In decision 4A_505/2017, the Swiss Supreme Court rejected a challenge to set aside an award based on an alleged violation of the right to be heard and lack of impartiality of the tribunal.
In a French-language decision, the Swiss Supreme Court refused to set aside an award rendered by an ICC arbitral tribunal for alleged violation of the right to be heard and lack of impartiality on the part of the tribunal.
A dispute arose between an Italian general contractor and a German subcontractor. The subcontractor claimed for payment of outstanding invoices; the contractor counterclaimed for payment of liquidated damages. The arbitration lasted six and a half years, during which time the tribunal issued over 50 procedural orders, held ten hearings and made three awards.
During the proceedings, the tribunal appointed an expert for technical and accounting issues. It subsequently reduced the scope of the expert's instructions, excluding the counterclaims from the analysis, finding that, irrespective of the expert's findings, the counterclaims would fail in any event based on legal considerations alone. The contractor contended that that amounted to a violation of its right to be heard.
The contractor also argued that the tribunal was biased because it allegedly communicated to the parties more of its preliminary case assessment during a settlement meeting than had been agreed.
The Swiss Supreme Court found that the tribunal was aware of the parties' right to be heard and acted with utmost diligence and care when taking evidence. It was justified in reducing the scope of the expert's instructions due to the tribunal's anticipatory evaluation of the evidence and considerations of efficiency. Moreover, the court noted that the tribunal had expressly retained the right to adapt the expert's scope in the agreement with the expert, which was signed by all parties.
The Supreme Court also rejected the contractor's challenge based on impartiality, even accusing it of bad faith conduct, given that the parties had signed an express waiver of challenge for bias regarding the tribunal's participation at the settlement meeting.
The decision again confirms the Supreme Court's support for arbitral tribunals applying anticipatory evaluation of evidence (here in connection with the legal evaluation) in order to foster efficiency in conducting arbitral proceedings while safeguarding the parties' rights to present their case. It also demonstrates the significant discretion that the Supreme Court affords to arbitral tribunals in that respect, and should embolden arbitrators to take brave decisions. As such, it shows that increasing "due process paranoia", which has been detected in arbitrators in other seats, has no place in arbitrations seated in Switzerland.
Case: Decision 4A_505/2017 (4 July 2018).
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