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The Swiss Fed­er­al Tri­bunal reject­ed a request for the set­ting aside of an award as belat­ed because a pre­vi­ous pro­ce­dur­al order on chal­lenge appli­ca­tions was not direct­ly sub­mit­ted to set­ting aside pro­ceed­ings with­in 30 days.

Com­men­tary by Simon Gabriel on Swiss Fed­er­al Tri­bunal deci­sion 4A_136/2018 on April 30, 2018

Facts

[1] The Par­ties ​“C” and ​“R” entered into an agree­ment on 14 Jan­u­ary 2012 (“Agree­ment”). The Agree­ment pro­vid­ed as dis­pute res­o­lu­tion mech­a­nism for arbi­tra­tion pro­ceed­ings with seat in Zurich pur­suant to the DIS Arbi­tra­tion Rules (1998 ed.) with a three-mem­ber arbi­tral pan­el (“Arbi­tra­tion Agreement”). 

[2] On 18 March 2016, C start­ed arbi­tra­tion pro­ceed­ings against R pur­suant to the Arbi­tra­tion Agree­ment. By 8 August 2016 the three-mem­ber arbi­tral pan­el was con­sti­tut­ed in accor­dance with the DIS Arbi­tra­tion Rules (“Arbi­tral Tribunal”).

[3] By sub­mis­sion dat­ed 9 June 2017, C chal­lenged the Chair­man of the Arbi­tral Tri­bunal for lack of impar­tial­i­ty (in the Ger­man orig­i­nal: ​“Ablehnung wegen Befan­gen­heit”).

[4] By sub­mis­sion dat­ed 21 June 2017, C also chal­lenged the Co-arbi­tra­tor that it had pre­vi­ous­ly nom­i­nat­ed for lack of impartiality. 

[5] By mes­sage dat­ed 13 July 2017, the Chair­man acknowl­edged receipt of the men­tioned sub­mis­sions and announced that the Arbi­tral Tri­bunal would decide on the chal­lenge appli­ca­tions (as pro­vid­ed for in the DIS Arbi­tra­tion Rules, Art. 18).

[6] By pro­ce­dur­al order (in the Ger­man orig­i­nal ​“Ver­fü­gung”) dat­ed 7 August 2017, the Arbi­tral Tri­bunal dis­missed the two chal­lenge appli­ca­tions and pro­ceed­ed with the arbitration.

[7] On 20 and 21 Sep­tem­ber 2017 an oral hear­ing took place.

[8] By final award dat­ed 26 Jan­u­ary 2018 (“Final Award”), the Arbi­tral Tri­bunal dis­missed C’s claims and par­tial­ly grant­ed R’s counterclaims.

[9] There­upon, by sub­mis­sion dat­ed 2 March 2018, C request­ed before the Swiss Fed­er­al Tri­bunal that the Final Award be set aside, the two chal­lenged arbi­tra­tors be removed from the pan­el and the mat­ter be referred to a new­ly com­posed arbi­tral tribunal. 

[10] The Swiss Fed­er­al Tri­bunal reject­ed C’s set­ting aside request by deci­sion dat­ed 30 April 2018 with­out look­ing into the mer­its of C’s request.

h2. Deci­sion

[11] In a rather brief deci­sion and appar­ent­ly with­out even invit­ing R to com­ment on C’s set­ting aside request the Swiss Fed­er­al Tri­bunal came to the con­clu­sion that C’s request was belat­ed and thus inadmissible.

[12] It stat­ed that pur­suant to Arti­cle 190.3 Swiss Pri­vate Inter­na­tion­al Law Act (“PILA”), inter­im awards on the tribunal’s juris­dic­tion and/​or com­po­si­tion need­ed to be direct­ly sub­mit­ted to set­ting aside pro­ceed­ings (i.e. with­in 30 days as from receipt of the award). Oth­er­wise, the right to request set­ting aside of a sub­se­quent award for this rea­sons was forfeited.

[13] The Swiss Fed­er­al Tri­bunal seems to con­clude (with­out any detailed expla­na­tions) that the pro­ce­dur­al order dat­ed 7 August 2017 had an equiv­a­lent func­tion as an inter­im award and, there­fore, should have been sub­mit­ted to set­ting aside pro­ceed­ings with­in 30 days from its receipt by C. 

[14] The Swiss Fed­er­al Tri­bunal con­clud­ed that C’s set­ting aside request dat­ed 2 March 2018 was belat­ed and, there­fore, inad­mis­si­ble pur­suant to Arti­cle 190 PILA.

