Switzerland: Update On Recent Arbitral Developments And Tendencies

by Nicolas Ulmer and Lionel Serex

Switzerland has long profited from its status as a small, reliable and neutral country, to be a major venue for international arbitration. In addition, Swiss substantive law is often chosen as a "neutral" law to govern international contracts, even when neither party is Swiss and the transaction has no particular connection with Switzerland, other than a dispute resolution clause providing for arbitration in Switzerland.

The result is that Switzerland has historically occupied a much larger place in the arbitral world than its small size would otherwise warrant. This is well illustrated by recently released ICC statistics; Switzerland retained its long-held top spot as to number of arbitrators and regained, in 2009, its status as the top country selected as the seat for ICC arbitrations.

Specifically, in calendar year 2009, there were 202 arbitrators of Swiss nationality in ICC cases (15.48% of all arbitrators); the most from any country. The second most popular country for ICC arbitrators was the United Kingdom with 196 arbitrators, the U.S. occupied fourth place with 99 ICC arbitrators. Thus, given Switzerland's small population, a Swiss is 8.5 times more likely than a British person, and immensely more likely than an American, to serve as an ICC Arbitrator. As to the place of ICC arbitrations, Switzerland ranked first with France, the headquarters of the ICC, a close second as the venue for ICC arbitrations in 2009; during 2009, 19% of ICC arbitrations were seated in Switzerland. It should be noted, however, that in the vast majority (92%) of these ICC cases, the Swiss place of arbitration was chosen by the parties and not the ICC - demonstrating that a Swiss place of arbitration remains very attractive to parties to international commercial agreements.[1] It is clear that despite its size, Switzerland retains an important, and growing, role in the world of international arbitration.[2]

This, of course, is the way the Swiss arbitration community likes it - and Swiss practitioners and arbitrators are very anxious that Switzerland retain its privileged status in arbitration, and reputation as an "arbitration-friendly" jurisdiction.
 
Legislative Developments

In a previous piece published by Mealey's, one of the authors reported on how the potentially dangerous effects of the Swiss Supreme Court's decision in Fomento de Construcciones y Contratas S.A. v. Colon Container Terminals S.A.,[3] had been effectively counteracted by an amendment to Art. 186 in the Swiss Private International Law Act ("PILA," Chapter 12, Arts. 176-194 of the PILA governs international arbitration in Switzerland),[4] and that the Swiss Arbitration Association (generally known by its French acronym "ASA") and others had been active in discreetly lobbying for this change, as they were concerned that Fomento's case's recognition of foreign litis pendens in arbitration would undercut the effectiveness of Switzerland as a place of arbitration.[5]

While no specific further amendments to the PILA are yet in the offing, some are being suggested and there are a number of institutional, case law and other developments that now merit a further update as to arbitration in Switzerland.

One recent development that was endorsed by the Swiss arbitration community was the Swiss VAT Act 2010's[6] confirmation that VAT was not chargeable on the fees of Swiss arbitrators sitting in Switzerland;[7] this "arbitration friendly" measure gives Swiss arbitrators a significant advantage over many European arbitrators who are often required (even when sitting in Switzerland) to charge a significant VAT percentage on top of the fees received.[8]

A further legislative development that will affect primarily Swiss domestic arbitration proceedings is the coming into force, on January 1, 2011, of the new Federal Code on Civil Procedure ("CCP"). Part 3, Arts. 353 et seq of the CCP will replace the Swiss Inter-Cantonal Concordat on arbitration, which has hitherto governed domestic arbitration in Switzerland. It should be noted that the CCP will also harmonize civil procedure rules in civil litigation before Cantonal Courts. Previously, the civil procedure between different Cantons (even neighboring Cantons) varied enormously. There were essentially 26 different cantonal civil procedure codes in a country of seven million persons. The individual cantons will still have control over the organization of their courts, but the CCP should vastly simplify and harmonize the way litigation is carried out in Switzerland.

In addition, under Art. 353(2) CCP, Swiss parties can opt-out of the CCP and have the PILA govern a domestic arbitration. As to non-Swiss parties, there is also an opt-out possibility in favor of the CCP, under Art. 176 (2) PILA. This possibility was already present in the past, although it applied in favor of the Concordat, but it was rarely, if ever, used by international parties.
 
Institutional Developments
 
(i) The 'Swiss Rules'

Strictly speaking, the "Swiss International Rules" of arbitration relate not to one arbitral institution, but to seven "Chambers." These common Rules, after long negotiation, were ultimately adopted by the chambers of commerce of 7 different Swiss Cantons and now apply to international arbitration in Basel, Bern, Geneva, Neuch?tel, Ticino, Vaud and Zurich - most of which previously had their own distinct arbitral rules. A major motivation behind this unification was to increase Switzerland's "arbitration friendliness" such that foreign parties could proceed in arbitration under the same familiar set of "Swiss Rules" whatever Swiss city was chosen as the place of arbitration. The Rules are, in large part, based on the former UNCITRAL Rules, with some Helvetic modifications. Where a contract's arbitration clause specifies, say, the Zurich or Geneva Chamber of Commerce Rules, this now automatically means an arbitration under the "Swiss Rules."[9] The overwhelming majority of the "Swiss Rules" cases are held in Switzerland, often with Swiss law applicable to the merits. However, Swiss Rules cases can be venued outside Switzerland; one recent case had a Singapore place of arbitration, and two recent cases were venued in the United States.

