arbi­tra­tion agree­ment isal­so­con­sid­ered­va­lidin­Switzer­lan­di­fit­meets the sub­stan­tive legal require­ments of either the law cho­sen by the par­ties or the law that applies to the mer­its of the case or Swiss law (Arti­cle 178.2 of the PILA; prin­ci­ple of favor validitatis).

Final­ly, Arti­cle 178.4 of the PILA clar­i­fies that the rules of the Swiss lex arbi­tri also apply, by anal­o­gy, to arbi­tra­tion agree­ments in uni­lat­er­al legal instru­ments (such as last wills) or in arti­cles of association.

3.2 Arbi­tra­bil­i­ty

Arti­cle 177.1 of the PILA pro­vides that every claim ​“of finan­cial inter­est” (ver­mö­gen­srechtlich) may be referred to inter­na­tion­al arbi­tra­tion. Claims that con­cern fam­i­ly sta­tus issues (eg, sep­a­ra­tion, divorce or chil­dren-relat­ed claims) are thus not arbi­tra­ble in Switzer­land, and nei­ther are insol­ven­cy mat­ters arbi­tra­ble that have the aim of dis­solv­ing a com­pa­ny for lack of assets. At the same time, a com­pa­ny in insol­ven­cy pro­ceed­ings is still bound by pre-exist­ing arbi­tra­tion agree­ments (unless the insol­ven­cy neg­a­tive­ly affects the gen­er­al legal capac­i­ty of an enti­ty accord­ing to the deci­sions of the Swiss Fed­er­al Tri­bunal Nos 4A_118/2014, 138 III 714, and 4A_428/2008 – the so-called Viven­di decision).

One impor­tant point for pro­ceed­ings with state involve­ment is that Arti­cle 177.2 of the PILA pro­vides that a state or state-owned enti­ty is not enti­tled to rely on its own law in order to argue that cer­tain issues in dis­pute are not arbi­tra­ble or that it is not capa­ble of being a par­ty in arbi­tra­tion pro­ceed­ings. This pro­vi­sion of the PILA can be very use­ful for any par­ty that con­tracts with state-owned entities.

3.3 Nation­al Courts’ Approach

The Swiss Fed­er­al Tri­bunal con­sid­ers that (at least) the core of the arbi­tra­tion agree­ment (ie, the exclu­sion of the state courts in favour of arbi­tra­tion) is of a pro­ce­dur­al nature.

If a par­ty starts legal pro­ceed­ings before state courts in a dis­pute that is sub­ject to an arbi­tra­tion agree­ment, the state court will – first of all – wait and see whether the coun­ter­par­ty objects to state court juris­dic­tion based on the arbi­tra­tion agree­ment. If there is an objec­tion, it will decline its juris­dic­tion and the claimant will need to start arbi­tra­tion pro­ceed­ings. How­ev­er, the state court will con­sid­er the absence of any objec­tion as tac­it agree­ment to pro­ceed before state courts (Arti­cle 7 of the PILA). In respect of the law applic­a­ble to the arbi­tra­tion agree­ment, the state court will apply the prin­ci­ple of favor valid­i­tatis in inter­na­tion­al arbi­tra­tion pro­ceed­ings seat­ed in Switzer­land (see 3.1 Enforce­abil­i­ty).

Against this back­ground, the (pro­ce­dur­al) Swiss approach is slight­ly dif­fer­ent from the (sub­stan­tive) US approach, where courts pos­i­tive­ly order par­ties to attend arbi­tra­tion pro­ceed­ings, but the result remains the same: if a valid arbi­tra­tion agree­ment exists and one of the par­ties insists on arbi­tra­tion, Swiss courts will respect the arbi­tra­tion agree­ment by declin­ing their juris­dic­tion and the par­ties must pro­ceed with arbi­tra­tion in order to obtain a deci­sion on the merits.

This approach is in line with Arti­cle II.3 of the New York Con­ven­tion, of which Switzer­land is a con­tract­ing state.

3.4 Valid­i­ty

Arti­cle 178.3 of the PILA express­ly pro­vides that an arbi­tra­tion agree­ment may be con­sid­ered valid even if the remain­der of the con­tract is invalid (the so-called doc­trine of separability).

At the same time, there may be sit­u­a­tions in which a defect of the main con­tract also affects the arbi­tra­tion agree­ment. This can be the case, for exam­ple, if an unau­tho­rised per­son signed a con­tract that includes an arbi­tra­tion agree­ment. How­ev­er, in such a sit­u­a­tion it would be for the arbi­tral tri­bunal (and not a state court) to assess whether the arbi­tra­tion agree­ment is valid, since the arbi­tral tri­bunal is com­pe­tent to rule on its own com­pe­tence (Arti­cle 186.1 of the PILA).

In excep­tion­al cas­es, an arbi­tra­tion agree­ment in a draft con­tract can even be valid and bind­ing before the main con­tract is signed. This is the case if an inten­tion to be bound by the arbi­tra­tion agree­ment can be estab­lished inde­pen­dent­ly of the con­clu­sion of the main con­tract (see Gabriel/​Wicki, Vorver­tragliche Schied­szuständigkeit – Pre-con­trac­tu­al Juris­dic­tion of Arbi­tral Tri­bunals, ASA Bull. 2/2009, p 236 et seq for fur­ther infor­ma­tion on this issue).

4. THE ARBI­TRAL TRIBUNAL

4.1 Lim­its on Selection

The par­ties are free to nom­i­nate and replace any arbi­tra­tor in line with the arbi­tra­tion agree­ment. If the par­ties have not agreed oth­er­wise, the tri­bunal shall con­sist of three mem­bers, where­by each par­ty nom­i­nates one mem­ber and these mem­bers nom­i­nat­ed by the par­ties unan­i­mous­ly nom­i­nate the pres­i­dent of the tri­bunal (Arti­cle 179.1 of the PILA).

