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Simon Gabriel; in: ASA Bull. 4/2019, p. 883 et seqq.

The Swiss Fed­er­al Tri­bunal con­sid­ers that the for­mal require­ments for arbi­tra­tion agree­ments of the NYC and the Swiss PILA are con­gru­ent. This posi­tion of the Fed­er­al Tri­bunal has already been known since 1995 with respect to the (lim­it­ed) sig­na­ture require­ment when using mod­ern means of com­mu­ni­ca­tion. The present judg­ment, how­ev­er, seems to express­ly extend this con­cept of con­gru­ence to fur­ther issues such as exten­sion of arbi­tra­tion agree­ments to non-signatories.

1. Back­ground

The Sloven­ian com­pa­ny ​“C” and the Swiss com­pa­ny ​“R” main­tained a dis­tri­b­u­tion rela­tion­ship between 2009 and 2015. The rela­tion­ship had been based on a dis­tri­b­u­tion agree­ment (“Agree­ment”) the offi­cial term of which had end­ed in 2014, but the rela­tion­ship was there­after de fac­to con­tin­ued until the end of 2015 (sec. A).

R forms part of a group of com­pa­nies which includes R’s affil­i­ate ​“RX AG” (sec. A).

The Agree­ment con­tains an arbi­tra­tion agree­ment which refers to any claims aris­ing out of or in rela­tion to the Agree­ment to arbi­tra­tion of the Sloven­ian Cham­ber of Com­merce in Ljubl­jana (Slove­nia; sec. A).

The Agree­ment was signed by C. This fact is not in dis­pute (sec. A).

On the oth­er hand, the Agree­ment was not signed by R, but rather ​“for and behalf of the ​‘Dis­trib­u­tor’ RX AG”. The per­son who signed the Agree­ment under this cap­tion has at all rel­e­vant times been a (sole­ly) autho­rized sig­na­to­ry of R and RX AG (sec. A).

By sub­mis­sion dat­ed 6 May 2018, C filed sev­er­al claims under the Agree­ment against R with the Com­mer­cial Court in Aar­gau (i.e. a state court in Switzer­land; sec. B).

R answered that the Com­mer­cial Court should reject C’s claims for lack of juris­dic­tion as these claims were sub­ject to arbi­tra­tion in Slove­nia (sec. B).

There­upon, C appar­ent­ly sub­mit­ted that R was not a sig­na­to­ry of the Agree­ment (and nei­ther of the arbi­tra­tion agree­ment con­tained there­in) and arbi­tral juris­dic­tion would thus not apply between C and R (sec. B).

By judge­ment dat­ed 5 Novem­ber 2018, the Com­mer­cial Court reject­ed C’s claims for lack of juris­dic­tion. In par­tic­u­lar, the Com­mer­cial Court found as fol­lows (sec. B):

By per­form­ing under the Agree­ment for many years, R expressed in an implied man­ner that it want­ed to be a Par­ty to the Agree­ment. There­fore, R joined the Agree­ment and thus also the arbi­tra­tion agree­ment con­tained therein.

At the same time, the Com­mer­cial Court con­sid­ered that the for­mal require­ments for arbi­tra­tion agree­ments pur­suant to Arti­cle II para­graph 2 New York Con­ven­tion (“NYC”) were not ful­filled as (i) R did nei­ther sign the arbi­tra­tion agree­ment con­tained in the Agree­ment, nor (ii) did it exchange doc­u­ments to that effect with C as is required by the rel­e­vant lan­guage of the NYC.

The Com­mer­cial Court at the same time found that C had act­ed in a con­tra­dic­to­ry man­ner and thus lost its right to rely on this for­mal fail­ure (pro­hi­bi­tion of venire con­tra fac­tum pro­pri­um) because C had express­ly con­firmed its posi­tion that C and R were par­ties to the Agree­ment when it sub­mit­ted the claims on 6 May 2018.