Although certain aspects of the Swiss Rules have been subject to criticism (including by one of the authors),[10] they have now been in place for more than five years and it is fair to say that they have been a success.[11] Calendar year 2009 saw a 50% increase in arbitrations submitted to the Swiss Rules, with a total of 104 new arbitrations filed.[12] Unofficial 2010 figures through October 31 show that 75 Swiss Rules cases had been filed by that time. But resorting to the Swiss Rules is still a primarily European phenomenon, with 48% of the parties from Western Europe, and a further 24% from Switzerland; 12% come from Asia or the Middle East and 6% from Russia or Eastern Europe in 2009. North American parties remain the laggard, comprising only 6% of Swiss Rules parties in 2009; there are ten North American parties in 75 Swiss Rules cases filed between January and end of October 2010. There may be wider geographical acceptance of the Swiss Rules in time, as they provide an efficient alternative to ICC and LCIA arbitration and, despite the absence of North Americans, 75% of the cases are already conducted in English.[13]

A particular interest of the Swiss Rules is the "Expedited Procedure" under Art. 42 of those Rules. Under the Expedited Procedure, only one round of substantive briefing and a maximum of one hearing is allowed and the matter is referred to a sole arbitrator whose Award may state his reasons "in summary form." If the parties' arbitration agreement provides for three arbitrators, the "Chambers shall invite the parties to agree to refer the case to a sole arbitrator." In principle, the Award is issued within six months from the transmission of the file to the arbitrator,[14] and the Chamber's statistics reveal that the average total time to conclusion of the case is 240 days.[15] These Expedited Procedures are essentially mandatory for cases where the amount in dispute is less than CHF 1 million (approx. US $ 1,029,000), but can be agreed or stipulated to for larger disputes.

The Expedited Procedures have proved popular and workable; in 2009 approximately 30% of Swiss Rules cases followed expedited procedures.[16] Given the large and vocal concern about the rise in arbitral costs, parties wishing a fairly swift but sure arbitration in Switzerland should give serious thought to stipulating the Swiss Rules Expedited Procedures in arbitration agreements, at least for fairly straightforward contracts for international sales or the like.

Now that the UNCITRAL Rules, which much of the Swiss Rules track, have been updated and modified,[17] there is an active working group of Swiss jurists in place to consider whether some of these UNCITRAL modifications should be incorporated into the Swiss Rules. This working group has already met three times, and discussed modifications based on a first, English-language, draft prepared by Zurich arbitration lawyer Philipp Habegger; the draft is largely based on the 2010 UNCITRAL Rules. The objective appears to be to come out with revised Swiss Rules in 2011; possibly in time for the ICCA conference that will take place in Geneva on May 20, 2011. What will probably happen is that a number of the better or more "modern" UNCITRAL changes will be adopted, but it is unlikely that the Swiss Rules will adopt the new UNCITRAL Rules wholesale,[18] as changes and additions will be required to adapt UNCITRAL provisions to Swiss Chamber institutional arbitration. Further, the Swiss Rules working group wishes to increase the efficient and cost-effective resolution of disputes by adding some provisions not present in the new UNCITRAL Rules.
 
(ii) Court Of Arbitration For Sport

The Court of Arbitration for Sport ("CAS," or "TAS" in French, its other official language) is located in Lausanne, the seat of the International Olympic Committee. Switzerland is also the seat of many major international sports federations, including FIFA (International Football (i.e. soccer) Federation), UEFA (the European Football Federation), FINA (International Swimming Federation), FIBA (International Basketball Federation), FIS (International Ski Federation) and UCI (International Cycling Union). Sports, as we all know, is big business; one symptom of this is a veritable explosion of arbitrations under the CAS Rules. In 1999 there were 32 arbitrations filed with the CAS; in 2009, there were 269 arbitrations filed there.[19]

Any dispute directly or indirectly related to sport may be submitted to the CAS; these can be disputes of a commercial nature such as sponsorship agreements, or disciplinary matters such as doping by athletes. There have been many multi-million dollar cases involving football players and others in high-profile sports.

Since November 22, 1994, the Code of Sports-related Arbitration has governed the organization and arbitration procedures of the CAS. The latest version of the Code of Sports-related Arbitration entered into force on January 1, 2010. The Code establishes rules for four distinct procedures[20]:

- the ordinary arbitration procedure;


- the appeals arbitration procedure;


- the advisory procedure, which is non-contentious and allows certain sports bodies to seek advisory opinions from the CAS;

- the mediation procedure.

