Arbitration in Switzerland

Legal framework

National arbitration laws

What legislation applies to arbitration in your jurisdiction?

Swiss law distinguishes between international and domestic arbitration. Chapter 12 of the Federal Statute on Private International Law applies to international arbitration (ie, where at least one of the parties has its domicile or regular place of residence outside of Switzerland at the time it enters into the arbitration agreement). The rules of the Civil Procedure Code – in particular, Part 3 (Articles 353 and following) – apply to domestic arbitration (ie, where none of the parties has its domicile or regular place of residence outside Switzerland at the time the arbitration agreement is concluded).

The following responses focus on the rules on international arbitration in Switzerland – that is, Chapter 12 of the Federal Statute on Private International Law.

Mandatory laws

Are there any mandatory laws?

Insofar as Chapter 12 of the Federal Statute on Private International Law is concerned, the following provisions are considered to be mandatory:

• objective arbitrability (Article 177(1));
• subjective arbitrability of a state, or an enterprise held by or an organisation controlled by a state (Article 177(2));
• the written form of the arbitration agreement (Article 178(1));
• the independence of arbitrators (Article 180(1)(c));
• the possibility for a party to challenge the appointment of an arbitrator it has nominated based on grounds which come to its attention after such appointment (Article 180(2));
• the principle of lis pendens (Article 181);
• the equal treatment requirement and the right to be heard in an adversarial procedure (Article 182(3)); and
• judicial assistance (Article 185).

In addition, the action for the annulment of arbitral awards (Article 190(2) of the Federal Statute on Private International Law) is considered mandatory in international arbitration if one of the parties is Swiss. If none of the parties to the arbitration agreement has its domicile, its habitual residence or a business establishment in Switzerland, the parties can waive the right to appeal the decision according to Article 192 of the Federal Statute on Private International Law.

New York Convention

Is your country a signatory to the New York Convention? If so, what is the date of entry into force?

Switzerland is a signatory to the New York Convention. It entered into force on August 30 1965.

Are there any reservations to the general obligations of the convention?

No.

Treaties and conventions

What other treaties and conventions in relation to arbitration is your jurisdiction party to?

Switzerland is a contracting party to the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927. However, according to Article VII(2) of the New York Convention, these treaties cease to have effect between contracting states to the New York Convention. As a consequence, the Geneva Convention has had no effect since 2007. Today, the Geneva Protocol applies only in relation to Iraq.

Switzerland has also signed over 120 bilateral investment treaties (for further details see www.seco.admin.ch/themen/00513/00594/04450/?lang=en).

UNCITRAL

Has your jurisdiction adopted the UNCITRAL Model Law?

No.

Reform

Are there any impending plans to reform the arbitration laws in your jurisdiction?

On January 11 2017 the Federal Council published the draft proposal for a revision of Chapter 12 of the Federal Statute on Private International Law, which governs international arbitration proceedings seated in Switzerland. The most relevant proposed changes concern the following issues:

• The draft proposal contains explicit provisions concerning correction and revision of arbitral awards (both remedies are already in practice, but not explicitly provided for in Chapter 12).
• The proposed amendment of Article 178(1) of the Federal Statute on Private International Law recognises arbitration agreements as valid, even if the form requirement under Article 178(1) is fulfilled by only one party.
• The draft proposal expressly confers the power and duty on the arbitral tribunal to render a decision as to the amount and allocation of the costs of the proceedings, as well as to compensation for legal and other costs, unless the parties agree otherwise (Chapter 12 is silent with respect to the issue of costs).
• Under the proposed amendment of Article 183(2) of the Federal Statute on Private International Law, both the tribunal and a party may request the assistance of the state courts in case a party does not voluntarily comply with provisional or protective measures ordered by the tribunal.
• Filings with the Federal Supreme Court in matters of international arbitration (eg, a request for revision or an action for setting aside an arbitral award) can also be made in English (filings with the court must be written in an official language).

It is difficult to make a prognosis as to when the revision will enter into force. During the consultation phase, which lasts until May 31 2017, all interested parties can comment on the draft proposal. Depending on the comments submitted, the Department of Justice may then still amend the draft proposal before proposing it to Parliament. 

Arbitration agreements

Validity

What are the validity requirements for an arbitration agreement?

Swiss law distinguishes between formal and substantive validity.