Con­se­quent­ly, the Com­mer­cial Court in Aarau reject­ed C’s claims for lack of juris­dic­tion (sec. B).

This deci­sion was chal­lenged by C before the Swiss Fed­er­al Tri­bunal (sec. C).

In essence, C dis­put­ed any con­tra­dic­to­ry behav­iour and argued that (i) its sub­mis­sions regard­ing the Agree­ment did not nec­es­sar­i­ly encom­pass the arbi­tra­tion agree­ment which was a sep­a­rate agree­ment and (ii) its action before a state court suf­fi­cient­ly demon­strat­ed that it was of the view that the arbi­tra­tion agree­ment was not valid (sec. 2). There­fore, its for­mal argu­ments should not have been dis­re­gard­ed by the Com­mer­cial Court.

2. Deci­sion

First, the Swiss Fed­er­al Tri­bunal large­ly accept­ed C’s argu­ments and con­firmed that there was no con­tra­dic­to­ry behav­iour of C which would have jus­ti­fied to dis­re­gard its for­mal argu­ments (sec. 2.2).

Sec­ond, the Fed­er­al Tri­bunal also dis­agreed with the Com­mer­cial Court on the issue of the par­ties to the Agree­ment. It would have been for the Com­mer­cial Court to deter­mine through inter­pre­ta­tion of the Agree­ment whether R was a Par­ty there­to from the very begin­ning. If this had been the case, the arbi­tra­tion agree­ment had been for­mal­ly valid as it was signed by a sole­ly autho­rized sig­na­to­ry of R (sec. 2.3).

Third, the Fed­er­al Tri­bunal also dis­agreed with the Com­mer­cial Court on the inter­pre­ta­tion of Arti­cle II para­graph 2 NYC:

In par­tic­u­lar, the Fed­er­al Tri­bunal stat­ed with ref­er­ence to its ear­li­er deci­sion BGE 121 III 38¹, sec­tion 2.c that the for­mal require­ments of the NYC were con­gru­ent (in Ger­man: ​“deck­en sich mit”) with those of Arti­cle 178 para­graph 1 of the Swiss Pri­vate Inter­na­tion­al Law Act (“PILA”; sec. 2.4).

As a result of this state­ment, the Swiss Fed­er­al Tri­bunal applied its long-stand­ing prac­tice regard­ing the exten­sion of arbi­tra­tion agree­ments to non-sig­na­to­ries under the PILA (includ­ing for par­ties that inter­fere with the per­for­mance of a con­tact) to the present case. The Fed­er­al Tri­bunal thus con­sid­ered that ​“signed by the par­ties” as men­tioned in Arti­cle II para­graph 2 NYC meant signed by the ini­tial par­ties and there was no need for the inter­fer­ing par­ty (here: R) to be a sig­na­to­ry itself (sec. 2.4).

C’s argu­ment that the PILA pro­vid­ed for dif­fer­ent and milder for­mal require­ments than the NYC was not accept­ed by the Fed­er­al Tri­bunal. It rather explained with ref­er­ence to French and Eng­lish judg­ments that even a treaty-autonomous inter­pre­ta­tion of the NYC would lead to a result in con­for­mi­ty with the one found by the Fed­er­al Tri­bunal based on the con­cept of con­gru­ent inter­pre­ta­tion (sec. 2.4).

After these con­sid­er­a­tions, the Fed­er­al Tri­bunal accept­ed for the case at hands R’s argu­ment pur­suant to which it had inter­fered with the Agree­ment in full knowl­edge of the arbi­tra­tion agree­ment and thus expressed its accep­tance of the (for­mal­ly valid) arbi­tra­tion agree­ment (sec. 2.5).

Also with respect to the de fac­to con­tin­u­a­tion of the Agree­ment after its term had lapsed in 2014, the Fed­er­al Tri­bunal con­sid­ered that C and R were still bound by the arbi­tra­tion agree­ment (sec. 2.6).

