International Arbitration 2021 – Litigation, Mediation & Arbitration
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1. ARBITRATION AGREEMENTS
1.1 What are the legal requirements for an arbitration agreement, if any, under the laws of your jurisdiction?
In Switzerland, international arbitration is based on Chapter 12 of the Law on Private International Law of 1987 (hereinafter: “IPRG”). A current (slight) revision came into force on January 1, 2021.
According to Art. 178 Para. 1 PILA, an arbitration agreement is valid if it is made in writing or using another means of communication that enables evidence to be provided in text. Its content is valid if it meets the requirements of the law chosen by the parties or the law applicable to the subject matter of the dispute, in particular the law applicable to the main contract, or Swiss law (Art. 178 Paragraph PILA).
The validity of an arbitration agreement cannot be challenged on the grounds that the main contract is invalid or that the arbitration agreement concerns a dispute that has not yet arisen (Art. 178 (3) PILA).
The above also applies to arbitration proceedings that are contained in a unilateral document or in a statute (Art. 178 Para. 4 PILA).
1.2 What other elements should be included in an arbitration agreement?
It is recommended (but not mandatory) to also indicate the seat of the arbitration, the language of the proceedings and the number and procedure for appointing arbitrators. The parties can also waive the right to contest the final arbitral award within the meaning of Article 192 PILA, provided that the parties do not have a place of residence, habitual abode or registered office in Switzerland. The parties cannot waive their right to request a revision of the arbitral award in accordance with Article 190a paragraph 1 letter b PILA (see question 10.4 below).
1.3 How did the national courts enforce arbitration agreements?
Switzerland is known as an arbitration-friendly jurisdiction where valid arbitration agreements are properly enforced by the courts.
In particular, if the parties have entered into an arbitration agreement in relation to a dispute that can be settled, the Swiss court before the case declares that it has no jurisdiction under Article 7 PILA, unless: (a) the defendant has proceeded without reservation; (b) the court determines that the arbitration agreement is void, ineffective or non-achievable; or (c) the arbitral tribunal cannot be formed for reasons clearly attributable to the respondent.
2. GOVERNING LAW
2.1 What are the laws governing arbitration enforcement in your jurisdiction?
Pursuant to Article 194 PILA, the recognition and enforcement of foreign arbitral awards is governed by the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention” or “NYC”).
Arbitral awards made on the basis of arbitration proceedings based in Switzerland are enforceable in Switzerland like Swiss court judgments, ie in accordance with the provisions of Article 335 ff. of the Swiss Code of Civil Procedure (“ZPO”) and, in the case of monetary awards, the provisions of the federal law on debt enforcement and bankruptcy.
2.2 Does the same arbitration law apply to national and international arbitration proceedings? If not, how are they different?
No. While international arbitration proceedings are regulated by the PILA (see question 1.1 above), domestic arbitration proceedings are subject to Article 353 ff. of the CPC.
Pursuant to Art. 176 Para. 1 PILA, the provisions of Chapter 12 PILA apply to all arbitration proceedings if the seat of the arbitral tribunal is in Switzerland and at least one of the parties to the arbitration agreement was not domiciled, habitually resident or headquartered in Switzerland at the time of Graduation. Article 176 (2) PILA provides that the parties can exclude the application of Chapter 12 PILA and instead consent to the application of Article 353 ff. CPC for domestic arbitration. This declaration must meet the formal requirements of Art. 178 Para. 1 PILA.
Conversely, the parties to domestic arbitration proceedings may deviate from Article 353 under Article 353 (2) ZPO
ff. CPC and instead apply the provisions of Chapter 12 PILA.
2.3 Is the law of international arbitration based on the UNCITRAL model law? Are there any significant differences between the two?
Chapter 12 PILA is unique in Switzerland and is not based on the model law of the United Nations Commission on International Trade Law (“UNCITRAL”). However, there are no major differences or inconsistencies between the two.
2.4 To what extent are there binding rules for international arbitration in your jurisdiction?
Although the parties enjoy extensive autonomy under Chapter 12 PILA and can change most of the rules by mutual agreement, certain provisions are mandatory, such as B. the provisions on the arbitrability of the dispute (Art. 178 para. 1 PILA), the refusal of arbitrators (Art. 180 PILA), the regulation on lis pending (Art. 181 PILA) and the principle of equality of the parties and their right to a fair hearing in adversarial proceedings (Art. 182 Para. 3 PILA).
