Switzerland: The SIA Standard 150:2018 For Arbitrations

Last Updated: 31 August 2018
Article by Nathalie Voser and Annabelle Möckesch
Most Read Contributor in Switzerland, September 2018

The Swiss Association of Engineers and Architects ("SIA") has revised its old arbitration rules for the first time in over 40 years. The new rules entered into force on 1 January 2018. Interesting innovations in particular are the urgent determination procedure, the instruction hearing, and the possibility to appoint a technical expert as a consultant to accompany the arbitration.

1 INTRODUCTION

The SIA has recently revised its Standard 150: Provisions for Arbitration Proceedings (the "SIA Rules"). The new SIA Rules, which replace the predecessor rules from 1977, entered into force on 1 January 2018 and apply in principle to all arbitration proceedings pursuant to the SIA Rules initiated after 1 January 2018, irrespective of when the arbitration agreement was entered into.

Arbitration proceedings, i.e. dispute resolution proceedings before private arbitral tribunals, have considerable advantages over state court proceedings: The parties may appoint persons with specific expertise as arbitrators. In addition, the procedure is generally confidential and may take less time because state courts can only review arbitral awards to a very limited extent. Especially in construction disputes, these are important reasons for agreeing on arbitration proceedings.

Institutional rules such as the SIA Rules contain the rules of the arbitral procedure. There are numerous, especially international, sets of institutional arbitration rules which in some cases vary considerably with respect to content and level of detail. However, the parties are not required to agree upon a certain set of institutional arbitration rules. In case the parties have not chosen institutional rules, the arbitral tribunal itself will determine the rules of the arbitral procedure ad hoc.

Generally, an arbitration institution monitors compliance with the arbitration rules and performs certain tasks during the proceedings. In case of the SIA Rules, the SIA Head Office performs these functions. Parties typically agree upon arbitration and the applicable institutional rules when entering into a contract. The SIA model contracts also contain the option to choose arbitration under the SIA Rules as the means of dispute resolution.

While the revised SIA Rules primarily aim at domestic construction arbitrations, they can in principle apply to any kind of dispute, including domestic and international contractual relationships.

The new SIA Rules were adapted to match the current legal framework, which has undergone considerable changes since 1977. Moreover, the drafting committee has taken into account the provisions of well-established, modern arbitration rules and introduced innovative elements so far unknown in other institutional rules. Specifically, these include the urgent determination procedure and the mandatory instruction hearing.

2 INSTITUTIONALIZATION

The revision of the SIA Rules brought about a notable institutionalization. In particular, the new SIA Rules assign more tasks and competences to the SIA Head Office at the beginning of the proceedings. For instance, the request for arbitration must be submitted to the SIA Head Office. The SIA Head Office is also involved in the constitution of the arbitral tribunal and transmits the file to the tribunal upon its constitution. Finally, the SIA Head Office retains an original of the award upon completion of the proceedings.

Overall, this institutionalization results in a notable simplification of the procedure for the parties. Here, however, compared to other institutional rules, the institutionalization is less far-reaching and thus continues to allow for a high degree of procedural flexibility.

3 PROVISIONS ON TIME LIMITS

In order to promote an efficient conduct of the proceedings, the SIA Rules contain strict time limits. For example, the respondent must submit the answer to the request for arbitration within 30 days after receipt of the request for arbitration. The arbitral tribunal shall hold a case management conference within 30 days of its constitution to establish a procedural timetable. Unless the statement of claim or the statement of defense, respectively, are already contained in the request for arbitration or the answer to the request for arbitration, the parties shall generally submit these within consecutive time limits of 30 days each. It is somewhat surprising that the SIA Rules do not set a deadline for rendering the final award in the regular proceedings.

4 PROMOTION OF AMICABLE DISPUTE SETTLEMENT

The SIA Rules contain several provisions which are intended to encourage the parties to settle their dispute amicably. The SIA Rules clarify that the arbitral tribunal may at any time attempt to facilitate a settlement agreement between the parties. Furthermore, the SIA Rules incorporate the institution of an instruction hearing.

The SIA Rules provide that the arbitral tribunal shall invite the parties to an instruction hearing within 30 days after receipt of the statement of defense or of the reply to counterclaim, as the case may be. During this instruction hearing, the arbitral tribunal provides the parties with a preliminary oral assessment of the prospects and risks of the case (including evidentiary risks) based on the tribunal's study of the file. Again, the objective of this instruction hearing is to encourage a settlement agreement between the parties.

5 TECHNICAL EXPERT

The SIA Rules expressly allow the arbitral tribunal to appoint a technical expert to accompany the entire proceedings. This technical expert functions as a consultant and is hence neither an arbitrator nor a tribunal-appointed expert within the meaning of the SIA Rules. The provisions on arbitrator impartiality and independence as well as the challenge procedure for arbitrators also apply to the technical expert. This institution is particularly innovative and efficient because it can eliminate the need for costly and timeconsuming formal expert reports. The Federal Supreme Court has expressly stated that the use of such consultants is possible in Switzerland (decision 4A_709/2014). It goes without saying that the arbitral tribunal cannot delegate its decision-making powers to the technical expert.