One of the major new features following the 1994 reform of the CAS was the creation of two divisions: an "Ordinary Arbitration Division," for sole-instance disputes submitted to the CAS, and an "Appeals Arbitration Division," for disputes resulting from final-instance decisions taken by sports organisations.[21]

As a result, the CAS is both the forum for direct arbitrations and a genre of appellate forum for appeals from decisions of many sports federations. To take the example of FIFA Art. 62 (1) of the FIFA Statutes (August 2010 edition) recognizes the CAS as the further forum to resolve disputes between FIFA and its Members, Confederations, Leagues, clubs, players, officials and licensed match agents and players' agents. The provisions of the CAS Code of Sports-Related Arbitration applies to such proceedings; CAS primarily applies the various regulations of FIFA and, additionally, Swiss law (Art. 62 (2)). Recourse to the CAS by FIFA or other associations can be further complicated by the need prior to exhaust internal remedies, time limits and other issues. There is one recent decision of the Swiss Supreme Court which denied that there was an agreement to arbitrate before the CAS.[22]

Many CAS arbitral decisions are published on their website.[23] Rule 46 of the CAS procedural rules tracks the potential exclusion of Art. 176(2) of the PILA in specifying that CAS Awards are not subject to appeal if the Parties are not resident and have no establishment in Switzerland, and expressly renounce the right of appeal. Many parties have obviously not made such a renunciation, as the arbitral appeal docket of the Swiss Supreme Court contains an increasing number of appeals from the CAS,[24] including a major case discussed below.

Given its rapidly growing number of cases, and the importance of sports and the "sports business" worldwide, the CAS appears to be shifting from a relatively small "insiders" club of sports-related professionals, to a broader international arbitral institution, which adds to Switzerland's presence as an international dispute resolution hub.
 
(iii) WIPO

The World Intellectual Property Organization ("WIPO"), a U.N. Agency, is headquartered in Geneva. In dispute resolution, WIPO is probably best known for its administration of "domain name" disputes, and it handles more than 2,000 such disputes a year.[25] But in these "on-line" disputes, the only issue for the WIPO-designated "panelist" to decide is the claim for transfer or cancellation of a website, the rights to which are disputed by the Complainant.

Less well-known, but growing, is the role of WIPO's Arbitration and Mediation Center in the administration of more general intellectual property and commercial disputes. The WIPO Mediation, Arbitration and Expedited Arbitration Rules were developed by a group of leading experts in dispute resolution, and came into force on October 1, 1994.[26] The Rules are particularly adapted for disputes involving intellectual property and contain, for instance, quite detailed procedures on how sensitive intellectual property and trade secrets can be kept confidential. While still somewhat nascent, the WIPO Center has experienced a considerable increase in intellectual property arbitration and mediation cases: as of June 2010, they had administered 220 such matters, most of them arising in the last five years.[27] The largest share of cases have involved patent-related disputes (44%), although many involve telecoms, trademarks and the entertainment industry. Indeed, the WIPO Center often points out that even purely commercial matters, with little or no IP component, may be submitted to arbitration by the Center. At least one WIPO arbitral matter has come before the Swiss Supreme Court and is briefly commented below. Another of WIPO's most recent initiatives is to promulgate the "WIPO Mediation and Expedited Arbitration Rules for Film and Media," which were launched in December 2009.[28] One highly specialized program, which may be a harbinger of WIPO's future approaches, is that the WIPO Center, at the request of AGICOA (Association of International Collective Management of Audiovisual Works/Association de Gestion Internationale Collective des Oeuvres Audiovisuelles), a non-profit group which tracks royalties on retransmission of audiovisual works, developed an expedited dispute resolution procedure tailored to the needs of AGICOA rights holders.[29]

While WIPO arbitrations and mediations can be held anywhere in the world, most have taken place in Geneva, where WIPO has handsome and growing facilities available for such procedures. Although there is no shortage of international arbitration centers vying for business, WIPO appears to be gaining industry acceptance and market share. It is likely that an increasing number of both general and highly specialized IP and entertainment-related disputes will be referred to WIPO in the coming years.
 
(iv) Other Institutions And Developments[30]

Switzerland, and Geneva in particular, continue to be a center for all manner of dispute resolution; witness the continuing presence of the World Trade Organization ("WTO") in Geneva.[31]

An area where Geneva and surrounding areas are indisputably coming to the fore is commodities trading, particularly unregulated commodities trading in oil, some metals, and many soft-commodities. Practically all major, and many minor, commodities concerns have significant operational offices in the Geneva area. A number of law firms and other service providers have followed this trend and set-up in Geneva,[32] or increased their focus on commodity law matters. The Geneva Chamber of Commerce and Industry ("CCIG"), applying the Swiss Rules, has already administered a number of arbitrations arising from the growing Geneva commodities market. It remains to be seen whether at some future point a center, or specific rules, aimed at mediating or arbitrating commodities disputes will be set up in Geneva, but it is a distinct possibility.

One development that would certainly further boost Geneva's, and Switzerland's, visibility as an international dispute resolution center is that the ICC is considering moving its Arbitration Secretariat and Court out of Paris, and has received attractive offers from both Geneva and Vienna. It is clear that the ICC's arbitration activities will have to move sometime, as they are vastly overcrowded in their fine historic building in Paris. There are also financial issues as the ICC receives its arbitral revenue in, increasingly devalued, dollars but has most of its administrative expenses in Euros. In theory, the ICC should make its decision imminently, possibly before the end of this year - but it may be delayed. The Paris arbitral community understandably opposes a move of ICC arbitration from Paris, and the ICC is negotiating with the French authorities to extract concessions that would keep their prestigious arbitral institution in the French capital. But if the ICC arbitration headquarters were to move to Geneva, it would find an enthusiastic welcome from the Swiss arbitral community.

