In a recent decision, the Swiss Supreme Court (the "Supreme
Court") confirmed that setting aside proceedings are also
available against an additional award, including the refusal to
issue an additional award. The Supreme Court also confirmed that a
request for an additional award has, as such, no impact on other
available post-award mechanisms. This decision is also a good
illustration of clarification of prayer for relief taking into
account the party's entire submission.
For the purpose of this note, the factual background of the case may be summarized as follows: In a WIPO arbitration, based in Geneva, a sole arbitrator awarded interests on damages to a party although the prayer for relief did not expressly refer to interests. The sole arbitrator thereafter rejected a request for an additional award. Both the award on interests and the refusal to issue an additional award were challenged before the Supreme Court.
The following clarifications on procedural issues are worth emphasizing:
First, the Supreme Court declined to resolve the recurrent controversy regarding the applicability, to international arbitrations, of the CHF 30,000 minimum dispute-value threshold, which applies normally to challenge proceedings in civil matters before the Supreme Court (Swiss Supreme Court Act, Art. 74.1).
Secondly, the Supreme Court confirmed that setting aside proceedings are available against an additional award and clarified, for the first time, that such proceedings are also available against the decision by which an arbitral tribunal refuses to issue an additional award. For the Supreme Court, there is no reason to differentiate this refusal from a refusal to issue a corrected award, which, according to Supreme Court decisions, may be challenged by way of setting aside proceedings
With respect to the impact of a request for an additional award on other post-award mechanisms, the Supreme Court confirmed its longstanding position that :
- The submission of a request for an additional award does not suspend the time period for challenging the initial award;
- The right to challenge the initial award is not subject to prior filing of a request for an additional award;
- If the initial award may be challenged because the arbitral tribunal did not rule on all the prayers for relief (PILA Article 190(2) lit.c, second case), this right to challenge does not prevent the relevant party from seeking an additional award on the omitted prayers; in such a case, the Supreme Court should stay the challenge proceedings until the arbitral tribunal issues its final decision on the request for additional award.
Thirdly, the arbitral tribunal must apply the law, without being limited to the parties' submissions. Therefore, an arbitral tribunal may rely on legal arguments that were not submitted by the parties. In doing so, the arbitral tribunal gives a different legal characterization of the factual background of the case but does not rule on a new claim or an amended claim. Nevertheless, the arbitral tribunal remains at all time bound by the object matter and amount of the prayer for relief, in particular by the limitations or specific legal characterization in the parties' prayer for relief.
In the instant case, the Supreme Court found that awarding interests although such interests were not expressly included in the prayer-for-relief section of the brief did not exceed the claimant's submissions (ultra petita) since (i) Claimant's prayer for relief sought payment of the "2009 minimum royalty to be established definitely once the 2009 turnover is submitted, this means EURO 1,397,883.62 at minimum" (ii) the claimant clearly stated in its brief that the royalties were subject to a 4% interest and (iii) there was no indication of claimant's intent to stop the interest from running at the date of the brief or at the date of the award. Therefore, the Supreme Court found that the above mentioned prayer, duly construed in the light of the Claimant's entire brief, expressed, at least implicitly in a manner which could be identified easily, Claimant's intent to claim for interests to accrue until total payment of the capital. As a corollary, the Supreme Court endorsed the Sole Arbitrator's refusal to award interests on the other party's claim because this party's prayer for relief set forth a limited amount only and nowhere in the brief could the Supreme Court find any indication that this party intended to claim for interests.
The arbitration users will naturally come to the conclusion that, whenever they are seeking payment, they should make sure that (i) their prayer for relief on the merits be limited to the amount to be paid, (ii) this amount be accompanied by "at minimum", "to be further determined in the proceedings" or similar formula, and that (iii) no legal or contractual basis be set forth in the prayers for relief.
For the arbitrators, however, it may be difficult to assess when the ultra petita cap allows them to consider that part of the party's reasoning is actually tantamount to a prayer for relief and when, actually, the infra petita threshold requires them to do so.
Swiss Supreme Court's decision 4A_440/2010. The full text of the decision is available in its original (French) language at http://www.bger.ch/fr/index/juridiction/jurisdiction-inherit-template/jurisdiction-recht/jurisdiction-recht-urteile2000.htm. This decision is also to be published in the Supreme Court's official case reporter.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.