Introduction
The press recently reported on an attempt by a major entertainment group to prevent a man from taking legal action against one of its subsidiaries on the grounds that he had agreed to an arbitration clause in the terms and conditions of its streaming platform.
In a few words, and still according to the press, the plaintiff had lost his wife, who died of anaphylactic shock, after eating at one of group theme parks.
After a few days, the group backtracked, explaining that it had waived the arbitration clause.
This textbook case took place in the United States, but it is not uninteresting to ask how it might have been judged in Switzerland. Questions such as whether an arbitration clause can be included in general terms and conditions, whether it can be transposed from one group subsidiary to another, or whether it applies in the event of death, are all relevant.
This contribution will focus on the first question: is an arbitration clause in general terms and conditions valid?
What is arbitration?
In principle, the State has a monopoly on the management and resolution of disputes. Occasionally, however, parties may decide to settle their dispute through arbitration. They appoint one or more arbitrators to rule on their dispute according to a specific procedure. This method of dispute resolution is widely used in Switzerland and abroad in commercial, financial and sporting matters, as well as in international relations. Arbitration decisions are generally binding and can be enforced by the courts. Not everything is arbitrable! For example, disputes relating to personal status (marriage, divorce), bankruptcy and criminal law cannot be submitted to arbitration.
The arbitration clause
To be settled by arbitration, a dispute must be subject to an arbitration clause.
In Switzerland, from a formal point of view, the arbitration clause must be concluded in writing, by telegram, telex, fax or any other means of communication that enables it to be proven by a text. The written (unqualified) form is a condition for the validity of the arbitration agreement. The aim here is to verify that the parties have indeed intended to resort to private justice, renouncing the State judge and the possibilities of recourse available under State procedure. The arbitration clause must contain at least the following elements: the identity of the parties, their willingness to resort to arbitration and the subject matter of the arbitration proceedings. A priori, the arbitration clause does not need to be signed electronically or manually, and can result from an exchange of e-mails.
It follows from what has been said above, that an arbitration clause inserted in general terms and conditions that meets the formal requirements would, a priori, be valid insofar as the dispute in question is arbitrable.
The concept of the "unusual" clause
However, not everything is permitted in general conditions...
Swiss case law applies the concept of the "unusual clause" to determine the validity of general terms and conditions. According to this, acceptance of general terms and conditions does not cover clauses that are unusual and to which the attention of the weaker or less experienced party has not been drawn. The more a clause undermines a party's legal position, the more unusual it is considered to be. In application of these principles, an arbitration clause may be considered null and void if it is so unusual that the party who accepted it could not reasonably have expected such a clause in the general terms and conditions.
In addition, Article 8 of the Swiss Unfair Competition Act prohibits the use of unfair commercial terms in contracts concluded with "consumers". Swiss law does not contain a uniform definition of "consumer". However, if a streaming platform offers mass services to individuals, it could be accepted that the individual in question is a consumer under the law.
In application of these principles, an arbitration clause should therefore be considered null and void if it is so unusual that the party accepting it could not reasonably have expected such a clause in the general terms and conditions. It could also be qualified as an "abusive commercial practice" and therefore not be enforced by a court in Switzerland.
Conclusion
Consumers in Switzerland can breathe: an arbitration clause contained in general terms and conditions should be qualified as unusual or an abusive commercial practice, and therefore not be enforced by a Swiss judge.
However, in view of the advantages of arbitration for an internationally active company such as confidentiality and consistency of decisions, the question may soon arise again. It will then be up to the (Swiss) State judge to decide whether such clause could be entertain.
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.