Overview (November 2000)

Arbitration Agreement
Scope of Application
Seat of the Arbitral Tribunal
Arbitrability
Arbitration Agreement
Arbitral Tribunal
Pending Arbitration
Procedure
Jurisdiction
Decision
Setting an Award Aside
Exclusion Agreements
Deposit and Certificate of Enforceability
Foreign Arbitral Awards


Arbitration Agreement

Pursuant to Article 7 of the Federal Act on Private International Law (December 18 1987), if the parties have entered into an arbitration agreement with respect to an arbitrable dispute, any Swiss court before which the dispute is brought will deny jurisdiction, unless:

• the defendant has proceeded on the merits without reservation;
  
  
• the arbitration agreement is null and void, inoperative or incapable of being performed; or
  
  
• the arbitral tribunal cannot be appointed for reasons that are obviously attributable to the defendant in the arbitration.

Scope of Application

Chapter 12 of the Federal Act on Private International Law concerns international arbitration. It applies to any arbitration if (i) the seat of the arbitral tribunal is in Switzerland, and (ii) at least one of the parties had neither its domicile nor its habitual residence in Switzerland when the arbitration agreement was concluded.

The provisions of this chapter do not apply where the parties have excluded its application in writing and agreed to the exclusive application of the procedural provisions of cantonal law that relate to arbitration.

Seat of the Arbitral Tribunal

The seat of the arbitral tribunal is determined by the parties. If the parties cannot agree on the seat, the decision will be made by the arbitration institution which they have designated or, failing this, by the arbitrators.

Arbitrability

Pursuant to Article 177 of the act, any dispute involving an economic interest may be the subject of arbitration.

If a party to the arbitration agreement is a state, or an enterprise or organization controlled by a state, it cannot rely on its own law in order to contest either its capacity to participate in the arbitration or the arbitrability of a dispute covered by the arbitration agreement.

Arbitration Agreement

Formal requirements
Article 178 provides that an arbitration agreement is valid if made in writing, or by telegram, fax or any other means of communication which permits it to be evidenced in a document.

Substantive requirements
An arbitration agreement is valid if it conforms to either:

• the law chosen by the parties;
  
  
• the law governing the subject-matter of the dispute, particularly the law governing the main contract; or
  
  
• Swiss law.

The validity of an arbitration agreement cannot be contested on the grounds that the main contract is invalid or that the arbitration agreement concerns a dispute which has not yet arisen.

Arbitral Tribunal

Constitution
Under Article 179 of the Federal Act on Private International Law, the arbitrators must be appointed, removed or replaced in accordance with the agreement of the parties.

In the absence of such an agreement, the matter may be referred to the court at the place where the arbitral tribunal has its seat, which will apply the relevant provisions of cantonal law.

Where a court is called upon to appoint an arbitrator, it will make the appointment unless a summary examination shows that no arbitration agreement exists between the parties.

Challenge of arbitrators
Article 180 provides that an arbitrator may be challenged if:

• he does not meet the requirements agreed by the parties;
  
  
• the arbitration rules agreed by the parties provide a ground for challenge; or
  
  
• circumstances exist that give rise to justifiable doubts as to his independence.

A party may only challenge an arbitrator whom it has appointed or in whose appointment it has participated if it becomes aware of the grounds for the challenge after the appointment. The grounds for challenge must be notified to the arbitral tribunal and to the other party immediately.

In the event of a dispute, if the parties have not determined a procedure for the challenge of an arbitrator, the final decision will rest with the court that has jurisdiction at the seat of the arbitral tribunal.

Pending Arbitration

Pursuant to Article 181 the arbitral proceeding is pending as of when one party submits its request to the arbitrator or arbitrators designated in the arbitration agreement or, in the absence of such designation, when one party initiates proceedings for the constitution of the arbitral tribunal.

Procedure

Principle
Article 182 permits the parties to determine the arbitral procedure, either directly or by reference to arbitration rules. They may also submit the arbitration to a procedural law of their choice.

Where the parties have not determined the procedure, the arbitral tribunal will determine it to the necessary extent, either directly or by reference to a law or to arbitration rules.

Irrespective of what procedure is chosen, the arbitral tribunal must ensure the equal treatment of the parties and their right to be heard in an adversarial procedure.