How­ev­er, if an arbi­tra­tor nom­i­nat­ed by a par­ty is not suf­fi­cient­ly inde­pen­dent and/​or impar­tial, they may be chal­lenged by the oth­er par­ty, and may be sub­ject to removal (see 4.4 Chal­lenge and Removal of Arbi­tra­tors).

Against this back­ground, a prospec­tive arbi­tra­tor must dis­close any grounds that may raise doubts as to their inde­pen­dence and impar­tial­i­ty, and this for the course of the entire pro­ceed­ings (Arti­cle 179.6 of the PILA). In this regard, an arbi­tra­tor whose law firm main­tains a client rela­tion­ship with one of the par­ties may have a duty to dis­close such rela­tion­ship irre­spec­tive of whether such oth­er mandate(s) bears any direct rel­e­vance to the case in ques­tion (deci­sion of the Swiss Fed­er­al Tri­bunal No 4A_462/2021, para­graph 4.2).

4.2 Default Procedures

If the par­ties’ cho­sen method for select­ing arbi­tra­tors fails, they may approach the state court judge at the place of arbi­tra­tion (juge d’appui) and request that it des­ig­nates an arbi­tral tri­bunal. If the par­ties have not deter­mined the seat, or deter­mined that the seat should be in Switzer­land (with­out any fur­ther spec­i­fi­ca­tion), the state court that was first seized by a par­ty shall have juris­dic­tion (Arti­cle 179.2 of the PILA).

In this con­text, Arti­cle 179.3 of the PILA spec­i­fies that if a state court is entrust­ed with the appoint­ment or replace­ment of a mem­ber of the tri­bunal, it must grant that request, unless a sum­ma­ry exam­i­na­tion shows that there exists no arbi­tra­tion agree­ment between the par­ties. The state court must there­by take the required mea­sures for the con­sti­tu­tion of the tri­bunal at the request of a par­ty if the par­ties or the (par­ty-nom­i­nat­ed) mem­bers of the tri­bunal do not com­ply with their duties with­in 30 days (Arti­cle 179.4 of the PILA). Also, the juge d’appui may nom­i­nate the entire arbi­tral tri­bunal in mul­ti­par­ty cas­es (Arti­cle 179.5 of the PILA).

4.3 Court Intervention

A state court can­not inter­vene in the selec­tion of arbi­tra­tors unless an arbi­tra­tor is right­ly chal­lenged and thus removed for lack of inde­pen­dence and/​or impar­tial­i­ty. Even in this case, the state court does not have the author­i­ty to name the new arbi­tra­tor. Instead, the arbi­tra­tion agreement’s pro­vi­sions will dic­tate the selec­tion of the replacement.

4.4 Chal­lenge and Removal of Arbitrators

Arti­cle 180 of the PILA gov­erns the chal­lenge and poten­tial removal of arbi­tra­tors. Rea­sons for chal­leng­ing an arbi­tra­tor include:

• rea­son­able doubts with respect to impar­tial­i­ty and/​or independence;
• a fail­ure to meet char­ac­ter­is­tics pro­vid­ed for in the arbi­tra­tion agree­ment; and
• any fur­ther rea­sons pro­vid­ed for in the arbi­tra­tion agreement.

If the par­ties have not agreed oth­er­wise and the pro­ceed­ings are still pend­ing, a time lim­it of 30 days for the sub­mis­sion of the chal­lenge applies, run­ning from the point in time when a par­ty has, or could have in exer­cis­ing due dili­gence, learned about the respec­tive rea­sons (Arti­cle 180a.1 of the PILA). Once the chal­lenge has been sub­mit­ted to the arbitrator(s), there is a fur­ther 30-day peri­od for bring­ing the chal­lenge to the state court, which will ren­der the final deci­sion (Arti­cle 180a.2 of the PILA). The tri­bunal may pro­ceed with­out exclud­ing the chal­lenged arbi­tra­tor until there is a deci­sion in the chal­lenge pro­ceed­ings, unless the par­ties have agreed oth­er­wise (Arti­cle 180a.3 of the PILA). Also, Arti­cle 180b of the PILA pro­vides addi­tion­al rules for the removal of arbi­tra­tors upon joint agree­ment of the par­ties or uni­lat­er­al­ly – that is, by a sin­gle par­ty – specif­i­cal­ly in cas­es where an arbi­tra­tor is deemed unfit for duty.

4.5 Arbi­tra­tor Requirements

Accord­ing to Arti­cle 180 of the PILA and per­ti­nent jurispru­dence of the Swiss Fed­er­al Tri­bunal, arbi­tra­tors must be inde­pen­dent and impar­tial, com­pa­ra­ble to state court judges (see, for exam­ple, the deci­sion of the Swiss Fed­er­al Tri­bunal No 4A_620/2012, para­graph 3.1). The Swiss Fed­er­al Tri­bunal takes note of the IBA Guide­lines on Con­flict of Inter­est in Inter­na­tion­al Arbi­tra­tion on a case-by-case basis, but does not con­sid­er itself to be bound by any stan­dards not­ed therein.

If an arbi­tra­tor does not meet the required (high) stan­dard of inde­pen­dence and impar­tial­i­ty, any award that was ren­dered with his or her par­tic­i­pa­tion risks being set aside.

5. JURIS­DIC­TION

5.1 Mat­ters Exclud­ed From Arbitration

Any dis­putes of finan­cial inter­est (ie, mon­e­tary val­ue) may be referred to arbi­tra­tion pur­suant to the Swiss lex arbi­tri (for the Swiss lex arbi­tri, see 2.1 Gov­ern­ing Law and for arbi­tra­ble dis­putes, see 3.2 Arbi­tra­bil­i­ty), as long as they are cov­ered by a valid arbi­tra­tion agreement.