With regard to formal validity, Swiss law requires the arbitration agreement to be in writing. Signature by the parties is not required. The written form requirement is considered to be met if the arbitration agreement is concluded in writing or by telegram, telex, telecopier or any other means of communication which permits it to be evidenced in text (Article 178(1) of the Federal Statute on Private International Law). This requirement is also generally met by any modern means of electronic communication, such as email.

It is not settled whether both parties must adhere to the formal requirement of Article 178(1) of the Federal Statute on Private International Law, or whether it is enough that a written offer to arbitrate by one party is accepted orally or tacitly by the other (see the proposed amendment of Article 178(1) of the Federal Statute on Private International Law).

With regard to substantive validity, Article 178(2) of the Federal Statute on Private International Law provides that an arbitration agreement is valid if it conforms to the law chosen by the parties, the law governing the subject matter of the dispute or Swiss law. It is sufficient if the arbitration agreement is valid under the substantive law of any of these three laws.

If substantive validity is examined under Swiss law, the parties must have the capacity to validly enter into an arbitration agreement (subjective arbitrability) and the subject matter of the dispute must be arbitrable (objective arbitrability).

In addition, the parties' consent with regard to the essential elements of the arbitration agreement is required. This requires that the parties express their intention to submit their dispute to arbitration and that the arbitration agreement specify the object or the legal relationship subject to arbitration.

Enforcement of agreements

How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?

Swiss courts are not allowed to order arbitration if one of the parties does not voluntarily comply with an arbitration agreement. Under Swiss law, the enforcement of an arbitration agreement may be ensured as follows:

• The state courts will decline jurisdiction whenever there is a valid arbitration agreement between the parties, unless the parties proceed on the merits without reservation (Article 7 of the Federal Statute on Private International Law; Article II(3) of the New York Convention).
• A party may refer to a state court to seek assistance in the constitution of the arbitration tribunal (Article 179 of the Federal Statute on Private International Law).
• A party may also turn to a state court if the other party obstructs the conduct of the arbitration proceedings (Article 185 of the Federal Statute on Private International Law).

Consolidation

Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

Chapter 12 of the Federal Statute on Private International Law contains no rules on the consolidation of arbitration proceedings by an arbitration tribunal. By contrast, Article 4(1) of the 2012 Swiss Rules of International Arbitration provides that "where a Notice of Arbitration is submitted between parties already involved in other arbitral proceedings pending under these Rules, the Court may decide, after consulting with the parties and any confirmed arbitrator in all proceedings, that the new case shall be consolidated with the pending arbitral proceedings.

Choice of law

How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

The parties are free to choose the rules of law applicable to their conflict. According to Article 187(1) of the Federal Statute on Private International Law, a dispute is decided according to the rules of law chosen by the parties or, in the absence of such a choice, according to the rules of law with which the case has the closest connection.

The parties can also authorise the tribunal to decide ex aequo et bono (Article 187(2) of the Federal Statute on Private International Law).

Separability

Are there any provisions on the separability of arbitration agreements?

The principle of the separability of the arbitration agreement is set out in Article 178(3) of the Federal Statute on Private International Law. The validity of an arbitration agreement cannot be challenged on the grounds that the main contract between the parties is invalid.

However, this does not preclude the grounds for nullity of the main contract from also affecting the arbitration agreement.

Multiparty agreements

Are multiparty agreements recognised?

Swiss law recognises multi-party arbitration agreements. However, no specific provisions of the Federal Statute on Private International Law deal with such situations, particularly the appointment of the arbitrators. The draft proposal for a revision of Chapter 12 of the Federal Statute on Private International Law provides that in case of a multiparty arbitration and in the absence of an agreement by the parties, the court at the seat of the arbitration may appoint all members of the arbitral tribunal.

Arbitral tribunal

Criteria for arbitrators

Are there any restrictions?

Arbitrators must be impartial and independent (Article 180(1)(c) of the Federal Statute on Private International Law). Beyond this, Chapter 12 of the Federal Statute on Private International Law imposes no additional requirements or restrictions on arbitrators. However, the parties are free to agree on any qualifications that the arbitrators must have.

Contractual stipulations

What can be stipulated about the tribunal in the agreement?

The parties are free to agree on any qualifications that the arbitrators must have (eg, regarding their legal qualification, experience of the subject matter or language skills) (Article 179(1) of the Federal Statute on Private International Law). The parties are also free to choose the number of arbitrators (Article 179(1) of the Federal Statute on Private International Law).

Default requirements

Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?