In con­clu­sion, the Swiss Fed­er­al Tri­bunal found that an arbi­tral tri­bunal in Ljubl­jana had juris­dic­tion over C’s claims and the judge­ment of the Com­mer­cial Court was thus cor­rect (even though the rea­son­ing was not so in sev­er­al regards). There­fore, the chal­lenge of C was dis­missed (sec. 2.7 and sec. 3).

3. Com­ments

There are two issues of inter­est in the present case: name­ly, the over­all con­gru­ence of the for­mal require­ments for arbi­tra­tion agree­ments under the NYC and the PILA on the one hand and the exten­sion of arbi­tra­tion agree­ments to non-sig­na­to­ries on the oth­er hand. For anoth­er recent deci­sion deal­ing with aspects of pub­lic pol­i­cy in con­nec­tion with an enforce­ment action under the NYC ref­er­ence is made to the case BGer 4A_663/2018².

On the first issue, the Fed­er­al Tribunal’s state­ment that the for­mal require­ments for arbi­tra­tion agree­ments under the Swiss PILA and the NYC are in all respects ​“con­gru­ent” (beyond its appli­ca­tion to mod­ern means of com­mu­ni­ca­tions such as tele­fax or e‑mail) is new, impor­tant, and at least a lit­tle bit sur­pris­ing in con­sid­er­a­tion of the dif­fer­ent lan­guage of the respec­tive provisions:

Arti­cle II para­graph 2 NYC provides:

“The term ​“agree­ment in writ­ing” shall include an arbi­tral clause in a con­tract or an arbi­tra­tion agree­ment, signed by the par­ties or con­tained in an exchange of let­ters or telegrams”.

Arti­cle 178 para­graph 1 of the Swiss PILA provides:

“The arbi­tra­tion agree­ment must be made in writ­ing, by telegram, telex, tele­copi­er or any oth­er means of com­mu­ni­ca­tion which per­mits it to be evi­denced by a text”. (Trans­la­tion of www​.swis​sar​bi​tra​tion​.org, vis­it­ed on 24 June 2019)

In par­tic­u­lar, the require­ment of an ​“exchange” of com­mu­ni­ca­tions (if the arbi­tra­tion agree­ment is not con­tained in the signed con­tract) which is express­ly pro­vid­ed for in the NYC can­not be found in the text of the PILA.

The last time when the Fed­er­al Tri­bunal made a com­par­i­son between the for­mal require­ments of the PILA and the NYC was in the year 1995 in the case BGE 121 III 38³, sec­tion 2.c to which the Fed­er­al Tri­bunal also referred in its present judg­ment. This pre­vi­ous case seems to have par­tic­u­lar­ly con­sid­ered the ques­tion of whether a hand­writ­ten sig­na­ture was formally  nec­es­sary or whether mod­ern means of com­mu­ni­ca­tions should be suf­fi­cient, if they evi­dence the arbi­tra­tion agree­ment by text:

“‘La con­ven­tion d’arbitrage est passée en la forme écrite. Elle respecte la forme écrite si elle est con­tenue dans un doc­u­ment signé par les par­ties ou dans un échange de let­tres, télex, télé­grammes ou tous autres moyens de trans­mis­sion d’informations qui per­me­t­tent d’en établir la preuve …’ [quote of a com­men­tary on the Unci­tral Mod­el Law on Inter­na­tion­al Com­mer­cial Arbi­tra­tion]. L’art. 178 al. 1 LDIP s’inspire man­i­feste­ment de cette for­mu­la­tion. Celle-ci, qui a pris en compte le développe­ment des moyens mod­ernes de com­mu­ni­ca­tion, doit donc égale­ment servir à l’interprétation de l’art. II al. 2 de la Con­ven­tion de New York. Il suit de là que les exi­gences formelles posées par ce traité inter­na­tion­al se recoupent en défini­tive avec celles de l’art. 178 LDIP (…).”