5.2 Chal­lenges to Jurisdiction

The arbi­tral tri­bunal can assess whether it is com­pe­tent to make a deci­sion on the mer­its of a dis­pute (Arti­cle 186.1 of the PILA: so-called com­pe­tence-com­pe­tence). When mak­ing use of its com­pe­tence-com­pe­tence, the arbi­tral tri­bunal may ren­der a deci­sion on its juris­dic­tion even in lis pen­dens sit­u­a­tions (ie, where the same mat­ter is already pend­ing before a state court or

a dif­fer­ent arbi­tral tri­bunal). In such lis pen­dens sit­u­a­tions, the arbi­tral tri­bunal is not required to stay its pro­ceed­ings, unless jus­ti­fied by notable cir­cum­stances (Arti­cle 186.1bis of the PILA).

5.3 Cir­cum­stances for Court Intervention

The Swiss Fed­er­al Tri­bunal is the only judi­cial instance that has the pow­er to review any deci­sion on juris­dic­tion (whether pos­i­tive or neg­a­tive) in poten­tial chal­lenge pro­ceed­ings, if a respec­tive objec­tion is brought for­ward by a par­ty (Arti­cle 191 of the PILA). If not chal­lenged, a neg­a­tive rul­ing on juris­dic­tion by the arbi­tral tri­bunal becomes final, with the effect that the same mat­ter can­not valid­ly be sub­mit­ted (again) to arbitration.

The Swiss Fed­er­al Tri­bunal freely assess­es the accu­rate appli­ca­tion of the law in this respect. At the same time, it is not in a posi­tion to review the find­ings of an arbi­tral tri­bunal with respect to the facts under­ly­ing the award on jurisdiction.

5.4 Tim­ing of Challenge

Only arbi­tral awards are sub­ject to chal­lenge pro­ceed­ings and thus also to chal­lenges with respect to the juris­dic­tion of an arbi­tral tri­bunal. At the same time, the par­ties are required to object to arbi­tral juris­dic­tion in their first sub­mis­sion on the mer­its. Oth­er­wise, the juris­dic­tion­al chal­lenge will be barred due to an assumed tac­it agree­ment to arbi­tral juris­dic­tion (materielle Ein­las­sung see also 3.3 Nation­al Courts’ Approach for the same require­ment before state courts).

If arbi­tral juris­dic­tion is dis­put­ed in arbi­tral pro­ceed­ings, the tri­bunal is gen­er­al­ly required to decide on its juris­dic­tion in a pre­lim­i­nary award, in order to enable an ear­ly chal­lenge in this respect (Arti­cle 186.3 of the PILA).

5.5 Stan­dard of Judi­cial Review for Jurisdiction/​Admissibility

The Swiss Fed­er­al Tri­bunal has the author­i­ty to con­duct a com­pre­hen­sive exam­i­na­tion of juris­dic­tion­al mat­ters, specif­i­cal­ly con­cern­ing the cor­rect appli­ca­tion of the law. How­ev­er, it has no author­i­ty to review the arbi­tral tribunal’s find­ings on the facts of the case (see also 5.3 Cir­cum­stances for Court Inter­ven­tion).

Accord­ing to recent sta­tis­tics in 2021, only 12.3% of all juris­dic­tion­al chal­lenges have been suc­cess­ful since the PILA was intro­duced in 1989 (see Dasser/​Wojtowicz, Swiss Inter­na­tion­al Arbi­tral Awards Before the Fed­er­al Supreme Court – Sta­tis­ti­cal Data 1989 – 2019, ASA Bull. 1/2021, p 19), so it appears fair to con­clude that the Swiss Fed­er­al Tri­bunal has remained def­er­ent to rea­son­able juris­dic­tion­al deci­sions of arbi­tral tribunals.

5.6 Breach of Arbi­tra­tion Agreement

Swiss courts will deny state court juris­dic­tion and the par­ty that com­menced state court pro­ceed­ings in breach of an arbi­tra­tion agree­ment will have to restart the pro­ceed­ings before an arbi­tral tri­bunal (see also 3.3 Nation­al Courts’ Approach).

5.7 Juris­dic­tion Over Third Parties

The Swiss Fed­er­al Tri­bunal has accept­ed exten­sions of arbi­tra­tion agree­ments to non-sig­na­to­ries in the fol­low­ing situations:

• if an assign­ment of a claim, an assump­tion of a debt or a trans­fer of a con­tract takes place;
• if a third par­ty inten­tion­al­ly inter­feres with the per­for­mance of a con­tract in full knowl­edge of the fact that this con­tract con­tains an arbi­tra­tion agree­ment; or
• if a con­tract for the ben­e­fit of a third par­ty is con­clud­ed; the third par­ty then also needs to respect an arbi­tra­tion agree­ment (unless oth­er­wise stat­ed in that arbi­tra­tion agreement).

A sum­ma­ry of this jurispru­dence can be found in the deci­sion of the Swiss Fed­er­al Tri­bunal No 4A_627/2011, para­graph 3.2 (with fur­ther ref­er­ences; see also 3.1 Enforce­abil­i­ty).

In the con­text of sit­u­a­tions with inten­tion­al inter­fer­ence by a third par­ty, the Swiss Fed­er­al Tri­bunal has recent­ly (part­ly) quashed an award in which an arbi­tral tri­bunal had extend­ed the arbi­tra­tion agree­ment of a main con­trac­tor to a sub­con­trac­tor (deci­sion of the Swiss Fed­er­al Tri­bunal No 4A_124/2020, para­graph 3.3.2). The key hold­ing of the deci­sion is that a party’s offi­cial­ly com­mu­ni­cat­ed posi­tion as a sub­con­trac­tor out­weighs actions by that par­ty that might oth­er­wise be deemed suf­fi­cient to extend the arbi­tra­tion agree­ment. This clar­i­fi­ca­tion is wel­come and like­ly to be rel­e­vant in prac­tice regard­ing projects or sup­ply chains with main con­trac­tors and subcontractors.