In the absence of an agreement on the constitution of the tribunal, the parties may turn to the court of the place where the tribunal has its seat. According to Article 179(2) of the Federal Statute on Private International Law, the court will then apply, by analogy, the provision of the Civil Procedure Code on the appointment, removal or replacement of arbitrators.

According to Article 360(1) of the Civil Procedure Code, unless the parties have agreed otherwise, the tribunal will consist of three members. The Civil Procedure Code includes no provisions on the characteristics that an arbitrator must have.

Challenging the appointment of an arbitrator

Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?

An arbitrator may be challenged if he does not have the qualifications agreed on by the parties (Article 180(1)(a) of the Federal Statute on Private International Law), or if the rules of arbitration agreed on by the parties provide for another reason to challenge the appointment of the arbitrator (Article 180(1)(b) of the Federal Statute on Private International Law). In addition, the appointment of an arbitrator may be challenged if there are justifiable doubts as to his independence or impartiality (Article 180(1)(c) of the Federal Statute on Private International Law).

A party may not challenge an arbitrator whom it nominated itself, unless the challenge is based on grounds which come to its attention after the appointment (Article 180(2) of the Federal Statute on Private International Law).

The parties to the arbitration agreement can establish their own rules on the procedure for challenging the appointment of an arbitrator. Unless the parties have agreed otherwise (eg, by reference to institutional arbitration rules), the court of the place where the tribunal has its seat shall make the final decision (Article 180(3) of the Federal Statute on Private International Law). The court will then apply the provisions of the Civil Procedure Code on the removal or replacement of arbitrators by analogy. According to Article 369(2) of the Civil Procedure Code, the challenge must be submitted within 30 days of the challenging party becoming aware of the grounds for challenge.

In addition, a party can request the removal of an arbitrator if the arbitrator in question cannot perform his tasks within reasonable time and with the necessary care according to Article 370 of the Civil Procedure Code, applicable by analogy based on Article 179(2) of the Federal Statute on Private International Law.

Jurisdictional objections

How should an objection to jurisdiction be raised?

According to Article 186(2) of the Federal Statute on Private International Law, a plea of lack of jurisdiction must be raised prior to any defence on the merits. A party that defends itself on the merits without objecting to the jurisdiction of the tribunal is considered to have accepted the tribunal's jurisdiction.

Replacement of an arbitrator

Why and how can an arbitrator be replaced?

The replacement of an arbitrator might become necessary if a challenge to the appointment of the arbitrator succeeds. In addition, a replacement might become necessary if an arbitrator is dismissed as a result of the corresponding declarations of the parties to the arbitration proceedings, or if an arbitrator resigns or is removed on the request of one of the parties.

According to Article 179(1) of the Federal Statute on Private International Law, an arbitrator shall be replaced in accordance with the agreement of the parties. In the absence of such agreement, the court of the place where the tribunal has its seat may be seized with the question (Article 179(2) of the Federal Statute on Private International Law). 

Powers and obligations

What powers and obligations do arbitrators have?

Most importantly, arbitrators are competent to decide on their own jurisdiction (the competence-competence principle; Article 186(1) of the Federal Statute on Private International Law).

The arbitrators’ main obligations recognised in international arbitration are as follows:

• An arbitrator is obliged to conduct the proceedings in a way that allows for a valid award to be rendered.
• An arbitrator cannot resign without good cause.
• An arbitrator must remain independent and impartial during the arbitration proceedings.
• An arbitrator must disclose any possible conflict of interests to the parties.
• An arbitrator must keep all information relating to the dispute and the proceedings confidential.

Liability of arbitrators

Are arbitrators immune from liability?

The prevailing view is that the relationship between the parties to the arbitration proceedings and the arbitrators is contractual in nature. As a consequence, the question of an arbitrator’s liability towards the parties will most likely be governed by Swiss law. Under Swiss law, a party is liable for a violation of its contractual duties. Thus, an arbitrator could become liable for a violation of his obligations. However, except for wilful intent and gross negligence, liability may be excluded or limited under Swiss law (see Article 45 of the 2012 Swiss Rules of International Arbitration).

Communicating with the tribunal

How do the parties communicate with the tribunal?

Chapter 12 of the Federal Statute on Private International Law does not prescribe any method of communication between the parties and the tribunal. In general, the parties will communicate with the tribunal in writing. However, the parties and/or the tribunal may establish specific rules regarding the applicable method of communication or agree on a specific means of communication.

Reaching decisions

Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?

