The International Arbitration Law of Switzerland is regulated under Chapter 12 of the Private International Law Act of 1987 ("PILA"). On 19 June 2020, the Swiss Parliament approved revisions to the PILA, which is expected to enter into force on 1 January 2021.1 The purpose of the revisions is to reflect the Swiss Federal Supreme Court's decisions, and to modernize and clarify the wording of some of its provisions.
The PILA still maintains its well-organized and flexible nature by keeping all of its core provisions, and aims to create a more user-friendly and accessible text to non-Swiss users. This Newsletter Article will address its main revisions.
What Has Changed?
According to the current Article 176 of the PILA, Chapter 12 applies to all arbitrations if the seat of arbitration is Switzerland and, at the time of conclusion of the arbitration agreement, at least one of the parties' domicile or habitual residence is outside of Switzerland.
Revision to the Article aims to clarify any confusion in deciding the seat or the domicile of the parties, whether to consider the seat/ domicile at the time of conclusion of the arbitration agreement, or at the time of the initiation of the arbitration. This confusion occurred as a result of Swiss case law, which considered the domicile or the seat at the time of the initiation of the arbitration.2
With the revision, it is clarified that when determining the application of the PILA, a party's seat, domicile, or habitual residence at the time of conclusion of the arbitration agreement, should be taken into account, and any change to such at the initiation of the arbitration should be disregarded.
Article 178 provides that the arbitration agreement should be made in writing by telegram, telex, telecopier or any other means of communication which could be evidenced by a text.
The revisions made to this Article aim to modernize the means used to enter into arbitration agreements, and will include an e-mail or any other form of modern communication. An important revision to the form of arbitration agreement is that now an arbitration agreement may be included in unilateral acts, such as tender offers, last wills, trusts, constitution deeds for foundations, and articles of associations. Chapter 12 will apply by analogy to arbitration agreements provided under unilateral acts.
Article 179 of the PILA provides for party autonomy while constituting the arbitral tribunal. In cases where parties cannot reach an agreement, parties may request the assistance of the Swiss state court at the seat of arbitration. New revisions clarify that if the parties cannot agree on the constitution of the arbitral tribunal for longer than 30 days, each party may request such assistance. If the parties have not determined the seat, or if they have agreed that the seat of the arbitral tribunal is in Switzerland, the court first seized will have jurisdiction.
Another revision is made in terms of the number of arbitrators. If the parties do not agree on a number, there will be a three-member arbitral tribunal, which will be constituted by each party appointing one arbitrator and two co-arbitrators appointing the president of the tribunal.
In terms of multi-party arbitrations, if the parties are unable to appoint the arbitrators, the Swiss state court may appoint all of the arbitrators.
The revisions also clarify that an arbitrator has the duty to disclose, without delay, situations, that may create justifiable doubts to his or her impartiality or independence throughout the proceedings. If an arbitrator is challenged, it would not mean that the arbitration is suspended unless the parties or the arbitral tribunal agree otherwise.
Article 182 maintains the general principle and allows parties to agree on the procedure of the arbitration. The arbitral tribunal still has discretion in deciding the procedure if the parties cannot reach an agreement.
One of the revisions to Article 182 provides that a party should object during the proceedings if there is a due process violation, allowing the arbitral tribunal to rule on such violation. With this revision, it is also aimed to eliminate any procedural objections made as a tactic by the losing party after the award.
Access to Swiss State Courts
Article 185(a) now allows foreign arbitral tribunals and foreign parties to access to Swiss state courts for the taking of evidence and interim measures. This revision aims to eliminate any enforceability problems of interim measures granted by a foreign arbitral tribunal. These requests to the Swiss state courts will be subject to the Swiss Code of Civil Procedure on summary proceedings.
Challenges Against Awards
The Swiss Federal Supreme Court continues to decide on the challenges against arbitral awards. The grounds for setting aside are listed under the PILA; however, the Swiss Supreme Court allows the parties to ask for a correction, interpretation, and amendment and revision of the award, and the current revisions to the PILA now reflect these remedies.
According to Article 189 (a), a party of the award can seek a correction, interpretation, or amendment within 30 days after the award.
A party may also seek revision of the award within 90 days after the grounds for revision presents itself. These grounds are (i) new and material facts, (ii) a criminal offense influencing the award, and (iii) grounds to challenge the arbitrator(s).
One of the clarifications made to the PILA is that an award can be challenged regardless of the amount in the dispute.
A very important revision now allows the parties to file written submissions in English to the Swiss Federal Supreme Court to set aside, or revision of the applications. In the current practice, the parties are only allowed to file submissions in German, French and Italian. This revision will clearly reduce translation costs and ease the work of attorneys. However, it should be noted that only lawyers admitted to the Swiss bar are allowed to file submissions.
New revisions and clarifications made to the PILA will apply as from its entry into force, time of the arbitration agreement, and initiation of the arbitration would not be considered.
1. For the text of the revisions please see; https://www.admin.ch/opc/fr/federal-gazette/2020/5481.pdf.
2. Sebastiano Nessi, 'New Law Maintains Switzerland at the Forefront of International Arbitration', Kluwer Arbitration Blog, August 22 2020.
Originally published August 2020
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.