Switzerland: Challenging Arbitrators For Lack Of Independence Or Impartiality - Procedural Pitfalls From A Swiss Perspective

I. Introduction

The right of parties to an independent and impartial arbitral tribunal has not lost any topicality. Indeed, the sensitivity around the issue of arbitrators' independence and impartiality appears to have increased in recent years. In particular, arbitral institutions such as the International Court of Arbitration of the International Chamber of Commerce (ICC) require a high (if not increasing) degree of transparency from arbitrators and are quite prepared to refuse their appointment or to approve challenges of arbitrators on the grounds of lack of independence and impartiality.¹

This contribution will highlight procedural pitfalls from a Swiss perspective when challenging arbitrators in international arbitration proceedings. In a decision rendered in April 2018, the Swiss Federal Supreme Court rejected a request for the setting aside of a final award as belated, because the requesting party (instead of seeking the setting aside of the final award) should already have brought such setting aside proceedings against a procedural order with which the arbitral tribunal had rejected a challenge against two of the arbitrators.² While this decision concerns the rather rare situation where an arbitral tribunal is competent to rule on a challenge brought against it, this contribution will, in a broader context, outline applicable procedures and potential pitfalls when challenging arbitrators.

After an overview of the grounds for challenge under Swiss law (Section II) and the related duties of parties and arbitrators (Section III), the authors will discuss the challenge procedures during the arbitration proceedings (Section IV.A) and after the rendering of an award (Section IV.B).

II. Overview of Grounds for Challenge

A. Legal Bases

International arbitration proceedings seated in Switzerland are governed by Chapter 12 of the Swiss Private International Law Act (Bundesgesetz uber das Internationale Privatrecht – PILA).³ According to Article 180(1)(a) and (b) PILA, an arbitrator can be challenged if he or she fails to meet the qualifications agreed upon by the parties or if a ground for challenge exists under the applicable arbitration rules. Furthermore, according to Article 180(1)(c) PILA, an arbitrator can be challenged if "circumstances exist that give rise to justifiable doubts as to his independence". As the Swiss Supreme Court has held in a leading decision, Article 180(1)(c) PILA refers to both independence and impartiality.⁴ Chapter 12 of the PILA is currently subject to revision and the draft bill of October 2018 explicitly includes the requirement of impartiality in Article 180(1)(c) PILA.⁵

Article 180(1)(c) PILA is mandatory and cannot be derogated by the parties in advance.⁶ Accordingly, parties cannot waive or limit their right to an independent and impartial tribunal, e.g. by choosing arbitration rules providing for lower standards than the PILA.⁷

Footnotes

1 See Andrea Carlevaris & Rocio Digon, Arbitrator Challenges under the ICC Rules and Practice, ICC Dispute Resolution Bulletin, at 26 and fn 5 (2016), noting that in ICC arbitration proceedings the number of prospective arbitrators who were not confirmed had increased between 2006 and 2014. According to a recent statistic published by the ICC, 42 arbitrators were not confirmed or appointed in ICC arbitration proceedings in 2017, see ICC Practice and Procedure, 2017 ICC Dispute Resolution Statistics, ICC Dispute Resolution Bulletin, at 57 (2018). See further fn 24 below for a statistical overview of the success rate of challenges brought before the ICC and the Arbitration Court of the Swiss Chambers' Arbitration Institution (SCAI).

2 Swiss Supreme Court, Apr 30, 2018, 4A_136/2018.

3 Domestic arbitration proceedings seated in Switzerland are governed by Part 3 of the Swiss Code of Civil Procedure (Zivilprozessordnung - CCP). This contribution will focus on the provisions of the PILA, and refer to the CCP only in specific cases.

4 Swiss Supreme Court, Oct 29, 2010, ATF 136 III 605 ("Valverde" decision), consid. 3.3.1.

5 The draft bill together with a report of the Swiss Federal Council is available at https://www.ejpd.admin.ch/ejpd/de/home/aktuell/news/2018/2018-10-24.html, last visited November 19, 2018. It is currently (as of November 2018) expected that the revised PILA will enter into force in summer 2020 or January 2021 at the earliest.

6 See Gabrielle Kaufmann-Kohler & Antonio Rigozzi, International Arbitration, Law and Practice in Switzerland, para. 4.107 (2015); Daniel Girsberger & Nathalie Voser, International Arbitration, Comparative and Swiss Perspectives, para. 754 (3rd ed. 2016); Wolfgang Peter & Christoph Brunner, Art. 180, in Basler Kommentar Internationales Privatrecht, para. 28 (Honsell et al. eds., 3rd ed. 2013).

7 E.g., Kaufmann-Kohler & Rigozzi, supra note 6, para. 4.107.

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Originally published in Klausegger/Klein/Kremslehner/Petsche/Pitkowitz/Welser/Zeiler (eds.), Austrian Yearbook on International Arbitration 2019, Wien 2019

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