The parties are free to establish their own rules on how the tribunal should reach its decision (Article 189(1) of the Federal Statute on Private International Law). If they fail to do so, the default rule of Article 189(2) of the Federal Statute on Private International Law provides that the arbitral award shall be made by a majority or, in the absence of a majority, by the presiding arbitrator alone.

Arbitrability

Are there any disputes incapable of being referred to arbitration?

According to Article 177 of the Federal Statute on Private International Law, any dispute of financial interest may be the subject of arbitration. This includes labour matters, marital property matters and disputes between heirs.

By contrast, claims that first and foremost affect a party's personal rights – such as marriage, paternity, child adoption, divorce or separation – are not arbitrable. Likewise, claims in bankruptcy law that are strictly part of the debt collection procedure, such as claims belonging to the bankruptcy estate, are considered to be non-arbitrable.

Can the arbitrability of a dispute be challenged?

Where a tribunal wrongly accepted or declined jurisdiction based on an erroneous assessment of the arbitrability of the dispute, a party can seize the Swiss Federal Supreme Court with an action for annulment (Article 190(2)(b) of the Federal Statute on Private International Law).

Jurisdiction and competence-competence

Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?

The principle of competence-competence is recognised in Article 186(1) of the Federal Statute on Private International Law. Accordingly, the tribunal is competent to decide on its own jurisdiction. This applies even if an action on the same matter between the same parties is pending before a state court or another tribunal, unless there are serious reasons to stay the proceedings (Article 186(1bis) of the Federal Statute on Private International Law). The tribunal shall, as a rule, decide on its jurisdiction by preliminary award (Article 186(3) of the Federal Statute on Private International Law).

Arbitral proceedings

Starting an arbitration proceeding

What is needed to commence arbitration?

Under Swiss arbitration law, arbitration proceedings are considered to be pending as soon as one of the parties seizes the arbitrator(s) designated in the arbitration agreement with a claim. If no arbitrators are designated in the arbitration agreement, the proceedings are considered to be pending from the moment that one of the parties initiates the procedure for the appointment of the tribunal (Article 181 of the Federal Statute on Private International Law).

Limitation periods

Are there any limitation periods for the commencement of arbitration?

No.

Procedural rules

Are there any procedural rules that arbitrators must follow?

According to Article 182(1) of the Federal Statute on Private International Law, the parties may, directly or by reference to rules of arbitration, determine the arbitration procedure; they may also submit the arbitration procedure to a procedural law of their choice. Article 182(2) of the Federal Statute on Private International Law states that if the parties have not determined the procedure, the tribunal shall determine it to the extent necessary, either directly or by reference to a statute or to rules of arbitration.

Regardless of the procedure chosen, the tribunal must guarantee equal treatment of the parties and the right of the parties to be heard in adversarial proceedings (Article 182(3) of the Federal Statute on Private International Law).

Dissenting arbitrators

Are dissenting opinions permitted under the law of your jurisdiction?

Chapter 12 of the Federal Statute on Private International Law does not address whether dissenting opinions are permitted. However, according to the Swiss Federal Supreme Court, a dissenting opinion may be expressed if the parties agreed to allow dissenting opinions or the majority of the tribunal decides to allow a dissenting opinion.

Judicial assistance

Can local courts intervene in proceedings?

Under certain circumstances, the Swiss courts may intervene in proceedings on the request of a party or the tribunal. For example, if a party does not voluntarily comply with provisional or conservatory measures ordered by the tribunal, the tribunal may request the assistance of the court (Article 183(2) of the Federal Statute on Private International Law). The tribunal or a party with the consent of the tribunal may request the assistance of the court of the place where the tribunal has its seat if this is necessary for the taking of evidence (Article 184(2) of the Federal Statute on Private International Law).

Can the local courts assist in choosing arbitrators?

The parties may seek help from the court of the place where the tribunal has its seat if this is necessary for the constitution of the tribunal. A party may, in particular, seize the court for the appointment, removal or replacement of arbitrators (Article 179(2) of the Federal Statute on Private International Law).

What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?

Local courts cannot compel parties to arbitrate or issue subpoenas to third parties.

Third parties

In what instances can third parties be bound by an arbitration agreement or award?

In general, an arbitration agreement is binding only on the parties to the original agreement. Deviating from that general rule, a third (non-signatory) party may nevertheless become bound by the arbitration agreement based on several legal extension theories under Swiss law, such as the principle of confidence (Vertrauensprinzip), agency law or the piercing of the corporate veil. In particular, the extension of arbitration agreements to non-signatories may be justified under Swiss law where the third party explicitly or implicitly expressed its intention to be bound by the arbitration agreement (eg, by interfering in the performance of the relevant contract).