Interim relief
Under Article 183 of the Federal Act on Private International Law the arbitral tribunal may grant interim relief at the request of one party, unless the parties have agreed otherwise.

If the party so ordered does not comply voluntarily the arbitral tribunal may request the assistance of the competent court, which will apply its own law.

The arbitral tribunal or the court may make the granting of interim relief subject to the provision of appropriate security.

Taking of evidence:
Article 184 stipulates that the arbitral tribunal will take the evidence itself.

Where the assistance of state authorities is needed for taking evidence, the arbitral tribunal, or a party with the consent of the arbitral tribunal, may request the assistance of the court at the seat of the arbitral tribunal. Again, this court will apply its own law.

Other judicial assistance
According to Article 185 of the act the court at the seat of the arbitral tribunal has jurisdiction with respect to any further judicial assistance.

Jurisdiction

Article 186 provides that the arbitral tribunal will make a preliminary decision on its own jurisdiction. Any objection to its jurisdiction must be raised prior to any defence on the merits.

Decision

Applicable law
Under Article 187 the arbitral tribunal will decide the dispute according to the rules of law chosen by the parties or, in the absence of such a choice, according to the rules of law which are most closely connected to the case.

The parties may authorize the arbitral tribunal to decide ex aequo et bono (ie, on the basis of equitable rather than strictly legal principles).

Partial award
Article 188 provides that the arbitral tribunal may make partial awards, unless the parties have agreed otherwise.

Arbitral award
Article 189 stipulates that the arbitral award must be made in conformity with the procedure and form agreed by the parties.

In the absence of such an agreement, the award will be made by a majority decision or, in the absence of a majority, by the presiding arbitrator alone. It must be made in writing, dated and signed, and reasons for the award must be given.

Pursuant to Article 190 the award is final from the time it is communicated.

Setting an Award Aside

Principle
Proceedings for setting aside the award may only be initiated in the following circumstances:

• if the sole arbitrator has been improperly appointed or the arbitral tribunal improperly constituted;
  
  
• if the arbitral tribunal has wrongly accepted or denied jurisdiction;
  
  
• if the arbitral tribunal has ruled beyond the claims submitted to it, or failed to decide one of the claims;
  
  
• if the principle of equal treatment of the parties or their right to be heard in an adversarial procedure has not been observed; or
  
  
• if the award is incompatible with public policy.

Proceedings to have a preliminary decision set aside can only be initiated if (i) the arbitrator has been improperly appointed or the arbitral tribunal improperly constituted, or (ii) the arbitral tribunal has wrongly accepted or denied jurisdiction. The time limit runs from the communication of the decision.

Competent court
Article 191 provides that proceedings to have an award set aside may only be brought before the Federal Supreme Court. The procedure is governed by the provisions of the Federal Judicial Organization Act relating to public law appeals.

However, the parties may agree that the court at the seat of the arbitral tribunal shall decide instead of the Federal Supreme Court. Its decision is final. The cantons will designate a sole cantonal court for this purpose.

Exclusion Agreements

Article 192 states that if none of the parties has its domicile, a habitual residence or a place of business in Switzerland, the parties may agree to exclude all setting aside proceedings, or limit such proceedings to one or several of the grounds listed in Article 190(2). This is achieved through an express statement in the arbitration agreement or through a subsequent written agreement.

If the parties have excluded all setting aside proceedings and the award is to be enforced in Switzerland, then the New York Convention of June 10 1958 on the Recognition and Enforcement of Foreign Arbitral Awards will apply.

Deposit and Certificate of Enforceability

According to Article 193 each party may, at its own expense, deposit a copy of the award with the Swiss court at the seat of the arbitral tribunal. The court will certify the enforceability of the award upon request.

The arbitral tribunal will also certify that the award has been made in conformity with the provisions of the Federal Act on Private International Law upon request. This certificate has the same effect as the deposit of the award.

Foreign Arbitral Awards

Article 194 stipulates that the recognition and enforcement of foreign arbitral awards is governed by the New York Convention of June 10 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

For further information on this topic please contact Pierre-Yves Tschanz at Tavernier Tschanz by telephone (+41 22 704 37 00) or by fax (+41 22 347 9789) or by e-mail ([email protected]).