6. PRE­LIM­I­NARY AND INTER­IM RELIEF

6.1 Types of Relief

Arti­cle 183 of the PILA express­ly autho­ris­es arbi­tral tri­bunals to order inter­im mea­sures, unless the par­ties agreed oth­er­wise in the arbi­tra­tion agreement.

Inter­im mea­sures in the sense of the PILA would be mea­sures of a tem­po­rary nature that aim to main­tain the sta­tus quo between the par­ties while a dis­pute is pend­ing, safe­guard the arbi­tral process (eg, by pre­serv­ing evi­dence), or pre­serve assets in order to sat­is­fy a sub­se­quent award (eg, secu­ri­ty for costs).

Even though it is not express­ly exclud­ed accord­ing to the terms of the PILA, Swiss arbi­tral tri­bunals would be very reluc­tant to order anti-suit injunc­tions as there is no legal tra­di­tion of apply­ing this mea­sure in Switzerland.

The arbi­tral tri­bunal may require a secu­ri­ty from the par­ty request­ing inter­im mea­sures in order to secure poten­tial dam­ages from the par­ty against which the order is direct­ed (Arti­cle 183.3 of the PILA).

Increas­ing­ly, there are also emer­gency arbi­tra­tion pro­ceed­ings in Switzer­land (most­ly under the ICC Rules or the Swiss Rules). In this respect, it should be not­ed that under the Swiss Rules, ex parte appli­ca­tions are also admis­si­ble before emer­gency arbitrators.

6.2 Role of Courts

If a par­ty does not vol­un­tar­i­ly com­ply with an inter­im mea­sures order from an arbi­tral tri­bunal, the state courts may assist in the enforce­ment of the order upon request of the arbi­tral tri­bunal or a par­ty (Arti­cle 183.2 of the PILA). The state courts also sup­port arbi­tral tri­bunals of, and par­ties to, arbi­tra­tion pro­ceed­ings with a place of arbi­tra­tion out­side Switzer­land (i) to imple­ment pre­lim­i­nary or secur­ing mea­sures (Arti­cle 185a.1 of the PILA), or (ii) in the tak­ing of evi­dence (in the case of a par­ty, only upon approval by the tri­bunal) (Arti­cle 185a.2 of the PILA).

6.3 Secu­ri­ty for Costs

Accord­ing to a large major­i­ty of legal com­men­ta­tors, arbi­tral tri­bunals are in a posi­tion to order secu­ri­ty for costs in the sense that (typ­i­cal­ly) the impe­cu­nious claimant would have to pro­vide secu­ri­ty for the poten­tial pro­ce­dur­al costs of the respondent.

While the spe­cif­ic require­ments remain a top­ic of debate among legal schol­ars, the major­i­ty of them con­tend that for secu­ri­ty for costs to be ordered, there must have been a dete­ri­o­ra­tion in the finan­cial posi­tion of the par­ty against whom the request is direct­ed (usu­al­ly the claimant) since the time the arbi­tra­tion agree­ment was exe­cut­ed. This means that any par­ty that choos­es to con­tract with an impe­cu­nious coun­ter­par­ty (eg, a shell com­pa­ny or spe­cial-pur­pose vehi­cle) risks that even­tu­al­ly no secu­ri­ty for costs will be granted.

7. PRO­CE­DURE

7.1 Gov­ern­ing Rules

Arti­cles 182 to 185a of the PILA pro­vide a few gen­er­al rules on arbi­tral procedure.

As a mat­ter of manda­to­ry pro­ce­dur­al law, Arti­cle 182.3 of the PILA pro­vides that, in any event, arbi­tral tri­bunals need to safe­guard the par­ties’ equal treat­ment as well as their right to be heard in con­tra­dic­to­ry proceedings.

In this con­text, Arti­cle 182.4 of the PILA express­ly stip­u­lates that a par­ty that con­tin­ues the pro­ceed­ings with­out object­ing to an infringe­ment against the pro­ce­dur­al rules imme­di­ate­ly after it took, or could have tak­en, notice there­of will lat­er be pre­clud­ed from invok­ing that infringement.

7.2 Pro­ce­dur­al Steps

As long as the par­ties are treat­ed equal­ly and their right to be heard in con­tra­dic­to­ry pro­ceed­ings is safe­guard­ed, Swiss law does not pre­scribe any par­tic­u­lar pro­ce­dur­al steps.

At the same time, it should be not­ed that the right to be heard in con­tra­dic­to­ry pro­ceed­ings guar­an­tees the fol­low­ing min­i­mum stan­dard of par­tic­i­pa­tion in arbi­tra­tion proceedings:

• the oppor­tu­ni­ty to sub­mit argu­ments on the mer­its of the case in accor­dance with the pro­ce­dur­al rules;
• par­tic­i­pa­tion in oral hear­ings, if any;
• access to records; and
• the oppor­tu­ni­ty to com­ment on the argu­ments of the oth­er party.

7.3 Pow­ers and Duties of Arbitrators

The arbi­tral tri­bunal has the pow­er to order the indi­vid­ual pro­ce­dur­al steps in the event that the par­ties have not reached any agree­ments regard­ing the pro­ce­dure. In this respect, and as pre­vi­ous­ly men­tioned, the arbi­tral tri­bunal is required to treat the par­ties equal­ly and grant them the right to be heard in con­tra­dic­to­ry pro­ceed­ings (see also 7.1 Gov­ern­ing Rules and 7.2 Pro­ce­dur­al Steps).