Com­ments

[15] The present deci­sion rais­es prac­ti­cal­ly rel­e­vant issues in two respects:

[16] First, it is a force­ful reminder that not only arbi­tral awards can and must be time­ly sub­mit­ted to the Swiss Fed­er­al Tri­bunal in set­ting aside pro­ceed­ings. Rather, also pro­ce­dur­al orders that show an equiv­a­lent func­tion as arbi­tral awards can be re-qual­i­fied as awards accord­ing to the prin­ci­ple of ​“fal­sa demon­stra­tio non nocet” (and vice ver­sa, see e.g. BGE 136 III 597, sec. 5.2.2 where a doc­u­ment cap­tioned ​“award” was re-qual­i­fied as sim­ple invoice).

[17] Such a re-qual­i­fi­ca­tion is gen­er­al­ly pos­si­ble for any deci­sions issued by arbi­tral tri­bunals as arbi­tral tri­bunals have in prin­ci­ple the pow­er to issue arbi­tral awards.

[18] For the spe­cif­ic sit­u­a­tion of an arbi­tral tri­bunal that ren­ders a sep­a­rate pre­lim­i­nary deci­sion on an impar­tial­i­ty chal­lenge (as was present­ly the case), Swiss schol­ars have main­tained that such a deci­sion should be ren­dered in the form of a pro­ce­dur­al order (and not an award; see Berger/​Kellerhals, Inter­na­tion­al and Domes­tic Arbi­tra­tion in Switzer­land; 3^rd ed.; Berne 2015, para. 911).

[19] It is under­stood that the Swiss Fed­er­al Tri­bunal did not fol­low this schol­ar­ly opin­ion and rather re-qual­i­fied the pro­ce­dur­al order at hands as inter­im award (“Zwis­ch­enentscheid”). It would cer­tain­ly have been inter­est­ing to learn more about the rea­sons of the Fed­er­al Tri­bunal for this re-qual­i­fi­ca­tion, in order to estab­lish best-pos­si­ble legal cer­tain­ty con­cern­ing the stan­dards for the re-qual­i­fi­ca­tion of pro­ce­dur­al orders. 

[20] In sum, par­ties in Swiss arbi­tra­tion pro­ceed­ings must be very care­ful not to over­look pro­ce­dur­al orders which express­ly or implied­ly decide issues of arbi­tral juris­dic­tion and/​or com­po­si­tion of the arbi­tral tri­bunal. Such pro­ce­dur­al orders may be qual­i­fied as awards and are thus sub­ject to set­ting aside pro­ceed­ings (only) with­in a strict time lim­it of 30 days accord­ing to Arti­cle 190.3 PILA.

[21] The present deci­sion demon­strates that the Swiss Fed­er­al Tri­bunal is not inclined to adopt a lenient approach in this regard.

[22] Sec­ond, the ques­tion aris­es whether the same require­ment (i.e. to direct­ly start set­ting aside pro­ceed­ings) applies, if arbi­tral insti­tu­tions (such as the ICC, SCAI or TAS) ren­der deci­sions on the com­po­si­tion of the arbi­tral tri­bunal (e.g. Art. 14 of the ICC Rules, 2017 ed.). 

[23] In this respect, there exist, unfor­tu­nate­ly, incon­sis­tent bod­ies of case law from the Swiss Fed­er­al Tribunal:

[24] Pur­suant to the (offi­cial­ly pub­lished) deci­sion BGE 126 III 249, sec­tion 3.c, dat­ing from the year 2000, deci­sions on chal­lenges of arbi­tra­tors by pri­vate insti­tu­tions (such as the ICC Court) can­not and need not to be direct­ly sub­mit­ted to the scruti­ny of the Swiss Fed­er­al Tri­bunal with­in 30 days. Any such com­plaints may be sub­mit­ted in set­ting aside pro­ceed­ings with respect to the next award of the arbi­tral tribunal.

[25] How­ev­er, by deci­sion BGer 4A_282/2013, sec­tion 5.3.2, dat­ing from 2013 the Swiss Fed­er­al Tri­bunal indi­cat­ed in an obiter dic­tum that a deci­sion on the com­po­si­tion of the arbi­tral tri­bunal by the ​“prési­dent de la Cham­bre arbi­tral ordi­naire du TAS” (i.e. an offi­cer of an arbi­tral insti­tu­tion) would have been sub­ject to a direct set­ting aside request. The Swiss Fed­er­al Tri­bunal in this 2013 deci­sion express­ly men­tioned cer­tain ​“inco­her­ence” with a view to its ear­li­er jurispru­dence (BGer 4A_282/2013, sec. 5.3.2).