The University of Geneva, jointly with Geneva's Graduate Institute of International and Development Studies, have begun a master's program specifically in International Dispute Settlement, primarily international arbitration. This appears to be the first of its kind. The program, which is taught in English, is in its first year and has attracted some 40 students; it boasts an impressive faculty of international arbitration experts and practitioners with a variety of specializations.
 
Developments In Appeals Of Swiss Arbitration Awards
 
(i) General And Probability Of Success

International Arbitration Awards in Switzerland are subject to a "one shot" appeal to the Swiss Supreme Court (Tribunal federal or Bundesgericht) in Lausanne. Since January 1, 2007 the procedure for such appeals is governed by a new procedural law, which also governs ordinary appeals from court decisions: the Law of the Supreme Court (abbreviated "LTF" in French).[33] Previously, appeals of arbitral awards were known as "public law appeals" (recours de droit public) under the Federal Judiciary Organization Law ("Loi federale d'organisation judiciaire," abbreviated "OJ" in French), and subject to somewhat looser requirements.

There have, however, now been numerous appeals of arbitral awards pursuant to Art. 77 of the LTF and the substance, and even much of the practical procedure, of the appeals to the Supreme Court is largely unchanged. In particular, the appeal (the actual appellate brief, not just a notice of appeal) must be filed within a short 30 day deadline from the notification of the Award to the appealing party. The arbitrators are notified of the appeal and permitted to comment on it, although Swiss arbitrators typically decline to comment - leaving the Supreme Court to determine their reasoning and thinking from the Award itself. The Court fixes a procedural fee for its costs (typically from CHF 20,000-40,000), which must be paid before the appeal can go forward. If the appellant party has no demonstrable assets in Switzerland and does not benefit from an international or bilateral civil procedure convention with Switzerland, the appellee may make a request under Art. 62(2) LTF that the appellant also post security for its legal costs in defending the appeal. The appeal of an international arbitral award in Switzerland does not suspend the award's effectiveness[34] unless the Supreme Court has specifically ordered such suspension based on a justified motion; such suspension orders are rarely granted.

Most importantly, the Supreme Court is cleaving to its strict and narrow interpretation of the permissible grounds for successful appeals of international arbitral awards. These grounds concern almost exclusively the violation of fundamental procedural rights, and not the merits per se.

Appeals continue to be exclusively restricted to five grounds under Art. 190(2) of the PILA; which may be summarized as follows:

(a) Improper appointment of arbitrators;

(b) Incorrect assumption or rejection of jurisdiction;

(c) Arbitrators ruling beyond the claims submitted, or failing to rule on claim(s) submitted (ultra petita or infra petita);

(d) Violation by the arbitrators of the principal of equal treatment or the right to be heard in an adversarial proceeding; and

(e) Where the Award violates public policy.

What occurs in practice is that the appealing party strains to shoehorn what is essentially an appeal on the merits into one of these five categories, but the Supreme Court rejects the appeal and continues to interpret the five exclusive grounds of appeal limitatively - often quoting word for word their previously edicted interpretations, and few appeals succeed. This has always been known to Swiss arbitral practitioners, but it has been empirically confirmed in a recently updated study by Zurich lawyer, Dr. Felix Dasser.[35]

Dasser's new study takes into account 68 additional Supreme Court decisions in arbitration appeals through June 2009. Although the number of arbitration award appeals appears to be increasing, the chances of success remains low, and is if anything diminishing.

Of the 229 Supreme Court decisions on the merits[36] of arbitral appeals in Switzerland since 1989 (when the PILA setting up the five limitative grounds listed above was promulgated), not more than 7% were successful. Indeed, counting the most recent cases studied by Dasser, the success rate dropped to 6.5%.

Also significant is that the ground with the greatest statistical chance of success (10.1%) was a jurisdictional challenge, the second most "successful" ground was ultra or infra petita, with a 5% success rate. During this entire almost twenty year period studied (i.e. since the PILA and its five limitative grounds was promulgated), there was no successful arbitral appeal in Switzerland on public policy grounds.37 This has changed since Dasser's study, in a recent case commented below. Dasser's study also confirmed that the Supreme Court is quite efficient in handling (or perhaps, more accurately, dismissing) arbitral appeals. The average time in which the Court disposed of challenges to arbitral awards can now be calculated at slightly less than four months. In one urgent CAS case involving the potential disqualification of a German speed skater shortly before the Vancouver Olympics, the Supreme Court actually waived the exchange of written pleading and rendered a decision in slightly more than two months.[38]

In sum, arbitral awards issued in Switzerland continue to be subject only to a one-shot, rapid and very restrictive appeal. Absent a serious jurisdictional or procedural error, the chances of success on appeal are virtually nil, and the appeal itself will not suspend the effectiveness of the award. For those seeking finality and efficiency in arbitration, this is a good thing, and may add to the desirability of a Swiss place of arbitration.
 