Default language and seat

Unless agreed by the parties, what is the default language and location for arbitrations?

Unless the parties have agreed otherwise, the seat will be determined by the arbitral institution designated by them or, in the absence of such designation, by the arbitrators (Article 176(3) of the Federal Statute on Private International Law). The language will be chosen by the tribunal if the parties failed to make a choice in this regard (Article 182(2) of the Federal Statute on Private International Law).

Gathering evidence

How is evidence obtained by the tribunal?

Pursuant to Article 184(1) of the Federal Statute on Private International Law, the tribunal shall conduct the taking of evidence (ie, the parties and the arbitrators cannot delegate the taking of evidence to a third party, such as a state authority).

The procedure to be followed for taking evidence is a matter to be determined by the parties or, in the absence of any agreement, by the tribunal (Article 182 of the Federal Statute on Private International Law). Under Chapter 12 of the Federal Statute on Private International Law, a tribunal is not obliged to follow the rules of state courts regarding the taking of evidence.

A tribunal acting under Chapter 12 of the Federal Statute on Private International Law has no coercive powers. Thus, Article 184(2) of the Federal Statute on Private International Law provides that "[i]f the assistance of state judiciary authorities is necessary for the taking of evidence, the arbitral tribunal or a party with the consent of the arbitral tribunal may request the assistance of the state court judge at the seat of the arbitral tribunal; the judge shall apply his own law".

What kinds of evidence are acceptable?

Chapter 12 of the Federal Statute on Private International Law contains no provisions on the kinds of evidence that are acceptable. However, a tribunal acting under Chapter 12 of the Federal Statute on Private International Law will usually stick to the commonly known evidentiary means, such as documents, fact and expert witnesses, and site or subject-matter inspections.

Confidentiality

Is confidentiality ensured?

Chapter 12 of the Federal Statute on Private International Law contains no rules on confidentiality. By contrast, Article 44(1) of the 2012 Swiss Rules of International Arbitration provides that "[u]nless the parties expressly agree in writing to the contrary, the parties undertake to keep confidential all awards and orders as well as all materials submitted by another party in the framework of the arbitral proceedings not already in the public domain, except and to the extent that a disclosure may be required of a party by a legal duty, to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings before a judicial authority". This undertaking also applies to the arbitrators, the tribunal-appointed experts and the secretary of the tribunal (Article 44(1) of the 2012 Swiss Rules of International Arbitration). According to Article 44(2) of the 2012 Swiss Rules of International Arbitration, the deliberations of the tribunal are confidential.

Can information in arbitral proceedings be disclosed in subsequent proceedings?

Article 44(1) of the 2012 Swiss Rules of International Arbitration provides that "[u]nless the parties expressly agree in writing to the contrary, the parties undertake to keep confidential all awards and orders as well as all materials submitted by another party in the framework of the arbitral proceedings not already in the public domain, except and to the extent that a disclosure may be required of a party by a legal duty, to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings before a judicial authority".

Ethical codes

What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

No specific ethical rules or professional standards apply to arbitrators and counsel in arbitration proceedings. In case of doubt, each participant must live up to his own applicable professional rules or ethical standards. 

Costs

Estimation & allocation

How are the costs of arbitration proceedings estimated and allocated?

Chapter 12 of the Federal Statute on Private International Law contains no rules on the costs of arbitration proceedings, including their estimation and allocation (see the proposed amendment with respect to the issue of costs in the draft proposal for a revision of Chapter 12 of the Federal Statute on Private International Law). The rules of arbitration institutions generally contain detailed provisions on the fees and expenses of the arbitrators and the institution. Further, the rules of arbitration institutions generally also provide that, unless otherwise agreed by the parties, the award shall contain a determination of the costs of the arbitration. Such rules generally adhere to the principle that the costs of the arbitration shall in principle be borne by the unsuccessful party.

Security for costs

Can the national court or tribunal order security for costs under the law in your jurisdiction?

Both national courts and arbitral tribunals can order security for costs under Swiss law.

The award

Requirements

What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?

Any award rendered by an international arbitral tribunal in Switzerland is final from its notification (Article 190(1) of the Federal Statute on Private International Law). The term ‘final’ means both that the award is enforceable and that it has binding effect by operation of law. Thus, no additional state court scrutiny is needed for an award rendered by an international tribunal with seat in Switzerland to be enforceable and have binding effect.

