Publications

Johannes Landbrecht, Axel Buhr; Expert Guides – Rising Stars 2020, p. 18 et seqq.

Mak­ing Some­thing Excel­lent Even Better

Swiss law on inter­na­tion­al arbi­tra­tion is part of the Swiss Pri­vate Inter­na­tion­al Law Act (PILA) as its Chap­ter 12. Swiss law on domes­tic arbi­tra­tion is part of the Swiss Code of Civ­il Pro­ce­dure. Arbi­tra­tion pro­ceed­ings are inter­na­tion­al, accord­ing to Swiss law, if at least one of the par­ties to the arbi­tra­tion agree­ment, at the time of its sign­ing, is not domi­ciled in Switzer­land. Fur­ther­more, the par­ties, in domes­tic cas­es, can opt in to Swiss inter­na­tion­al arbi­tra­tion law, where­as in inter­na­tion­al cas­es, they can opt out of Swiss inter­na­tion­al arbi­tra­tion law, choos­ing domes­tic arbi­tra­tion law instead.

The cur­rent ver­sion of Chap­ter 12 PILA was enact­ed, sub­ject to very minor sub­se­quent amend­ments, in 1989. It has been a suc­cess sto­ry with par­ties from all over the world. Par­ties val­ue its clar­i­ty, its pre­ci­sion, and its sim­plic­i­ty. While Chap­ter 12 PILA cov­ers by and large the same issues as the UNCI­TRAL Mod­el Law 1985, the Swiss leg­is­la­tor decid­ed to enact an inde­pen­dent and unique ver­sion of an arbi­tra­tion law. In a nut­shell, it would seem that the main fea­ture of Swiss inter­na­tion­al arbi­tra­tion law, sin­gling it out amongst arbi­tra­tion laws from oth­er juris­dic­tions, is its high regard for par­ty autonomy.

Giv­en its over­all suc­cess, one may ques­tion whether Swiss inter­na­tion­al arbi­tra­tion law even requires fun­da­men­tal reform. While a thor­ough review process was launched in order to assess pos­si­ble short­com­ings and areas that might need improve­ment, and the Zurich Uni­ver­si­ty of Applied Sci­ences School of Man­age­ment and Law was tasked with an in-depth mar­ket and reg­u­la­to­ry cost assess­ment study, it quick­ly turned out that the cur­rent Swiss inter­na­tion­al arbi­tra­tion law was already high­ly com­pet­i­tive in an inter­na­tion­al are­na, served its users and oth­er stakeholders

well, and did not require major adjust­ments. Yet, in 2012, the Swiss par­lia­ment, eager not to rest on its lau­rels, request­ed the gov­ern­ment, i.e. the Swiss Fed­er­al Coun­cil, to pre­pare a draft bill that ​“pre­serves the attrac­tive­ness of Switzer­land as an inter­na­tion­al arbi­tra­tion hub”. Fol­low­ing the release of a first draft in 2017 and sub­se­quent pub­lic con­sul­ta­tions, the Swiss Fed­er­al Coun­cil, in 2018, issued a revised draft that focus­es on three main objectives:

• cod­i­fi­ca­tion of case law of the Swiss Fed­er­al Court;
• ren­der­ing Chap­ter 12 even more user friend­ly; and
• fur­ther strength­en­ing par­ty auton­o­my in line with inter­na­tion­al developments.

The most impor­tant inno­va­tion, from a prac­ti­cal per­spec­tive, may have been the pro­posed pos­si­bil­i­ty to make, in the con­text of annul­ment pro­ceed­ings, sub­mis­sions to the Swiss Fed­er­al Court in Eng­lish. We had report­ed on these devel­op­ments already in last year’s Expert Guide.

After con­sul­ta­tion in the two cham­bers of the Swiss par­lia­ment, the sec­ond cham­ber final­ly adopt­ed the reform, with only minor amend­ments, on 9 June 2020. It is there­fore time for a brief update.