“‘The arbi­tra­tion agree­ment is con­clud­ed in writ­ten form. It respects the writ­ten form, if it is con­tained in a doc­u­ment signed by the par­ties or in an exchange of let­ters, telex, telegrams or any oth­er means of trans­mis­sion of infor­ma­tion which per­mit to estab­lish prove there­of…’ [quote of a com­men­tary on the Unci­tral Mod­el Law on Inter­na­tion­al Com­mer­cial Arbi­tra­tion]. Art. 178 para. 1 PILA obvi­ous­ly takes inspi­ra­tion from this lan­guage. This lan­guage took into con­sid­er­a­tion the devel­op­ment of mod­ern means of com­mu­ni­ca­tion and must there­fore also serve as means of inter­pre­ta­tion for art. II para. 2 New York Con­ven­tion. It fol­lows from this that the for­mal require­ments of this inter­na­tion­al treaty cor­re­spond to those of art. 178 PILA.” (Infor­mal translation)

One could thus have under­stood this pre­vi­ous case from the year 1995 to specif­i­cal­ly con­cern the ques­tion of the sig­na­ture in mod­ern means of com­mu­ni­ca­tion, but not any and all aspects of form such as exten­sion to non-signatories.

The Swiss Fed­er­al Tri­bunal has now clar­i­fied that it con­sid­ers – as a rule – for­mal aspects under Arti­cle II para­graph 2 NYC and Arti­cle 178 para­graph 1 of the Swiss PILA to be con­gru­ent. Whether this con­gru­ence also extends to issues where the lan­guage of the two pro­vi­sions express­ly dif­fers (such as the require­ment of the ​“exchange” of com­mu­ni­ca­tions which is mere­ly pro­vid­ed in the NYC) is not specif­i­cal­ly addressed in the present case.

A dif­fi­cul­ty of this clar­i­fied posi­tion of the Swiss Fed­er­al Tri­bunal lies, in the author’s view, in the method­olog­i­cal approach cho­sen: Swiss nation­al prin­ci­ples are applied for the inter­pre­ta­tion of the NYC to the extent that they do not con­flict with a poten­tial treaty-autonomous inter­pre­ta­tion. This is expressed in the fol­low­ing state­ment of the Swiss Fed­er­al Tribunal:

​“Es ist daher davon auszuge­hen, dass sich die Abgren­zung zwis­chen formeller und materieller Gültigkeit der Aus­dehnung ein­er Schiedsvere­in­barung auf eine Drittper­son unter der Anwend­barkeit des New York­er Übereinkom­mens nicht abwe­ichend von der beschriebe­nen bun­des­gerichtlichen Recht­sprechung gestal­tet. (sec. 2.4)

“It thus fol­lows that the dis­tinc­tion between for­mal and sub­stan­tive valid­i­ty of the exten­sion of an arbi­tra­tion agree­ment to a third par­ty pur­suant to the NYC is not dif­fer­ent from the described juris­dic­tion of the Fed­er­al Tri­bunal.” (Infor­mal translation)

As the NYC is an inter­na­tion­al treaty, one would rather have expect­ed, as a first step, the autonomous inter­pre­ta­tion of the NYC which would then influ­ence the inter­pre­ta­tion of Swiss nation­al law – and not appli­ca­tion of the Swiss nation­al law to the extent that it does not con­flict with the NYC. This for­mer approach was even pre­vi­ous­ly accept­ed in prin­ci­ple by the Swiss Fed­er­al Tri­bunal (BGE 138 III 520⁴, sec. 5.4.1 with ref­er­ence to the Vien­na Convention).

Indeed, the sum­ma­rized con­sid­er­a­tions of Eng­lish and French deci­sions show that these courts appar­ent­ly apply quite dif­fer­ent legal con­cepts than the Swiss Fed­er­al Tri­bunal when it comes to the inter­pre­ta­tion of the NYC (the Eng­lish Supreme Court appar­ent­ly does not even express­ly refer to any for­mal aspects of arbi­tra­tion agree­ments and mere­ly focus­es on the issue of sub­stan­tive con­sent; sec. 2.4 of the present judgment).