(ii) Discussion Of Some Recent Cases Of Note

Decisions of the Supreme Court of appeals of international arbitral awards are available, in the original language, on the Court's website at http://www.bger.ch/fr/index/juridiction/jurisdiction-inherit-template/jurisdiction-recht.htm, and many of the most important decisions are reprinted in the Swiss Arbitration Association's "ASA Bulletin." A further source, "The Swiss International Arbitration Reports," is discussed at the end of this section. The purpose here is to highlight a few recent cases that may be of particular interest to an international audience.

In a decision published on July 2, 2010, the Swiss Supreme Court has for the first time overturned an arbitral award on the basis of a violation of public policy.[39] The case arose from a CAS arbitral award involving a Portuguese football player who terminated his contract with the Sport Lisboa E Benfica football club ("Benfica"). The decision has received considerable comment in Switzerland and abroad, with one Swiss commentator describing it as a "landmark" decision.[40]

In 2000, three months after joining Benfica, a Portuguese football player terminated his contract for cause, and joined Club Atletico de Madrid ("Atletico") two weeks later. In June 2001, Benfica claimed compensation for training and promotion of the Portuguese football player within the meaning of Art. 14(1) of the 1997 FIFA Regulations for the Status and Transfer of Players. In April 2002, the FIFA Special Committee awarded $2.5 million to Benfica. Atletico challenged this award on an ex parte basis before the Commercial Court of the Canton of Zurich in June 2002. In June 2004, that Court voided the FIFA Special Committee decision based on the ground that the 1997 FIFA Regulation violated European and Swiss competition laws. Benfica did not challenge the Zurich court's decision, and instead brought another claim before the FIFA Special Committee in October 2004 over its investment in the Portuguese football player, again seeking compensation. The Special Committee rejected the claim. Benfica appealed this decision to the CAS (not the Commercial Court because FIFA had in the meantime introduced an arbitral review procedure for the decisions of the FIFA Special Committee), which upheld the appeal in part and ordered Atletico to pay Benfica  400'000 compensation. The CAS reasoned that the Zurich Commercial Court's decision determined only "the legality of FIFA's regulations," but not the merits of Benfica's original claim. In April 2010, the Swiss Supreme Court set aside the CAS award on the grounds that the decision impermissibly ignored the principle of res judicata. The Court relied on Art. 190(2)(e) of the PILA, which permits a court to set aside an arbitration award that is incompatible with public policy. Such public policy includes both procedural and substantive components. According to the Court, an arbitral tribunal breaches procedural public policy when its decision violates fundamental procedural principles, the disregard of which is sufficiently intolerable that the decision appears incompatible with the rule of law. The Court ruled that the CAS Tribunal's disregard of the material legal force of the decision of the Zurich Commercial Court constituted such a breach of procedural public policy. The reader should be cautioned against any overbroad reading of this case; the procedural public policy enforced related to a CAS Tribunal's relatively willful overruling of a prior Swiss Court decision; there is, in our view, no clear new public policy principle of general application to arbitral award appeals.

As to substantive public policy, the Supreme Court has yet to reverse an arbitral award on this ground. The apposite rule, still applied, was well restated by the Supreme Court in its decision of February 21, 2008 involving a French Football player joining an English Club.41 While the Court routinely reaffirmed that the principle of sanctity of contracts is one of the rules which form part of substantive public policy, it also made clear that this principle of pacta sunt servanda, in the narrow sense defined by the decisions made under Art. 190(2)(e) PILA, is breached only where an arbitrator refuses to enforce a contract term while finding that such term is binding on the parties, or conversely, where an arbitrator orders the parties to comply with a contract term while finding that such term is not binding on them. The Swiss Supreme Court has emphasized on several occasions that almost all of the litigation relating to breach of contract is outside the scope of its review under the principle of pacta sunt servanda.

In simplest terms, appeals that the arbitrators misapplied the contract or the law or applied it in an inconsistent way will not be entertained as violations of public policy. The Supreme Court will have an opportunity to reaffirm this principle in an appeal filed this September against an ICC Award, in which the authors are acting for the appellee. In this connection, it should be noted that an Award's "arbitrariness" is not a ground for appeal under the PILA, although it was a ground of appeal under the Concordat and remains one under the new CCP (Art. 391).

The so called "Vivendi case" also merits attention.[42] In this case, while an ICC arbitral proceeding was pending in Geneva, a Polish respondent, Elektrim S.A., informed the Arbitral Tribunal by letter of September 5, 2007 that the Warsaw bankruptcy court had declared it bankrupt by decision of August 21, 2007. Pursuant to Art. 142 of the Polish Bankruptcy and Reorganization Act ("pKSG"), such a bankruptcy finding results in the automatic cancellation of any arbitration agreements entered into by the bankrupt, and the automatic termination of any ongoing arbitration proceedings in which the bankrupt is involved as a party. In an interim award of July 21, 2008, the Arbitral Tribunal stayed the proceedings as concerns Respondent Elektrim S.A. as it had been declared bankrupt on the basis of Art. 142 pKSG. It held that the words "pending arbitration proceedings" in that article were to be understood as meaning any arbitration proceedings, including any proceedings before foreign arbitral tribunals. On September 15, 2008, Vivendi S.A. and others, filed a Civil Law appeal with the Swiss Supreme Court seeking the annulment of the interim arbitral award and a finding that the arbitral proceedings be continued with respect to Elektrim S.A. The Court observed that a party's standing to appear in arbitration proceedings must be examined in the context of the jurisdictional appeal, according to Art. 190(2)(b) PILA. Because Elektrim S.A. was incorporated as a common stock corporation under Polish law, its legal capacity and thus its standing as a party in international arbitral proceedings was assessed based on Art. 154 and, subsidiarilly, Art. 155(c) PILA (the chapter of the PILA dealing with international corporate conflicts of law issues), with a renvoi to Polish law, and more precisely Polish bankruptcy law. According to Art. 142 pKSG, a bankrupt Polish entity immediately loses its standing to participate in arbitral proceedings. The Court ruled that there is no reason to doubt the validity of this legal finding, with the consequence that the Court confirmed that the arbitral tribunal rightly denied jurisdiction with respect to Elektrim S.A.