Sub­mis­sions to the Swiss Fed­er­al Court in English

Today, any sub­mis­sions to the Swiss Fed­er­al Court must be filed in one of the offi­cial lan­guages (Ger­man, French, Ital­ian, or Romansh). Exhibits in a lan­guage oth­er than Ger­man, French, or Ital­ian must be filed togeth­er with a trans­la­tion. This rule even includes exhibits in Eng­lish, which are accept­ed by the Swiss Fed­er­al Court with­out trans­la­tion only where all par­ties agree.

The lan­guage require­ments of the Swiss Fed­er­al Court con­flict with the fact that the major­i­ty of inter­na­tion­al arbi­tra­tion pro­ceed­ings seat­ed in Switzer­land are con­duct­ed in the Eng­lish lan­guage and may involve par­ties who are not flu­ent in any of the offi­cial lan­guages. In these cas­es, trans­lat­ing a party’s own (draft) sub­mis­sions and those of the oth­er par­ty can be a very cost­ly and time-con­sum­ing task. In annul­ment pro­ceed­ings, where time is of the essence espe­cial­ly for the appli­cant (who must pre­pare and file a request to set aside an inter­na­tion­al arbi­tral award with­in a mere 30 days from receipt), trans­lat­ing drafts and doc­u­ments can be a daunt­ing exercise.

The government’s draft bill enabled the fil­ing of sub­mis­sions in Eng­lish in order to make annul­ment pro­ceed­ings for many for­eign par­ties much more user friend­ly. The cham­ber of the Swiss par­lia­ment first review­ing the draft bill pro­posed to go even fur­ther and request­ed that the Swiss Fed­er­al Tri­bunal be oblig­ed to also pro­vide a signed Eng­lish trans­la­tion of its deci­sions. How­ev­er, the oth­er cham­ber of the Swiss par­lia­ment reject­ed this pro­pos­al in its entire­ty. After fur­ther con­sul­ta­tion, the two cham­bers agreed, as a com­pro­mise, to adopt the government’s ini­tial pro­pos­al: the Swiss Fed­er­al Tri­bunal will, in the future, accept sub­mis­sions in Eng­lish, although its deci­sions will not be trans­lat­ed into Eng­lish. This is like­ly to be seen as a major improve­ment of Swiss arbi­tra­tion law in practice.

Cod­i­fi­ca­tion of Case Law of the Swiss Fed­er­al Court

The draft bill fur­ther sought to bring the text of Chap­ter 12 PILA up to date with the case law of the Swiss Fed­er­al Court and to clar­i­fy cer­tain open issues that are cur­rent­ly not dealt with in Swiss inter­na­tion­al arbi­tra­tion law.

In line with the case law of the Swiss Fed­er­al Court and Swiss domes­tic arbi­tra­tion law, the draft bill pro­vid­ed for the right of a par­ty to request the arbi­tral tri­bunal to cor­rect typo­graph­i­cal errors in its award, to explain con­sid­er­a­tions in its award, or to ren­der an addi­tion­al award on claims omitted.

Fur­ther­more, the draft bill con­firmed the right of a par­ty to request, in lim­it­ed cas­es, a reopen­ing of the pro­ceed­ings by way of a deci­sion of the Swiss Fed­er­al Court (Revi­sion / review), in addi­tion to the right to request the set­ting aside of the award. These lim­it­ed cas­es include sit­u­a­tions where (i) rel­e­vant facts or evi­dence come to light after the com­ple­tion of the arbi­tra­tion pro­ceed­ings; where (ii) crim­i­nal inves­ti­ga­tions show that the award was taint­ed by ille­gal­i­ty; and/​or where (iii) cir­cum­stances have come to light after the com­ple­tion of the arbi­tra­tion pro­ceed­ings that call into ques­tion an arbitrator’s inde­pen­dence or impartiality.