According to Article 189(1) of the Federal Statute on Private International Law, the arbitral award shall be rendered in conformity with the procedure and in the form agreed upon by the parties.

In the absence of such agreement, the arbitral award shall be made by a majority or, in the absence of a majority, by the chairman. The award shall further be in writing, supported by reasons, dated and signed. The signature of the chairman is sufficient (Article 189(2) of the Federal Statute on Private International Law).

Timeframe for delivery

Are there any time limits on delivery of the award?

Swiss law imposes no time limit on the arbitrators within which they must render their award. Some institutional arbitration rules, such as the International Chamber of Commerce Arbitration Rules, provide for a non-mandatory and extendable time limit for the rendering of the award.

Remedies

Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?

The parties’ autonomy to choose the applicable substantive law and thus the remedies available (Article 187(1) of the Federal Statute on Private International Law) is not without limits. A tribunal with its seat in Switzerland shall disregard any rules of law chosen by the parties if they would lead to a decision on the merits which would not be compatible with public policy in the sense of Article 190(2)(e) of the Federal Statute on Private International Law.

The parties’ freedom regarding the choice of the applicable substantive law might further be restricted by the application of ‘foreign’ mandatory rules (ie, rules of law other than the provisions chosen by the parties calling for immediate application).

What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?

According to Article 183(1) of the Federal Statute on Private International Law, unless the parties have agreed otherwise, a tribunal to which Chapter 12 of the Federal Statute on Private International Law applies may, at the request of a party, grant provisional or conservatory measures.

Article 183(1) of the Federal Statute on Private International Law does not define the permitted content or types of interim measures. However, it is commonly accepted that, in principle, a tribunal can grant any interim measures it considers necessary to protect a party's right effectively during the arbitration proceedings. In other words, a tribunal to which Chapter 12 of the Federal Statute on Private International Law applies is not restricted to interim measures recognised under Swiss law.

In case of non-compliance with any interim measures ordered, the tribunal lacks the power to enforce its interim decision. Thus, if a party does not voluntarily comply with any interim measures ordered against it, the tribunal (or, under the draft proposal for a revision of Chapter 12 of the Federal Statute on Private International Law, a party) may request the assistance of the state court judge (Article 183(2) of the Federal Statute on Private International Law).

An arbitration agreement does not preclude a state court from granting interim relief before or after the commencement of arbitration proceedings.

Interest

Can interest be awarded?

The answer to this question depends on the applicable substantive law. Swiss substantive law allows for the award of interest.

At what rate?

The answer to this question depends on the applicable substantive law. Under the Swiss Code of Obligations, where an obligation involves the payment of interest but the rate is not set by contract, law or custom, interest is payable at the rate of 5% per annum (Article 71(1) of the Swiss Code of Obligations).

Finality

Is the award final and binding?

The award is final from its notification (Article 190(1) of the Federal Statute on Private International Law). Once the award is final, it has binding effect. Further, the finality of the award leads to its enforceability.

What if there are any mistakes?

The grounds on which an award rendered by a tribunal with its seat in Switzerland can be challenged are set forth in Article 190(2) of the Federal Statute on Private International Law. Only fundamental mistakes may lead to annulment of the award.

Although not explicitly stated in Chapter 12 of the Federal Statute on Private International Law, it is recognised under Swiss law that a party may also file a request for correction of the award.

Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Article 192(1) of the Federal Statute on Private International Law provides for the possibility to waive the right to challenge an award, in part or in full. For the waiver to be valid, two conditions must be met:

• None of the parties had its domicile, habitual residence or a business establishment in Switzerland at the time when the waiver was made; and
• The waiver is made by an express statement in the arbitral agreement or by a subsequent written agreement.

While an explicit reference to Article 192 of the Federal Statute on Private International Law is not necessary, the waiver must be made in an explicit and clear manner. Mere reference to an award being ‘final’ is insufficient.

If the parties agreed to waive the right to challenge in full, enforcement of the award in Switzerland will be governed by the New York Convention (Article 192(2) of the Federal Statute on Private International Law).

If the parties to arbitration agree on a waiver under Article 192(1) of the Federal Statute on Private International Law, it is still possible for the parties to request the revision of an international arbitral award rendered in Switzerland.

Appeal

What is the procedure for challenging awards?