At the same time, the arbi­tra­tors have a duty to con­duct a rea­son­ably expe­dit­ed pro­ce­dure and issue the nec­es­sary orders in good time. They also have a duty to delib­er­ate on the mer­its of the case and make an award on the basis of the applic­a­ble sub­stan­tive law (which is applied ex offi­cio in Swiss arbi­tra­tion pro­ceed­ings pur­suant to the prin­ci­ple of iura novit arbiter). An excep­tion applies if the par­ties agreed that the arbi­tral tri­bunal shall decide ex aequo et bono (Arti­cle 187.2 of the PILA).

Final­ly, the appli­ca­tion of the law by the arbi­tral tri­bunal must not be sur­pris­ing. How­ev­er, a sur­prise has been acknowl­edged by the Swiss Fed­er­al Tri­bunal only in very excep­tion­al cas­es, where an arbi­tral tri­bunal applied a legal act to which no par­ty had made ref­er­ence in the arbi­tral pro­ceed­ings and the appli­ca­tion of which could not have been fore­seen by the par­ties (deci­sion of the Swiss Fed­er­al Tri­bunal No 4A_424/2018, para­graph 5.2.3).

7.4 Legal Representatives

There are no legal require­ments for legal rep­re­sen­ta­tives in arbi­tra­tion pro­ceed­ings in Switzer­land, but it is high­ly rec­om­mend­ed to choose a legal rep­re­sen­ta­tive who is not only edu­cat­ed in Swiss law but also expe­ri­enced in inter­na­tion­al arbi­tra­tion. Can­di­dates should specif­i­cal­ly be asked about their expe­ri­ence in inter­na­tion­al arbi­tra­tion before being instruct­ed in an arbi­tra­tion case.

For legal rep­re­sen­ta­tion of par­ties before any Swiss state courts (also in chal­lenge pro­ceed­ings against an arbi­tral award before the Swiss Fed­er­al Tri­bunal), a Swiss Bar exam or an inter­na­tion­al accred­i­ta­tion as a lawyer in Switzer­land is required.

8. EVI­DENCE

8.1 Col­lec­tion and Sub­mis­sion of Evidence

Typ­i­cal­ly, Swiss arbi­tra­tors use the IBA Rules on the Tak­ing of Evi­dence in Inter­na­tion­al Arbi­tra­tion (the ​“IBA Rules”; 2020 ver­sion) as a source of inspi­ra­tion for the tak­ing of evi­dence. This means:

• there are usu­al­ly no US-style dis­cov­ery pro­ceed­ings, but requests for the pro­duc­tion of spe­cif­ic doc­u­ments that may be rel­e­vant to the out­come of the case are gen­er­al­ly con­sid­ered to be admis­si­ble (typ­i­cal­ly in the for­mat of a so-called Red­fern Schedule);
• cor­re­spon­dence between clients and legal coun­sel is usu­al­ly con­sid­ered to be legal­ly priv­i­leged and is thus exclud­ed from any pro­duc­tion orders;
• doc­u­men­tary evi­dence is to be sub­mit­ted togeth­er with the writ­ten submissions;
• writ­ten wit­ness state­ments are fair­ly com­mon in Swiss inter­na­tion­al arbi­tra­tion proceedings;
• in the oral wit­ness hear­ings, there is typ­i­cal­ly a brief direct exam­i­na­tion (to ​“warm up” the wit­ness) and then cross-exam­i­na­tion on all rel­e­vant issues – in many cas­es, Swiss arbi­tral tri­bunals admit re-direct exam­i­na­tion lim­it­ed to issues cov­ered in cross-exam­i­na­tion and re-cross-exam­i­na­tion lim­it­ed to issues cov­ered in re-direct exam­i­na­tion; and
• the tri­bunal often takes the pre­rog­a­tive to ask ques­tions of wit­ness­es at any time dur­ing the exam­i­na­tions, but expe­ri­enced arbi­tra­tors will rarely inter­fere with the exam­i­na­tions of versed coun­sel, unless there are spe­cif­ic rea­sons to do so.

8.2 Rules of Evidence

Arti­cle 184.1 of the PILA (mere­ly) pro­vides that it is for the arbi­tral tri­bunal to admin­is­ter the tak­ing of evi­dence, and Arti­cle 184.2 of the PILA pro­vides that the arbi­tral tri­bunal or a par­ty (upon approval by the tri­bunal) may seek the assis­tance of the state courts with respect to the tak­ing of evi­dence. The state courts apply their own (domes­tic) law or, since the revi­sion, may apply or con­sid­er dif­fer­ent pro­ce­dur­al rules as their own on request, which may, in par­tic­u­lar, be help­ful for the exam­i­na­tion of wit­ness­es (Arti­cle 184.3 of the PILA).

Against the back­ground of the right to be heard, the tri­bunal is required to con­sid­er evi­dence that was offered in accor­dance with the pro­ce­dur­al rules.

8.3 Pow­ers of Compulsion

As pre­vi­ous­ly men­tioned, the arbi­tral tri­bunal may seek the assis­tance of the state courts with respect to the tak­ing of evi­dence (see 8.2 Rules of Evi­dence). If rel­e­vant evi­dence is not under the con­trol of either par­ty, there may be no oth­er option than to seek assis­tance from a state court, even though it is rarely seen in prac­tice. Since the revi­sion (see 2.2 Changes to Nation­al Law), the Swiss state courts will also assist arbi­tral tri­bunals and par­ties (upon approval by the tri­bunal) to arbi­tra­tion pro­ceed­ings with a place of arbi­tra­tion out­side Switzer­land with the tak­ing of evi­dence (Arti­cle 185a of the PILA).

How­ev­er, if rel­e­vant evi­dence is under the con­trol of a par­ty, tri­bunals may antic­i­pate a so-called adverse infer­ence if the evi­dence is not pro­duced, rather than seek­ing the assis­tance of the state courts.

