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.
It is clear that despite its size, Switzerland retains an important, and
growing, role in the world of international arbitration.
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
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.,
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), 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.
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 confirmation that VAT was not chargeable on the
fees of Swiss arbitrators sitting in Switzerland; 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
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.
(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." 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), they have now been in place for more
than five years and it is fair to say that they have been a success.
Calendar year 2009 saw a 50% increase in arbitrations submitted to the Swiss
Rules, with a total of 104 new arbitrations filed. 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.
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, and the Chamber's
statistics reveal that the average total time to conclusion of the case is 240
days. 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. 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, 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, 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
(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
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
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:
- 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
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.
Many CAS arbitral decisions are published on their website. 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, 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.
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. 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. 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. 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. 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.
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
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.
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, 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
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
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). 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 unless the Supreme Court has specifically ordered such
suspension based on a justified motion; such suspension orders are rarely
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.
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
Of the 229 Supreme Court decisions on the merits 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
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.
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. 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.
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. 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, 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, 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. 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." 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
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.
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
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).
6. Federal Act on Value Added Tax of 12 June 2009, OJ  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 -
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
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.
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
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.
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;
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/.
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.  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.]