The Vivendi case has been strongly criticized,[43] and may ultimately result in a modification of the PILA as the Fomento case did. The matter is all the more interesting and delicate as the English Commercial Court and Court of Appeals came to, essentially, the opposite decision as to the continuation of arbitral proceeding against Elektrim S.A. In Syska v. Vivendi Universal SA,[44] the English Court of Appeals ruled that the critical question was what law governs the effects of the Polish bankruptcy order. If the law is that of Poland, the August 21, 2007 declaration of bankruptcy invalidated the arbitration agreement under the above-mentioned Art. 142 pKSG, and the arbitral tribunal ceased to have any jurisdiction to make an award. If the applicable law is that of England, the arbitrators retained jurisdiction, because it contains no provisions comparable to Art. 142 pKSG. In a complex decision, the English Court of Appeals applied Council Regulation (EC) N?. 1346/2000 on Insolvency Proceedings ("the Regulation"), which is a piece of subordinate European Community legislation which forms part of English law in making its choice of law decision, and held that the arbitration could proceed. Under Art. 4 of the Regulation, the law of the place where the insolvency proceedings are opened governs the effect of insolvency on "current contracts" but Art. 15 provides that the effect of insolvency on "lawsuits pending" is "governed solely by the law of the member state in which that lawsuit is pending." The Court of Appeals, upholding the first instance decision, held that Art. 15 applied to pending lawsuits, including arbitration proceedings, so that the effect of insolvency on the arbitration was governed by English law as the law of the forum.

There has been at least one WIPO arbitration case appealed to the Supreme Court.[45] In that case, the Court confirmed that an interim order of a tribunal, styled as a "Partial Arbitral Award," was not directly enforceable, as it was not an arbitral award per se. This is probably a disappointment to WIPO, as interim orders and injunctions are often particularly called for in intellectual property disputes, but it is consistent with arbitral jurisprudence in Switzerland and elsewhere. The Court observed that a procedural order that could be modified or suspended while the case is still pending cannot be appealed to the Swiss Supreme Court, because it is not a decision/award ("sentence" in French) within the meaning of Ar. 77 LTF, as understood in connection with Arts. 190 to 192 of the PILA. The Court pointed out that interim orders and injunctions, as provided for in Art. 183 of the PILA, cannot be appealed to the Supreme Court because they are not final or partial decisions, nor prejudicial or incidental decisions. What was decisive for the Court was not the designation of the measure, but its content. The Court ruled that the appeal was directed against an interim order within the meaning of Art. 183 of the PILA, and not against a true arbitral award. This case highlights the difficulty, not restricted to Switzerland, of obtaining arbitral interim measures in an enforceable form.

English speakers who wish to follow the Swiss Supreme Court's arbitral developments in detail have a further tool at their disposal. Paolo Michele Patocchi and Matthias Scherer have been editing "The Swiss International Arbitration Reports."[46] These reports, which come out twice a year, set forth recent Swiss Supreme Court decisions concerning international arbitration (published and unpublished) in the original French, German or Italian, but with a tracking English translation (of a generally high quality) in the right hand column. The cases are also accompanied by head-notes and a summary in English. Two volumes (i.e. 4 issues) have been published; the next volume, covering cases through 2009, is due out at the end of December 2010. At least part of the idea is to make Swiss arbitration even more accessible to the many English-only speakers who often arbitrate here. The Reports are also intended to cause Swiss arbitral case law to be better known, and more widely cited outside Switzerland.

This leads to an appropriate summary: arbitration in Switzerland is not insular and still strives, with success, to be "user friendly" and internationally attractive; but it also retains the Helvetic particularities and independence that may have been part of why Switzerland developed as an arbitration center in the first place.
 
Endnotes

1. 21 ICC Bull., No. 1, pp. 12-13 (2010). As to the place of arbitration within Switzerland, Geneva was the most popular in 2009 (62 cases), with Zurich second (50 cases).

2. Switzerland has, for at least the past decade, been the top choice for the nationality of arbitrators. Over this time, it has, with France, alternated between the top and second spot for the seat of arbitrations. See, e.g. 17 ICC Bull, No. 1, pp. 10-11n (2006), 19 ICC Bull, No. 1, pp. 10-11 (2008), 11 ICC Bull., No. 1, pp. 8-9 (2000).