In line with the case law of the Swiss Fed­er­al Court and Swiss domes­tic arbi­tra­tion law, the draft bill also pro­vid­ed that a par­ty for­feits its right to object to a vio­la­tion of pro­ce­dur­al rules if the objec­tion is not prompt­ly raised.

Respond­ing to uncer­tain­ties cre­at­ed by the case law of the Swiss Fed­er­al Court, the draft bill express­ly clar­i­fied that arbi­tra­tion pro­ceed­ings are inter­na­tion­al if one par­ty to the arbi­tra­tion agree­ment was not domi­ciled in Switzer­land at the time the agree­ment was signed. The par­ties’ domi­cile at the time the pro­ceed­ings are com­menced is irrel­e­vant in this respect.

Final­ly, the draft bill clar­i­fied that any ancil­lary pro­ceed­ings before Swiss state courts (the so-called juge d’appui) are gov­erned by the rules on sum­ma­ry proceedings.

The Swiss par­lia­ment, by and large, accept­ed these pro­pos­als of the Swiss government.

Ren­der­ing Chap­ter 12 Even More User Friendly

The draft bill sought to ren­der Swiss inter­na­tion­al arbi­tra­tion law more user friend­ly for inter­na­tion­al users.

With this goal in mind, the gov­ern­ment pro­posed to fur­ther strength­en the char­ac­ter of Chap­ter 12 as a self-con­tained set of rules, by remov­ing ref­er­ences to the pro­vi­sions of the Swiss Code of Civ­il Pro­ce­dure and incor­po­rat­ing the con­tent of those pro­vi­sions direct­ly into Chap­ter 12.

Fur­ther­more, the draft bill sought to uni­fy the form require­ments for all arbi­tra­tion-relat­ed agreements.

The two cham­bers of the Swiss par­lia­ment had also no objec­tions to this aspect of the government’s draft bill.

Fur­ther strength­en­ing Par­ty Autonomy

Final­ly, in line with the pre­vail­ing view in Switzer­land, the draft bill express­ly con­firmed that arbi­tra­tion claus­es includ­ed in uni­lat­er­al acts, such as for exam­ple in a will or a trust deed, can have legal force. This amend­ment is a wel­come con­fir­ma­tion that inter­na­tion­al suc­ces­sion and trust mat­ters can be safe­ly sub­mit­ted to arbi­tra­tion in Switzerland.

The Swiss par­lia­ment again had no objections.

Con­clu­sion

The reform of Chap­ter 12 PILA was thus wel­comed by the Swiss par­lia­ment with­out major changes. The most vis­i­ble improve­ment, from a prac­ti­cal per­spec­tive, and in par­tic­u­lar for inter­na­tion­al par­ties, will be the pos­si­bil­i­ty to file annul­ment sub­mis­sions with the Swiss Fed­er­al Tri­bunal in Eng­lish. This is a huge step in the direc­tion of mak­ing the Swiss Fed­er­al Tri­bunal as acces­si­ble to inter­na­tion­al par­ties as its coun­ter­parts in the Eng­lish-speak­ing world.

The reform con­tains also many oth­er improve­ments, but the leg­is­la­tor refrains from exten­sive recon­struc­tion works. For the users of Swiss inter­na­tion­al arbi­tra­tion, this is good news. Chap­ter 12 PILA, under the wise guid­ance giv­en by the Swiss Fed­er­al Court, has been work­ing well for many years. Rather than sim­ply fol­low­ing inter­na­tion­al trends, Swiss inter­na­tion­al arbi­tra­tion law has in fact devel­oped and shaped many of those trends over the past decades. In addi­tion, Swiss inter­na­tion­al arbi­tra­tion law of the future will be even more acces­si­ble and trans­par­ent, with the reform fur­ther enhanc­ing clar­i­ty and pre­ci­sion as well as the user friend­li­ness of Swiss inter­na­tion­al arbitration.