9. CON­FI­DEN­TIAL­I­TY

9.1 Extent of Confidentiality

Swiss arbi­tra­tion pro­ceed­ings are con­fi­den­tial in the sense that they are not open to the pub­lic (express­ly con­firmed by the Swiss Fed­er­al Tri­bunal in con­nec­tion with the ​“Causa Pech­stein” in deci­sion No 4A_612/2009, para­graph 4.1).

Fur­ther­more, it is wide­ly acknowl­edged that, based on the arbi­tra­tors’ agree­ment with the par­ties (recep­tum arbi­tri), arbi­tra­tors have a duty to keep any infor­ma­tion from the arbi­tral pro­ceed­ings confidential.

At the same time, legal schol­ars have con­tro­ver­sial­ly dis­cussed whether, and to what extent, the par­ties them­selves have any con­fi­den­tial­i­ty duties aris­ing out of the arbi­tra­tion agree­ment. If the arbi­tra­tion agree­ment (includ­ing arbi­tra­tion rules poten­tial­ly referred to) does not address the issueofconfidentiality,itisdifficulttofindalegal basis for a respec­tive duty between the par­ties, as the Swiss lex arbi­tri is silent on this issue.

Nev­er­the­less, some Swiss com­men­ta­tors sug­gest that any arbi­tra­tion agree­ment should be inter­pret­ed to the effect that the mere exis­tence of arbi­tra­tion pro­ceed­ings is not con­fi­den­tial, while any mate­ri­als sub­mit­ted in the pro­ceed­ings as well as the award should be con­sid­ered confidential.

The Swiss Rules, for exam­ple, pro­vide for a gen­er­al con­fi­den­tial­i­ty pro­vi­sion in Arti­cle 44, where­as the ICC Rules do not.

10. THE AWARD

10.1 Legal Requirements

Arti­cle 189.1 of the PILA pro­vides that the arbi­tral award shall be made in the form, and accord­ing to the pro­ce­dure, agreed upon by the parties.

Arti­cle 189.2 of the PILA pro­vides that, in the absence of any agree­ment between the par­ties, the fol­low­ing require­ments apply:

• the award shall be made by major­i­ty vote or, in the absence of any major­i­ty, by the pres­i­dent of the tribunal;
• the award shall be in writ­ten form (the sig­na­ture of the pres­i­dent is suf­fi­cient) and show the date on which it is ren­dered; and
• the award shall be rea­soned (at least with respect to the most rel­e­vant argu­ments of the parties).

10.2 Types of Remedies

As a gen­er­al rule, the arbi­tral tri­bunal may, and shall, award what is owed pur­suant to the applic­a­ble sub­stan­tive law. At the same time, there are some lim­its that must be considered.

First, any arbi­tral award ren­dered in Switzer­land must remain with­in the bound­aries of Swiss pub-

lic pol­i­cy (the so-called ordre pub­lic). Any legal con­se­quences that are not in line with Swiss pub­lic pol­i­cy must not be award­ed, and such an award would be at risk of being set aside by the Swiss Fed­er­al Tri­bunal. There are indi­ca­tions that puni­tive dam­ages might be con­sid­ered as an infringe­ment of Swiss pub­lic pol­i­cy by the Swiss Fed­er­al Tri­bunal (see, for exam­ple, the decisionoftheSwissFederalTribunalNo122III 463, para­graph 5.c.cc).

Sec­ond, as pre­vi­ous­ly men­tioned (see 3.2 Arbi­tra­bil­i­ty), only claims ​“of finan­cial inter­est” are arbi­tra­ble in Switzer­land, so an arbi­tral tri­bunal must not award reme­dies for claims that fall out­side the def­i­n­i­tion of arbitrability.

10.3 Recov­er­ing Inter­est and Legal Costs

The issue of the recov­ery of legal costs is a mat­ter of pro­ce­dur­al law and is thus gov­erned by the arbi­tra­tion agree­ment (includ­ing ref­er­ence to any insti­tu­tion­al rules). If the arbi­tra­tion agree­ment is silent on the allo­ca­tion of legal costs but both par­ties request to be com­pen­sat­ed for their legal costs, it appears rea­son­able to accept an implied agree­ment that legal costs should be allo­cat­ed. If the par­ties do not request com­pen­sa­tion for legal costs, the issue of the allo­ca­tion becomes moot, as the tri­bunal must not award any posi­tion that was not request­ed by either of the parties.

Gen­er­al­ly, Swiss tri­bunals allo­cate legal costs in pro­por­tion to the suc­cess of the par­ties on the mer­its of the case. Fur­ther cir­cum­stances (such as the pro­ce­dur­al behav­iour of the par­ties) are some­times con­sid­ered as well.

The so-called Amer­i­can Rule, where each par­ty bears its own costs, is only applied if agreed upon by the par­ties or if the pro­por­tion of the suc­cess on the mer­its is close to 50/50.

11. REVIEW OF AN AWARD

11.1 Grounds for Appeal

In Switzer­land, an arbi­tral award may be chal­lenged before the Swiss Fed­er­al Tri­bunal. The avail­able grounds are express­ly not­ed in Arti­cle 190.2 of the PILA and can be sum­marised as follows:

• incor­rect des­ig­na­tion and/​or com­po­si­tion of the arbi­tral tribunal;
• inac­cu­rate deci­sion on arbi­tral jurisdiction;
• the deci­sion either does not cov­er all of the par­ties’ requests for relief (infra peti­ta) or goes beyond the requests for relief of the par­ties (ultra peti­ta or extra petita);
• infringe­ment of the prin­ci­ples of the right to be heard and/​or equal treat­ment; and
• infringe­ment of Swiss pub­lic policy.

