Arbitration is a private form of dispute resolution in which parties agree to submit their dispute to an arbitral tribunal, whose decision is binding and internationally enforceable under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Traditionally the preferred method for resolving commercial disputes, arbitration is gaining traction in private wealth matters, particularly those involving trusts, estates and foundations.
Families, fiduciaries and beneficiaries increasingly turn to arbitration to resolve their most personal disputes discreetly and efficiently.
This shift is driven by increasingly global family structures, cross-border estate planning and the need for confidentiality, flexibility and speedy procedures. Parties involved in private wealth disputes are turning to arbitration to resolve their disputes outside of public courtrooms, often in highly sensitive contexts involving significant assets and diverging interests.
From a dogmatic standpoint, the extension of arbitration into trust, estate and foundations matters is notable. Arbitration agreements are, by nature, consensual: they require mutual agreement between two or more parties. However, many trust and estate structures are based on unilateral legal instruments such as wills, trust deeds or foundation statutes. This raises the fundamental question: can a clause inserted unilaterally by a testator or founder bind heirs or beneficiaries who never expressly agreed to arbitrate?
Swiss law offers a progressive answer. Since 1 January 2021, amendments to the Swiss Civil Procedure Code (CPC) and the Swiss Private International Law Act (PILA) explicitly confirm that arbitration clauses in unilateral legal instruments such as wills, trust deeds and foundation statues are valid under Swiss law, provided that the seat of arbitration is in Switzerland.
By confirming the validity of arbitration clauses in unilateral legal instruments, Swiss law provides welcome certainty for parties involved in private wealth disputes.
Introducing the TEF Rules
The Swiss Arbitration Centre (the Swiss institution that administers arbitration proceedings) identified the growing popularity of arbitration in trusts and estates and recognised the need for specific rules. It therefore just released its Supplemental Swiss Rules for Trust, Estate and Foundation Disputes (TEF Rules) on 22 May 2025. Entering into force on 1 July 2025, the TEF Rules are available in four languages and come with a multilingual Explanatory Note. They offer a modern and practical framework for resolving private wealth disputes through arbitration, specifically designed to address the specificities and particular complexities of trust, estate and foundation matters.
Families, fiduciaries and beneficiaries now have a tailored arbitration framework to address the unique demands of private wealth disputes.
The TEF Rules will supplement the Swiss Rules of International Arbitration. They will mainly apply in three situations:
1. where an arbitration clause in a unilateral legal instrument refers to the Swiss Rules of International Arbitration;
2. where an arbitration agreement specifically refers to the TEF Rules or their predecessor rules; or
3. where parties expressly agree to arbitrate under the TEF Rules.
The rules cover the notification and representation of all persons whose rights may be affected by the dispute ("Entitled Persons"), the constitution of the arbitral tribunal, and the applicable substantive law in estate matters. Very importantly, parties are required to identify and notify all Entitled Persons, including unborn or incapacitated individuals, and to ensure their interests are properly represented. The rules also allow Entitled Persons to comment on the appointment of arbitrators, and the Arbitration Court of the Swiss Arbitration Centre may appoint some or all tribunal members where not all are represented.
One critical issue is the interplay between the TEF Rules and the revised PILA provisions on cross-border estates. The applicable conflict of law regime will always need to be taken into account. In this regard, a distinction must be made between estate matters and trust matters:
- In estate matters, the TEF Rules clarify that the applicable substantive law is determined by the conflict of law rules, reflecting the mandatory nature of many estate law provisions and the restriction of party autonomy in estate disputes. The relevant connecting factor may differ depending on the applicable legal regime. For example, under the EU Succession Regulation, the relevant factor is the decedent's last habitual residence, and in some jurisdictions, parties may be able to opt for their national law to apply, which may not contain the same mandatory provisions as the law of the last residence.
- For trust and foundation disputes, parties are free to agree on the law applicable to any dispute in relation to the trust or the foundation. In the absence of such a choice of law, the arbitral tribunal applies the rules of law with which the dispute has the closest connection, such as, for example, the law governing the trust or the foundation.
It is also important to note that, although the TEF Rules provide for the representation of all Entitled Persons and are designed to enhance the enforceability of arbitral awards, a careful assessment is still required as to whether such awards will be enforceable in the relevant jurisdictions. In particular, the so-called "firewall" provisions found in many offshore trust jurisdictions may pose certain obstacles to the enforcement of arbitral awards concerning trusts.
Finally, the TEF Rules are accompanied by model arbitration clauses for inclusion in wills, inheritance contracts, trust deeds and foundation statutes, which help parties draft clear and enforceable arbitration agreements.
Why the TEF Rules Matter
By providing an appropriate framework for the use of arbitration in trust and estate disputes, the TEF Rules bring a number of practical benefits. First, they provide certainty and predictability in cross-border disputes. That will help parties avoid parallel court proceedings and jurisdictional conflicts, which are as common as they are harmful when assets or beneficiaries are located in multiple countries. Second, the ability to tailor proceedings and select arbitrators with relevant expertise means that complex disputes are handled professionally and efficiently. Confidentiality, privacy and discretion is a third important advantage, highly valued by high-net-worth and prominent families. Fourth, and perhaps most importantly, the TEF Rules ensure that all persons affected by a dispute have their interests properly represented.
This may prove crucial not only for the acceptance of any award rendered in the arbitration, but also for any potential enforcement in Switzerland and abroad.
Concluding Remarks
With the TEF Rules soon in force, Switzerland is further cementing its position as a leading venue for resolving private wealth disputes. The rules offer a clear, efficient and confidential process tailored to the needs of families, fiduciaries and beneficiaries, and are expected to encourage greater use of arbitration in trust, estate and foundation matters.
Originally published by ThoughtLeaders4 Private Client Magazine
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.