3. PLACE OF JURISDICTION
3.1 Are there any issues that the applicable law of your jurisdiction does not allow for referral to arbitration? What is the general approach to determining whether or not a dispute is “arbitrary”?
According to Art. 177 (1) PILA, any action that involves an economic interest can be submitted to arbitration. The term “economic interest” is interpreted broadly. Examples of arbitration are unfair competition, antitrust claims or claims under labor law. Family law issues such as adoption or divorce are not divorced because they primarily concern personal rights. Debt enforcement proceedings such as bankruptcy declarations or seizures are reserved for state courts and are therefore not arbitrary. Finally, it should be noted that under Art. 177 (2) PILA, a state cannot invoke its own law to contest its arbitrability or the arbitrability of the dispute.
3.2 Can an arbitral tribunal decide on the question of its own jurisdiction?
Yes sir. According to Art. 186 para. 1 PILA, the arbitral tribunal decides on its jurisdiction. This principle of
Competence-Competence also applies if proceedings between the same parties and on the same subject are already pending before a state court or another arbitral tribunal, unless there are essential reasons for a stay of the proceedings (Art. 186 parauntil) PILA).
3.3 How do the national courts in your jurisdiction deal with a party instituting legal proceedings for an apparent breach of an arbitration agreement?
The national court decides that it has no jurisdiction unless (a) the defendant has proceeded without reservation, (b) the court finds that the arbitration agreement is void, ineffective or unenforceable, or (c) the arbitral tribunal cannot be appointed for reasons that are clearly attributable to the defendant in the arbitration proceedings (Art. 7 PILA). The court examines it great facie if the seat of the arbitration is in Switzerland, but with full review authority if the seat is abroad.
3.4 Under what circumstances can a national court consider the jurisdiction and jurisdiction of an arbitral tribunal? What is the standard of review in relation to a court’s decision on its own jurisdiction?
See question 3.3 above. In addition, the decision of an arbitral tribunal can be reviewed by the Federal Supreme Court in appeal proceedings with full review powers. However, the Supreme Court will use the facts established by the arbitral tribunal that are relevant to the question of jurisdiction, such as: The jurisdiction of a foreign arbitral tribunal can also be reviewed in enforcement proceedings under the New York Convention.
3.5 Under what circumstances does the national law of your jurisdiction allow an arbitral tribunal to have jurisdiction over natural or legal persons who are not themselves party to an arbitration agreement?
This question is not explicitly dealt with in Chapter 12 PILA. According to case law, an arbitration agreement may, in exceptional circumstances, bind a non-signatory if the relevant applicable law (see question 1.1 above) allows it. According to Swiss law, this may be the case, for example, if the non-signatory intervened in the conclusion and performance of the main contract in such a way that the other party had legitimate reasons to believe that the non-signatory wanted to be bound by the arbitration agreement. However, the mere existence of a group of companies is not sufficient to extend an arbitration agreement to an affiliated company. Arbitration agreements are usually also transferred to the legal successor of a party or in the case of assumption of debt.
3.6 Which laws or regulations prescribe limitation periods for initiating arbitration proceedings in your jurisdiction and how long are such periods typically? Do the national courts in your jurisdiction consider such rules to be procedural or substantive, ie which choice of law rules govern the application of limitation periods?
In Swiss law, statutes of limitations apply as material regulations. The relevant limitation period is therefore based on the applicable substantive law.
3.7 In your area of responsibility, what are the effects of pending insolvency proceedings that affect one or more parties to ongoing arbitration proceedings?
According to case law, the effect of pending insolvency proceedings on a party is to be assessed according to the general conflict-of-law rules of the PILA. If an insolvent foreign legal entity retains its legal capacity under applicable foreign law, it is party to Swiss arbitration proceedings. This is also the case if the foreign law contains restrictions which only relate specifically to an arbitration but which preserve the general legal capacity of that party. For Swiss companies, courts have also confirmed that the insolvent party will remain bound by the arbitration agreement concluded before bankruptcy.
Originally published by The International Comparative Legal Guide to International Arbitration 2021.
The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.