The chal­lenge appli­ca­tion must be sub­mit­ted to the Swiss Fed­er­al Tri­bunal with­in 30 days of the date of receipt of the award (Arti­cle 190.4 of the PILA), and must specif­i­cal­ly demon­strate that at least one of the above rea­sons for chal­lenge applies to the award at issue. Since the revi­sion, the briefs in appeal pro­ceed­ings can be sub­mit­ted in the Eng­lish lan­guage (Arti­cle 77.2bis of the Fed­er­al Tri­bunal Act) (see 2.2 Changes to Nation­al Law). The Swiss Fed­er­al Tri­bunal invites the coun­ter­par­ty and the arbi­tral tri­bunal to sub­mit com­ments (unless a chal­lenge is con­sid­ered as evi­dent­ly inad­mis­si­ble or unfound­ed by the Swiss Fed­er­al Tri­bunal), and typ­i­cal­ly decides with­in a time­frame of four to six months in total.

Grounds for Revision

Since the revi­sion (see 2.2 Changes to Nation­al Law), the Swiss lex arbi­tri for­mal­ly includes the excep­tion­al legal rem­e­dy of the so-called revi­sion against bind­ing awards based on ear­li­er jurispru­dence of the Swiss Fed­er­al Tri­bunal (see deci­sions of the Swiss Fed­er­al Tri­bunal Nos 122 III 492 and 134 III 286), which is gen­er­al­ly only avail­able on lim­it­ed grounds that are dis­cov­ered after an award was ren­dered. Such lim­it­ed grounds include (i) dis­cov­ery of new mate­r­i­al facts, (ii) crim­i­nal behav­iour that affect­ed the award, and (iii) dis­cov­ery of new cir­cum­stances that give rise to doubts as to an arbitrator’s inde­pen­dence or impar­tial­i­ty (Arti­cle 190a.1 of the PILA).

A request for revi­sion must be sub­mit­ted with­in 90 days of the dis­cov­ery of such new facts, where­by such request has, in any event, to be sub­mit­ted with­in ten years of the award com­ing into legal force, with the excep­tion of crim­i­nal behav­iour that affect­ed the award (Arti­cle 190a.2 of the PILA). As with appeal pro­ceed­ings, the briefs can be sub­mit­ted in the Eng­lish lan­guage (Arti­cle 77.2bis of the Swiss Fed­er­al Tri­bunal Act).

In its first deci­sion on a request for revi­sion pur­suant to Arti­cle 190a of the PILA, the Swiss Fed­er­al Tri­bunal reject­ed the respec­tive appli­ca­tion as man­i­fest­ly inad­mis­si­ble. Specif­i­cal­ly, the Swiss Fed­er­al Tri­bunal named the fol­low­ing five indi­vid­ual con­di­tions that must be ful­filled under the per­ti­nent ground for revi­sion (deci­sion of the Swiss Fed­er­al Tri­bunal No 4A_422/2021, para­graph 4.4.1):

• Alle­ga­tion of one or more facts.
• The alleged facts must be mate­r­i­al to the sense that the cor­rect appli­ca­tion of the law on the (mod­i­fied) facts leads to a dif­fer­ent legal solu­tion and thus to a dif­fer­ent award.
• The rel­e­vant facts already exist­ed at the time when the award was rendered.
• The rel­e­vant facts were only dis­cov­ered at a lat­er point in time.
• The appli­cant was not in a posi­tion – in spite of all its dili­gence – to rely on these facts dur­ing the arbi­tra­tion proceedings.

In sev­er­al recent deci­sions, the Swiss Fed­er­al Tri­bunal applied Arti­cle 190a PILA to requests for the revi­sion of arbi­tral awards which were released before 1 Jan­u­ary 2021, when the revised law entered into force (see deci­sions of the Swiss Fed­er­al Tri­bunal No 4A_184/2022, para­graph 2.2; 148 III 436, para­graph 3; and 4A_100/2022, para­graph 2.3).

In con­clu­sion, the revi­sion is not mere­ly a the­o­ret­i­cal con­cept; it is a legal rem­e­dy with very spe­cif­ic require­ments, offer­ing a mech­a­nism to review awards along­side the ordi­nary set­ting aside appli­ca­tion under Arti­cle 190.2 of the PILA.

Cor­rec­tion of Awards

Final­ly, Arti­cle 189a.1 of the PILA pro­vides for the right of a par­ty to request from the arbi­tral tri­bunal the cor­rec­tion of typos, the expla­na­tion of unclear or ambigu­ous con­sid­er­a­tions and the ren­der­ing of an addi­tion­al award on any claims not dealt with.

11.2 Excluding/​Expanding the Scope of Appeal

If no par­ty is domi­ciled in Switzer­land, the par­ties may exclude (ful­ly or par­tial­ly) any chal­lenge or revi­sion pro­ceed­ings (Arti­cle 192 of the PILA). As is the case with the arbi­tra­tion agree­ment, such exclu­sion must be evi­denced by text (so-called text form, Arti­cle 178.1 of the PILA) (see 3.1 Enforce­abil­i­ty). How­ev­er, the par­ties may not exclude a revi­sion on the ground of crim­i­nal behav­iour that affect­ed the award (Arti­cle 192.1 of the PILA) (see the deci­sion of the Swiss Fed­er­al Tri­bunal 148 III 436, para­graph 4.3.3, and 11.1 Grounds for Appeal).

If the par­ties wish to expand the scope of review of a high­er instance, they have the pos­si­bil­i­ty to agree on an appeal mech­a­nism before a sec­ond arbi­tral tri­bunal, but the Swiss Fed­er­al Tri­bunal will review chal­lenges only as defined in Arti­cle 190.2 of the PILA.

11.3 Stan­dard of Judi­cial Review

The Swiss Fed­er­al Tri­bunal does not review the mer­its of the case, unless it is indis­pens­able in order to review issues of (i) arbi­tral juris­dic­tion or (ii) sub­stan­tive pub­lic policy.

12. ENFORCE­MENT OF AN AWARD

12.1 New York Convention

Switzer­land has signed and rat­i­fied the New York Con­ven­tion (with­out reser­va­tions; see also 3.1 Enforce­abil­i­ty).