Under Swiss law, an arbitral award may be challenged only before the Swiss Federal Supreme Court (Article 191 of the Federal Statute on Private International Law). The proceedings are governed by Article 77 of the Federal Statue on the Swiss Federal Supreme Court of June 17 2005. Appeals against arbitral awards may be brought before the Swiss Federal Supreme Court with the uniform appeal in civil matters (Article 77(1) of the Federal Statue on the Swiss Federal Supreme Court). Set-aside proceedings before the Swiss Federal Supreme Court last approximately four months on average.

According to Article 100(1) of the Federal Statue on the Swiss Federal Supreme Court, an appeal against an arbitral award must be filed with the Swiss Federal Supreme Court within 30 days of notification of the award.

An application to challenge an arbitral award must be written in an official language (ie, in German, French or Italian), be signed by the applicant or its representative and contain the applicant's prayers for relief and the reasons and evidence on which the applicant is relying for the challenge (Article 42(1) of the Federal Statue on the Swiss Federal Supreme Court). According to the proposed adaption of the Federal Statute on the Federal Supreme Court (which is linked to the proposed revision of Chapter 12 of the Federal Statute on Private International Law), an application to challenge an arbitral award can also be made in English. 

As a rule, a motion to set aside the award has no effect on the finality or enforceability of the award (Article 103(1) of the Federal Statue on the Swiss Federal Supreme Court). However, on the request of a party or ex officio, the Swiss Federal Supreme Court has discretion to stay enforcement of the award (Article 103(3) of the Federal Statue on the Swiss Federal Supreme Court).

If the Swiss Federal Supreme Court decides that one of the grounds listed in Article 190(2) of the Federal Statute on Private International Law is fulfilled, it will set aside the award. If the Swiss Federal Supreme Court affirms the challenge of the award based on the grounds that the tribunal erroneously denied or affirmed jurisdiction (Article 190(2)(b) of the Federal Statute on Private International Law), it may issue a new decision replacing the award. In all other cases, however, the Swiss Federal Supreme Court will not issue its own decision on the merits, but will refer the matter back to the same tribunal for reconsideration.

As case law shows, the Swiss Federal Supreme Court is reluctant to set aside arbitral awards and the success rate of appeals brought before the Swiss Federal Supreme Court is very low.

On what grounds can parties appeal an award?

Swiss law allows the parties to challenge an arbitral award by way of annulment proceedings on the basis of one of the grounds exhaustively listed in Article 190(2) of the Federal Statute on Private International Law as follows:

• The tribunal was irregularly constituted or the sole arbitrator was improperly appointed (Article 190(2)(a) of the Federal Statute on Private International Law).
• The tribunal wrongly accepted or declined jurisdiction (Article 190(2)(b) of the Federal Statute on Private International Law).
• The tribunal's decision went beyond the claims submitted to it or failed to address one of the items of the claim (Article 190(2)(c) of the Federal Statute on Private International Law).
• The principle of equal treatment of the parties or the right of the parties to be heard was violated (Article 190(2)(d) of the Federal Statute on Private International Law).
• The award is incompatible with public policy (Article 190(2)(e) of the Federal Statute on Private International Law).

According to Article 190(3) of the Federal Statute on Private International Law, interim (or preliminary) awards (as opposed to final awards) may be challenged only on the basis of a violation of Article 190(2)(a) of the Federal Statute on Private International Law (irregular constitution of the tribunal) or Article 190(2)(b) of the Federal Statute on Private International Law (incorrect ruling on jurisdiction).

Enforcement

What steps can be taken to enforce the award if there is a failure to comply?

With regard to awards rendered by an international tribunal with its seat in Switzerland – the following applies:

• Each party may, at its own expense and for reasons of safekeeping, deposit a copy of the award with the Swiss court of the place where the tribunal has its seat (Article 193(1) of the Federal Statute on Private International Law). This is not a requirement for receiving a certificate of enforceability of the award under Article 193(2) of the Federal Statute on Private International Law or for the enforcement of the award in Switzerland.
• On the request of a party, the court at the place of arbitrartion shall certify the enforceability of the award (Article 193(2) of the Federal Statute on Private International Law). A certificate of enforceability has only a declaratory effect. However, the binding effect and enforceability of the award both arise without a certificate of enforceability.
• Any Swiss international award may be enforced anywhere in Switzerland "by operation of law" and under the same rules as Swiss state court decisions. This means that no additional exequatur is needed for the successful enforcement of the award; rather, Swiss law provides for the automatic enforceability of Swiss international awards.
• Enforcement is subject to Article 192(2) of the Federal Statute on Private International Law, which states that "[i]f the parties have waived fully the action for annulment against the award and the awards are to be enforced in Switzerland, the New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards applies by analogy".