[26] Swiss legal schol­ars have crit­i­cized the 2013 deci­sion and argued that deci­sions of pri­vate insti­tu­tions could not be sub­ject to set­ting aside pro­ceed­ings as they could – as a mat­ter of prin­ci­ple – not be qual­i­fied as arbi­tral awards (see Scher­er, Deci­sions of pri­vate bod­ies and insti­tu­tions can­not be chal­lenged under Art. 190 PIL Act – Real­ly?, in: ASA Bull. 1/2014, p. 106 with fur­ther references).

[27] In a fur­ther deci­sion dat­ing from Jan­u­ary 2017, the Swiss Fed­er­al Tri­bunal again referred to the men­tioned inco­her­ence and appears to have clar­i­fied the sit­u­a­tion (BGer 4A_546/2016, sec. 1.3). With ref­er­ence to the 2013 deci­sion, the Swiss Fed­er­al Tri­bunal con­firmed that at least appoint­ment deci­sions (in the Ger­man orig­i­nal ​“Ernen­nungsentschei­de”) of arbi­tral insti­tu­tions were not sub­ject to direct set­ting aside proceedings. 

[28] Whether or not this clar­i­fi­ca­tion also extends to deci­sions by arbi­tral insti­tu­tions on chal­lenge appli­ca­tions after the appoint­ment stage of the pro­ceed­ings was not express­ly men­tioned in the 2017 deci­sion. At the same time, the Swiss Fed­er­al Tri­bunal explained that the 2013 deci­sion was not intend­ed as change of the pre-exist­ing jurispru­dence. Con­se­quent­ly, it appears as like­ly that the Swiss Fed­er­al Tri­bunal will not fur­ther rely on its 2013 deci­sion and – there­fore – deci­sions of arbi­tral insti­tu­tions do not need to be direct­ly sub­mit­ted to set­ting aside pro­ceed­ings with­in a time lim­it of 30 days.

[29] Con­clu­sions: Par­ties should con­sid­er set­ting aside pro­ceed­ings after every deci­sion by an arbi­tral tri­bunal on the com­po­si­tion and/​or juris­dic­tion of the arbi­tral tri­bunal, irre­spec­tive of the appar­ent form of the deci­sion (i.e. also for deci­sions described as ​“pro­ce­dur­al orders”). 

[30] At the same time, it appears as unlike­ly that deci­sions of arbi­tral insti­tu­tions on the com­po­si­tion of arbi­tral tri­bunals need to be direct­ly sub­mit­ted to set­ting aside pro­ceed­ings with­in a time lim­it of 30 days. How­ev­er, in light of the inco­her­ent deci­sions men­tioned above, there is no full cer­tain­ty in this respect for the time being.

[31] These con­clu­sions can be sys­tem­at­i­cal­ly sum­ma­rized by dis­tin­guish­ing (i) the type of doc­u­ment issued (first col­umn) and (ii) the issu­ing body (first line) in the fol­low­ing chart:

	Issued by Arbi­tral Tribunal:	Issued by Arbi­tral Insti­tu­tion (or oth­er pri­vate insti­tu­tion that is not an Arbi­tral Tribunal):
Doc­u­ment cap­tioned ​“Award” decid­ing on juris­dic­tion or com­po­si­tion of the Tribunal:	Set­ting aside request must be sub­mit­ted with­in 30 days from receipt (Art. 190.3 IPRG).	Not applic­a­ble (this doc­u­ment would not be an Award accord­ing to BGer 4A_546/2016, sec. 1.3).
Doc­u­ment cap­tioned ​“Pro­ce­dur­al Order” or ​“Deci­sion” (but not ​“Award”) decid­ing on juris­dic­tion or com­po­si­tion of the Tribunal:	Set­ting aside request must be sub­mit­ted with­in 30 days from receipt to be on the safe side (Art. 190.3 IPRG in con­nec­tion with poten­tial re-qual­i­fi­ca­tion of doc­u­ment as Award as occurred in the present decision).	Prob­a­bly no pos­si­bil­i­ty and no need to sub­mit to set­ting aside pro­ceed­ings with­in 30 days (BGer 4A_546/2016, sec. 1.3). Risk: BGer 4A_282/2013, sec­tion 5.3.2.