12.2 Enforce­ment Procedure

Enforce­ment of an arbi­tral award does not require a sep­a­rate recog­ni­tion pro­ce­dure in Switzer­land. Rather, the com­pe­tent court will exam­ine as a pre­lim­i­nary ques­tion with­in the spe­cif­ic enforce­ment pro­ce­dure whether the require­ments of the New York Con­ven­tion are fulfilled.

The applic­a­ble state court juris­dic­tion and the details of the enforce­ment pro­ce­dure are pro­vid­ed for in Arti­cles 335 et seq of the CPC and the Swiss Debt Enforce­ment and Insol­ven­cy Act.

12.3 Approach of the Courts

Swiss courts are right­ly con­sid­ered to be arbi­tra­tion-friend­ly and there are rarely any pub­lic pol­i­cy con­cerns that would impede enforce­ment of an arbi­tral award.

In par­tic­u­lar, nei­ther the mere pos­si­bil­i­ty to chal­lenge a for­eign award nor the mere fil­ing of an appeal at the for­eign seat con­sti­tutes a ground for refusal under Arti­cle V.1.e of the New York Con­ven­tion (see deci­sion of the Swiss Fed­er­al Tri­bunal No 135 III 136, para­graph 2.2). Rather, it is, in line with Arti­cle IV of the New York Con­ven­tion, up to the dis­cre­tion of the com­pe­tent state court to decide whether the enforce­ment pro­ceed­ings should be stayed until ongo­ing set-aside pro­ceed­ings at the for­eign seat are resolved.

13. MIS­CEL­LA­NEOUS

13.1 Class Action or Group Arbitration

Col­lec­tive arbi­tra­tion pro­ce­dures do not exist and requests for rep­re­sen­ta­tive relief can­not be sub­mit­ted to arbi­tra­tion in Switzerland.

Sub­ject to a very lim­it­ed num­ber of excep­tions, claimants are not enti­tled to sub­mit any claims but their own to arbi­tra­tion. Like­wise, Swiss awards strict­ly enti­tle and bind the par­ties to the arbi­tra­tion only.

13.2 Eth­i­cal Codes

All qual­i­fied Swiss lawyers who are reg­is­tered to rep­re­sent par­ties in state courts must com­ply with Switzerland’s pro­fes­sion­al rules, includ­ing its eth­i­cal pro­vi­sions. The entire­ty of their con­tentious and non-con­tentious legal work (whether in or out of court) must com­ply with these pro­fes­sion­al rules. This includes, as a gen­er­al rule, any work as an arbi­tra­tor or coun­sel in arbi­tra­tion pro­ceed­ings, includ­ing cas­es with a place of arbi­tra­tion out­side Switzerland.

Inter­na­tion­al soft law (such as the IBA Inter­na­tion­al Prin­ci­ples on Con­duct for the Legal Pro­fes­sion or the IBA Guide­lines on Par­ty Rep­re­sen­ta­tion in Inter­na­tion­al Arbi­tra­tion) is often viewed with scep­ti­cism (with the excep­tion of the IBA Guide­lines on Con­flicts of Inter­est in Inter­na­tion­al Arbi­tra­tion, which are also used by the Swiss Fed­er­al Tri­bunal as guide­lines, as men­tioned above; see 4.5 Arbi­tra­tor Requirements).

13.3 Third-Par­ty Funding

Third-par­ty fund­ing is not specif­i­cal­ly addressed by Swiss statu­to­ry laws or Swiss arbi­tra­tion law. How­ev­er, the pos­si­bil­i­ty of third-par­ty fund­ing and its lim­i­ta­tions have been con­firmed and analysed by the Swiss Fed­er­al Tri­bunal numer­ous times (deci­sions of the Swiss Fed­er­al Tri­bunal Nos 131 I 223 and 2C_814/2014).

Third-par­ty fund­ing must not pre­vent Swiss lawyers from act­ing in line with the pro­fes­sion­al rules. As in all oth­er cas­es, Swiss lawyers must act inde­pen­dent­ly, keep client-relat­ed infor­ma­tion con­fi­den­tial, and avoid con­flicts of inter­est. In addi­tion, Swiss lawyers must com­ply with the fol­low­ing lim­i­ta­tions for suc­cess fee arrange­ments, which have been recent­ly high­light­ed by the Swiss Fed­er­al Tri­bunal (deci­sion of the Swiss Fed­er­al Tri­bunal No 4A_125/2018):

• the fees that are not per­for­mance-relat­ed must cov­er the lawyer’s costs and include a rea­son­able prof­it margin;
• the per­for­mance-relat­ed fees must not be high­er than the fees that are not per­for­mance-relat­ed; and
• the suc­cess fee arrange­ment must be made either at the begin­ning or after the com­ple­tion of the case. Dur­ing the pro­ceed­ings, lawyers must not enter into suc­cess fee arrange­ments with their clients.

13.4 Con­sol­i­da­tion

Con­sol­i­da­tion is not specif­i­cal­ly addressed by Swiss arbi­tra­tion law. Con­sol­i­da­tion of com­pat­i­ble pro­ceed­ings is pos­si­ble, and usu­al­ly gov­erned by insti­tu­tion­al rules (eg, by Arti­cle 7 of the revised Swiss Rules).

13.5 Bind­ing of Third Parties

Arbi­tra­tion agree­ments can extend to non-sig­na­to­ries only in the lim­it­ed num­ber of sit­u­a­tions described in 5.7 Third Parties.

As a gen­er­al rule, awards can­not be enforced against any par­ty but the award debtor. Pierc­ing of the cor­po­rate veil at the enforce­ment lev­el is only pos­si­ble in very excep­tion­al cas­es that must typ­i­cal­ly include an abuse of cor­po­rate structures.