3. ATF 127 III (2001) pp.279-288.

4. N. Ulmer, "Swiss Arbitration Update: First Amendments of International Arbitration Law," 21 Mealey's International Arbitration Report, vol. 21, no. 12, pp. 35-39 (2006).

5. Ibid.

6. Federal Act on Value Added Tax of 12 June 2009, OJ [2009] 5203 (VATA 2010).

7. Jan Ole Luuk, "Practical Guidance for Arbitrators and Counsel on Value Added Tax in Arbitration Proceedings," 28 ASA Bulletin 1/2010 (March).

8. For a more thorough analysis please see Luuk, id.

9. Swiss Rules, Introduction paras (b) and (c).

10. Ulmer at note 4, supra, pp. 37-38, See also, Ulmer, The Cost Conundrum, 26 Arbitration International 221, 228-29 (2010).

11. See Bernhard Meyer, "The Swiss Rules of International Arbitration - Five Years of Experience", pp. 7-24 in Swiss Rules of International Arbitration: Five Years of Experience (ed. Dr. Rainer F?eg, 2009). This brochure is available for free from the secretariat at http://www.zurichcci.ch/en/order-arbrules.html.

12. See "Swiss Chambers' Court of Arbitration and Mediation - Newsletter - 1/2010."

13. Ibid.

14. Swiss Rules Art. 42.

15. See Swiss Chambers' Court of Arbitration and Mediation Newsletter 1/2009; accord, T. L?rcher, "The Swiss Rules of International Arbitration Seen from Abroad" p. 75 in Swiss Rules of International Arbitration: Five Years of Experience (ed. Dr. Rainer F?eg, 2009).

16. Swiss Chambers Newsletter 1/2010; unofficial statistics through October 31, 2010 show that at least 31 of the 75 cases filed so far this year were "Expedited Procedure" cases.

17. The revised UNCITRAL Rules are at http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/arb-rules-revised-2010-e.pdf, see also Justice Clyde Croft, The Revised UNCITRAL Arbitration Rules of 2010: A commentary, http://www.supremecourt.vic.gov.au/wps/wcm/connect/b5a59880438d22fbb372fb34222e6833/The+Revised+UNCITRAL+Arbitration+Rules+of+2010+-+A+commentary.pdf?MOD=AJPERES; Andrew Ness and William DeVan, Updating the UNCITRAL Arbitration Rules, http://kluwerconstructionblog.com/2010/08/30/updating-the-uncitral-arbitration-rules/.

18. Interestingly, the influence goes in both directions: language from Article 14 of the Swiss Rules, which deals with the resumption of proceedings after the replacement of an arbitrator was adopted almost word for word in Article 15 of the new UNCITRAL Rules. See Daniel Wehrli, "The Swiss Rules and the Revision of the UNCITRAL Arbitration Rules" in the Swiss Rules of International Arbitration - Five Years of Experience, ed. Dr. Rainer F?eg pp. 77, 94 (2009). One change, not present in the UNCITRAL Rules, which are designed for ad hoc arbitration, but that is being considered for the Swiss Rules is the introduction of an "Emergency Arbitrator" mechanism. See Christopher Boog, "Swiss Rules of International Arbitration - Time to Introduce an Emergency Arbitrator," 28 ASA Bull. No. 3, pp. 462-477 (2010). Such "emergency arbitrator" procedures already exist in the ICDR and were at the beginning of this year introduced in the SCC Rules (where they have now been used twice).

19. That was less than the previous year, 2008, when, possibly due to the Olympic Games, there was an all-time record of 311 arbitrations filed before the CAS, see http://www.tas-cas.org/d2wfiles/document/437/5048/0/stat2009.pdf.

20. http://www.tas-cas.org/en/infogenerales.asp/4-3-238-1011-4-1-1/5-0-1011-3-0-0/.

21. Ibid.

22. Supreme Court's unpublished Decision 4A_456/2009, in?X c/ A, commented on in an article released November 18, 2010, by Isabelle Fellrath and Frank Spoorenberg, "When an offer to arbitrate is binding on the offering party," http://www.internationallawoffice.com/Newsletters/Detail.aspx?g=ee41758c-6704-4f73-bc73-5e7ed6a44196&utm_source=ILO+Newsletter&utm_medium=email&utm_campaign=Arbitration+Newsletter&utm_content=Newsletter+2010-11-18.

23. http://www.tas-cas.org/recent-decision.

24. This is statistically demonstrated in the new Felix Dasser study, "International Arbitration and Setting Aside Proceedings in Switzerland - An Updated Statistical Analysis" in 28 ASA Bulletin 1/2010, pp. 96-97.

25. See http://www.wipo.int/amc/en/domains/.

26. See generally, Ignacio de Castro / Sarah Theurich / Asako Hatanaka, Review of the World Intellectual Property's Arbitration and Mediation Center, in International Commercial Arbitration Practice: 21st Century Perspectives, co- eds., Horacio A. Grigera Na?n and Paul E. Mason, Chapter 45 (2010).