With regard to awards rendered by an international tribunal with its seat outside Switzerland the following applies:

• According to Article 194 of the Federal Statute on Private International Law, the enforcement of foreign awards is governed by the New York Convention.
• If a foreign award is enforced in Switzerland, the New York Convention applies irrespective of whether the country of origin of the award is a signatory to the New York Convention.

Under Swiss law, awards ordering a party to pay a sum of money and non-monetary awards (eg, declaratory awards) are enforced under different rules. This applies irrespective of whether the tribunal had its seat in Switzerland or outside Switzerland.

Monetary awards are enforced pursuant to the Swiss Debt Enforcement and Bankruptcy Act of April 11 1889. Under the Swiss Debt Enforcement and Bankruptcy Act, the party which has been awarded a sum of money commences enforcement proceedings by filing a request for debt collection with the debt collection office (Article 67 of the Swiss Debt Enforcement and Bankruptcy Act). The debt collection office then issues a payment order (Article 69 of the Swiss Debt Enforcement and Bankruptcy Act). If the debtor objects to the payment order within 10 days (Article 74 of the Swiss Debt Enforcement and Bankruptcy Act), the party which has been awarded a sum of money in the award must file a request for an order setting aside the objection to a state court, which will render its decision in summary proceedings (Articles 79 and following of the Swiss Debt Enforcement and Bankruptcy Act). If a foreign monetary award is at stake, the state court must also decide whether the prerequisites set forth in Articles IV and V of the New York Convention are met. A request that the debt collection proceedings be continued may be made as soon as the state court's decision to set aside the debtor's objection is final (Article 88 of the Swiss Debt Enforcement and Bankruptcy Act).

Non-monetary awards are enforced under the Civil Procedure Code – that is, by a state court in summary proceedings (Articles 335 and following of the Civil Procedure Code). If a foreign non-monetary award is at stake, the state court must also decide on whether the prerequisites set forth in Articles IV and V of the New York Convention are met.

Can awards be enforced in local courts?

Yes.

How enforceable is the award internationally?

This depends on the rules of the foreign state in which enforcement of the award is sought. 

To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

In Switzerland, the following requirements must be fulfilled to enforce an award against a foreign state:

• The claim to be enforced must have arisen with respect to activities of the foreign state of a commercial nature;
• There must be a sufficiently close connection between Switzerland and the legal relationship from which the claim arose; and
• The assets of the state with regard to which enforcement is requested must not be allocated to or intended for governmental purposes.

Are there any other bases on which an award may be challenged, and if so, by what?

Although not explicitly stated in Chapter 12 of the Federal Statute on Private International Law, under Swiss law, the revision of international arbitral awards rendered in Switzerland is allowed, in particular, where the award was influenced by a criminal offence within the meaning of the Swiss Penal Code (Article 123(1) of the Federal Statue on the Swiss Federal Supreme Court) or where a party has obtained knowledge of new and relevant facts that were previously unknown (Article 123(2) of the Federal Statue on the Swiss Federal Supreme Court). The Swiss Federal Supreme Court is competent to decide on applications for revision of arbitral awards. If the Swiss Federal Supreme Court grants a request for revision, it will not render a new award, but will remit the case to either the original or a newly constituted tribunal for a new decision.

The draft proposal for a revision of Chapter 12 contains explicit provisions as to the revision of an award.

How enforceable are foreign arbitral awards in your jurisdiction?

Switzerland enforces foreign awards under the New York Convention, irrespective of whether the country of origin of the award is a signatory to the New York Convention (Article 194 of the Federal Statute on Private International Law).

Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

To date, Swiss courts have refused to enforce awards that have been set aside by the courts at the seat of arbitration.

Third-party funding

Rules and restrictions

Are there rules or restrictions on third-party funders?

There are no restrictions on third-party funders. One issue that is under discussion is the extent to which third-party funding affects the cost consequences (including attorneys' fees in arbitration proceedings): is the losing party liable to compensate in accordance with the third-party funding agreement concluded by the winning party? 

Class-action or group arbitration

Concept

Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

So far, there are no specific provisions dealing with class action or group arbitration in Switzerland.

Hot topics

Emerging trends

Are there any hot topics or trends emerging in arbitration in your jurisdiction?

No.