Comparative Guides

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4. Results: Answers
International Arbitration
The parties
Are there any restrictions on who can be a party to an arbitration agreement?

Answer ... So-called ‘subjective arbitrability’ – that is, the legal capacity of a specific entity or person to validly enter into an arbitration agreement – constitutes one of the requirements that must be fulfilled in order for an arbitration agreement to be deemed valid.

Whether a party has the capacity to be a party in arbitral proceedings is thus to be determined according to the applicable law. According to the Swiss Federal Tribunal, the legal capacity of a person is governed not by the special rules of conflict in arbitral proceedings, but rather by operation of the general conflict of laws rules. Thus, for natural persons, Articles 35 and 36 of the Swiss Private International Law Act (PILA) are applicable, referring to the law of the domicile of the party as the governing law for questions of legal capacity. For legal entities, Articles 154 and 155 of the PILA refer to the law of the state under which the respective entity is organised. If Swiss law is applicable, the question of legal capacity to be a party is dependent on the capacity to exercise civil rights. Thus, while natural persons must be of age and have legal capacity (Articles 12 to 19 of the Swiss Civil Code), legal entities must fulfil the necessary requirements described by law. The same holds true for national arbitration.

In this regard, Article 177, paragraph 2 of the PILA particularly states that a state, or an entity held by or controlled by a state, may be a party to an arbitration agreement. However, such state party is restricted from invoking its own law in order to contest its capacity to arbitrate or the arbitrability of a dispute covered by the arbitration agreement.

For more information about this answer please contact: Anja Vogt from Niederer Kraft Frey AG
Are the parties under any duties in relation to the arbitration?

Answer ... The Swiss legislation on both international and domestic arbitration includes few provisions on the parties’ duties in arbitration proceedings; neither the PILA nor the Swiss Code of Civil Procedure (CPC) stipulates specific duties of the parties in this regard. Only the CPC explicitly stipulates the duty of the parties to appoint the arbitrators (Article 361 of the CPC). However, this provision is not mandatory.

However, according to Article 2, paragraph 1 of the Swiss Civil Code, the parties are bound by the general duty of good faith in procedural matters. As a consequence, the parties must cooperate in the establishment and substantiation of the relevant facts.

Beyond that, the parties’ duties mainly derive from the arbitration agreement, the chosen arbitration rules and the orders of the arbitral tribunal (see Article 182 of the PILA and Article 373 of the CPC). Under the Swiss Rules of International Arbitration, for instance, the duty to act according to good faith is explicitly foreseen in Article 15, paragraph 7. Furthermore, like other arbitration rules, the Swiss Rules impose on the parties a duty to pay an advance on costs (Article 41, paragraph 1 of the Swiss Rules). Time limitations are also commonly imposed on the parties for the filing of submissions (eg, see Article 18, paragraph 1 and Article 19, paragraph 1 of the Swiss Rules). Finally, the parties must also comply with the final award rendered by the arbitral tribunal (Article 44 of the Swiss Rules).

In general, the duties that can be imposed on the parties are limited by Article 182, paragraph 3 of the PILA, which obliges the arbitral tribunal to treat the parties equally and to grant each party the right to be heard.

For more information about this answer please contact: Anja Vogt from Niederer Kraft Frey AG
Are there any provisions of law which deal with multi-party disputes?

Answer ... The Swiss legislation on international arbitration is silent on multi-party issues. However, the revised PILA is expected to address certain issues related to multi-party arbitration proceedings.

In contrast, Article 376, paragraph 1 of the CPC allows for arbitral proceedings conducted by or against multiple parties, on condition that:

  • the respective parties are bound by one or several corresponding arbitration agreement(s); and
  • the asserted claims are either identical or factually connected.

In addition, Article 376, paragraph 3 of the CPC allows for the intervention as well as the joinder of a third party to a pending arbitration, provided that there is an identical arbitration agreement between the third party and the parties to the arbitration proceeding and subject to the consent of the arbitral tribunal.

As regards the appointment of arbitrators in multi-party disputes, in domestic arbitration the state court at the place of arbitration (‘juge d’appui’) may appoint all arbitrators, if seized by the parties after failure to designate the arbitrators. In practice, the same applies in international arbitrations seated in Switzerland.

Apart from the above, Swiss law includes no specific provisions on multi-party arbitration. However, if an arbitration is conducted under the Swiss Rules of International Arbitration, for instance, the arbitral tribunal may allow the joinder or intervention of a third party when so requested in a pending case (Article 4, paragraph 2 of the Swiss Rules). The decision on the joinder or intervention of a third party must be made by the arbitral tribunal, after consulting with both the parties and any confirmed arbitrator in all proceedings.

For more information about this answer please contact: Anja Vogt from Niederer Kraft Frey AG
International Arbitration