27. De Castro and Theurich, note 26, supra.

28. www.wipo.int/amc/en/film/rules.html, see also Sarah Theurich, Designing Tailored Alternative Dispute Resolution in Intellectual Property: The Experience of WIPO, in Jacques de Werra (ed.), Resolution of Intellectual Property Disputes, Actes de la Journ?e de droit de la propri?t? intellectuelle du 8 f?vrier 2010, p. 175-193 (Intellectual property, Schulthess M?dias Juridiques SA, Gen?ve - Zurich - B?le, 2010).

29. See www.wipo.int/amc/en/arbitration/agicoa;see also Theurich, note 28, supra, p. 189

30. In recent years, two claims bodies in Geneva ceased activities. The United Nations Compensation Commission ("UNCC"), which handled disputes against Iraq arising from the first Gulf War, almost entirely wound down about five years ago, and has now completed all environmental claims. The UNCC no longer has any offices or agents. See http://www.uncc.ch/pressrel/Press%20release%20-%2028%20January%202010.pdf; http://www.uncc.ch/. Similarly, the Forced Labor Compensation Programme administration was set up, under the aegis of the Geneva-based International Organization for Migration and directed by Norbert W?hler, to process WWII claims of slave labor, and through which Germany paid compensation to surviving victims, has now completed its work, apart from some remaining payments. See http://www.iom.int/jahia/Jahia/activities/by-theme/reparation-programmes/forced-labour-compensation-programme.

31. Approximately 12 years ago, there was rather intense lobbying by Germany to displace the WTO to Bonn, where due to the move of Germany's capital to Berlin there was much attractive empty office space. Switzerland, however, trumped Germany's entreaties, and Geneva remains the home of WTO trade disputes, and the WTO administration.

32. The most recent being commodities and shipping specialist firm Holman, Fenwick, Willan LLP, see http://www.hfw.com/worldwide-offices/geneva/.

33. http://www.admin.ch/ch/f/rs/173_110/index.html.

34. PILA Article 190(1): the award is final as at its notification ("[l]a sentence est definitive d?s sa communication.").

35. Dasser, note 24, supra, pp. 82-100.

36. Approximately 20% of the appeals filed where either deemed inadmissible or dropped. Ibid. p. 85.

37. Ibid. at p. 88.

38. Case 4A_612/2009; the Supreme Court issued a press release concerning the case, see http://www.bger.ch/mm_4a_612_2009_d.pdf.

39. Decision of 13 April 2010 (4A_490/2009). Available on the Surpeme Court website at http://www.bger.ch/fr/index/juridiction/jurisdiction-inherit-template/jurisdiction-recht/jurisdiction-recht-urteile2000.htm.

40. See Georg von Segesser, "Swiss Federal Supreme Court sets aside CAS Award for violation of the principal of procedural public policy," Kluwer Arbitration Blog, http://kluwerarbitrationblog.com/blog/2010/08/17/swiss-federal-supreme-court-sets-aside-cas-award-for-violation-of-the-principle-of-procedural-public-policy/; Herbert Smith LLP, Swiss Federal Supreme Court sets aside arbitral award for violation of the principal of res judicata, Lexology, 5 October 2010 (http://www.lexology.com/library/detail.aspx?g=8036977a-43d3-4ba1-9ec9-132e82cab783). See also, James E. Berger & Charlene Sun "Swiss Federal Tribunal Overturns Arbitration Award on Public Policy Grounds", Paul Hastings Stay Current - A client Alert from Paul Hastings (August 2010).

41. X. v. A. Association and B. SASP, N? 4A_370/2007, unpublished in the official reports of the Decisions by the Swiss Federal Supreme Court; available in The Swiss International Arbitration Law Reports, Paolo Michele Patocchi and Matthias Scherer, General Editors, 2008 Vol. 2 N? 1, pp. 89 et seq.

42. Decision of March 31, 2009; Vivendi et al. 4A_428/2008. The text is available on the web-site of the Federal Tribunal www.bger.ch.

43. See e.g. Pierre A. Karrer "Views on the decision by the Swiss Supreme Court of March 31, 2009, in re Vivendi et al. v. Deutsche Telekom et al." in 28 ASA Bull 1/2010, pp. 111-112.

44. [2009] EWCA Civ 677, Court of Appeal, Lord Justice Mummery, Lord Justice Longmore and Lord Justice Patten, 9 July 2009.

45. Reprinted at 28 ASA Bull., no. 3, p. 598 (2010).

46. Swiss International Arb. L. Rep. (Juris Publishing, New York).[Editor's Note: Nicolas Ulmer is a partner at Budin & Partners, Geneva, specializing in international commercial arbitration and international disputes. Lionel Serex recently joined Budin & Partners as an associate after obtaining an LL.M. at Georgetown University. Lionel is active in litigation, arbitration and related construction law. Copyright 2010 Nicolas Ulmer and Lionel Serex. Replies to this commentary are welcome.][Editor's Note: Nicolas Ulmer is a partner at Budin & Partners, Geneva, specializing in international commercial arbitration and international disputes. Lionel Serex recently joined Budin & Partners as an associate after obtaining an LL.M. at Georgetown University. Lionel is active in litigation, arbitration and related construction law. Copyright 2010 Nicolas Ulmer and Lionel Serex. Replies to this commentary are welcome.]