The said analy­sis of the Fed­er­al Tri­bunal does – at least pri­ma facie – not imper­a­tive­ly lead to the con­clu­sion of full con­gru­ence between the Swiss lex arbi­tri and the NYC on all for­mal aspects of arbi­tra­tion agreements.

If the autonomous inter­pre­ta­tion of the NYC in the future should (fur­ther) devi­ate from the long-stand­ing prac­tice of the Swiss Fed­er­al Tri­bunal on Arti­cle 178 para­graph 1 PILA the present judg­ment of the Fed­er­al Tri­bunal may unfor­tu­nate­ly lead to legal uncer­tain­ty, rather than being a help­ful clar­i­fi­ca­tion. In par­tic­u­lar, it would be entire­ly unclear whether or not the inter­pre­ta­tion of Arti­cle 178 PILA would have to fol­low any devel­op­ments in the treaty-autonomous inter­pre­ta­tion of the NYC (e.g. with respect to the require­ment of ​“exchange” of com­mu­ni­ca­tions which is only pro­vid­ed for in the NYC). On the sec­ond issue, the present case is a fair oppor­tu­ni­ty to recall the spe­cif­ic sit­u­a­tions in which the effects of an arbi­tra­tion agree­ment can be extend­ed to non-signatories:

1. if an assign­ment of a claim, an assump­tion of a debt or a trans­fer of a con­tract takes place; 
2. 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 
3. if a con­tract for the ben­e­fit of a third par­ty is con­clud­ed; the third par­ty then needs to respect an arbi­tra­tion agree­ment as well (unless oth­er­wise stat­ed in said arbi­tra­tion agreement). 

A sum­ma­ry of this leg­is­la­tion can part­ly be found in the present judg­ment of the Swiss Fed­er­al Tri­bunal in sec­tion 2.4 and in BGer 4A_627/2011⁵, para 3.2 (with fur­ther references).

More impor­tant­ly how­ev­er, the present deci­sion appears to apply the exten­sion of an arbi­tra­tion agree­ment for inten­tion­al inter­fer­ence with the per­for­mance of a con­tract in favour of the inter­fer­ing par­ty. To the best of the author’s knowl­edge, the exten­sion for rea­sons of inten­tion­al inter­fer­ence has, to date, typ­i­cal­ly been applied against the inter­fer­ing par­ty. The rea­son­ing was there­by always based on a ​“venire con­tra fac­tum pro­pri­um” argu­ment: The inter­fer­ing par­ty should not be in a posi­tion to object to an arbi­tra­tion agree­ment in a con­tract under which it had (know­ing­ly) performed.

In the present case, R suc­cess­ful­ly relied on its own inter­fer­ence with a con­trac­tu­al per­for­mance, in order to force C into arbi­tra­tion. R argued in essence: ​“Because I have inter­fered with the per­for­mance of this con­tact and C did not object, I am enti­tled to rely on the arbi­tra­tion agree­ment there­in”. The Swiss Fed­er­al Tri­bunal did, how­ev­er, not analyse in detail to what extent C had giv­en its con­sent to arbi­trate with the non-sig­na­to­ry R.

This is an inter­est­ing devel­op­ment and it remains to be seen whether or not this is the new stan­dard of the Swiss Fed­er­al Tri­bunal for such cas­es or rather the exception.

In con­clu­sion, while the result of the present deci­sion is cer­tain­ly cor­rect, there seems to be a risk that the present­ly applied con­cept of con­gru­ence between the PILA and the NYC on all for­mal issues of arbi­tra­tion agree­ments may lead to legal uncer­tain­ty in the future. This could be the case when the treaty-autonomous inter­pre­ta­tion of the NYC devel­ops into a direc­tion that is no longer con­gru­ent with the PILA.