6 RULES ON THE TAKING OF EVIDENCE

The SIA Rules contain detailed rules on the taking of evidence, some of which soften the classic adversarial principle (Verhandlungsgrundsatz). It is worth highlighting that the factual submissions may be supplemented by specific references to the content of submitted documents. This provision must be understood against the backdrop of the Swiss practice for court submissions, which in turn is a response to the strict standard of substantiation imposed, for example, by the Commercial Court of Zurich. The drafting committee considered these court submissions unnecessarily detailed and thus costly for the client. Most importantly, however, the arbitral tribunal may also take into account facts which do not form part of the parties' respective submissions but rather only arise out of the submitted evidence.

In the event of unclear, contradictory, undefined or incomplete factual submissions, the arbitral tribunal may inform the parties accordingly.

7 PRELIMINARY MEASURES

At the request of a party, the arbitral tribunal may order provisional measures if there is an imminent risk of harm. As is customary in arbitration, the claimant may choose between bringing its request before the arbitral tribunal or the competent state court (even in the presence of an arbitration agreement).

However, regarding the provisional registration of the building contractor's lien, which is of particular interest to the construction sector, a request before state courts should generally prove to be preferable. This is due to the registration deadline, the costs associated with the application for interim relief, and the authority of the state courts to order registration in the land register.

8 COSTS

The costs of the proceedings comprise the registration fee of CHF 1,000 as well as the fees and expenses of the arbitral tribunal and, if applicable, those of a legal secretary, a technical expert and a tribunal-appointed expert. These costs are generally allocated in accordance with the outcome of the proceedings. However, again in the interest of efficient dispute resolution, the SIA Rules contain an important exception where a written settlement offer has been rejected. If the award does not accord one party substantially more than what the other party offered during the arbitration and at the latest until the case management conference in case of an amicable settlement, the former party may be ordered to bear the entire costs of the proceedings.

Unlike other institutional rules, the SIA Rules contain no scales for the calculation of the arbitrator's fees but merely provide that the members of the arbitral tribunal must consider the amount in dispute, the complexity of the dispute, the amount of time spent on the case and any other relevant circumstances when determining their "adequate remuneration". In order to account for the uncertainties associated with this provision and to raise cost awareness, the parties should ask the arbitral tribunal to draw up a detailed budget at the beginning of the proceedings.

Although arbitrator fees tend to exceed court fees, the aforementioned advantages of arbitration often make this means of dispute settlement preferable to litigation. Regarding the parties' legal and other costs, the arbitral tribunal has discretion to decide which party shall bear which costs. In doing so, the tribunal shall take into account the outcome of the proceedings and the parties' behavior throughout the proceedings, as well as the extent to which the parties had reason to make their respective submissions in good faith.

9 SIMPLIFIED PROCEDURE

Where the amount in dispute does not exceed CHF 250,000 or where the parties so agree, the SIA Rules provide for a simplified procedure comparable to the expedited procedures known from other institutional rules.

In order to minimize time and costs, a sole arbitrator decides the case, and generally there is only a single round of submissions and (unless the parties already agreed that the arbitrator should make her decision based solely on the file) a single evidentiary hearing. The sole arbitrator will generally render a summary award within six months after receipt of the file.

10 URGENT DETERMINATION PROCEDURE

The Annex contains the truly remarkable feature of the new SIA Rules, namely the urgent determination procedure. This procedure is not to be confused with the emergency arbitrator proceedings for interim relief that have found their way into most other institutional rules in recent years. Rather, the urgent determination procedure allows for a declaratory decision to be made on certain exhaustively listed questions which typically arise during construction (right to order a variation, violation of an obligation to cooperate, and non-performance) and which require a quick solution in the interest of planning and legal certainty.

This declaratory decision is rendered by the arbitrator within 30 days after the SIA Head Office transmits the file. It has – albeit strictly limited to the findings on the questions listed in the Annex – the effect of a final award, unless one of the parties initiates a regular arbitration within 30 days of receipt of the written notification of the reasoning underlying the decision.

The urgent determination procedure only applies in case of a separate opt-in. It is thus necessary that the parties have explicitly agreed on the applicability of the urgent determination procedure.

11 STATE COURT REVIEW OF THE AWARD

An arbitral award made under the SIA Rules is subject only to limited review by the state courts. Unlike awards rendered in international arbitration, those rendered in domestic arbitrations seated in Switzerland may also be challenged on the ground of arbitrariness.

Unless the parties expressly agree on the jurisdiction of the higher cantonal court at the respective place of arbitration, the Federal Supreme Court is competent to hear challenges to a domestic arbitral award.

12 CONCLUSION

The new SIA Rules contain innovative and remarkable new features to promote the efficient resolution of disputes, which makes them particularly attractive. For example, the arbitral tribunal is obliged to streamline the conduct of the proceedings immediately upon its constitution and must provide a preliminary assessment at the instruction hearing. Especially in view of ambitious time limits, the appointment of a technical expert can prove helpful. The evidentiary rules deviating from the adversarial principle as well as the simplified procedure for smaller amounts in dispute must also be welcomed. Finally, the urgent determination procedure presents a promising novelty. It remains to be seen whether it can establish itself in practice.

All in all, the new SIA Rules have turned out well. Parties are thus recommended to make use of this option in their contracts for work in the future and thereby avoid lengthy state court proceedings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions