In decision 4A_525/2017, the Swiss Supreme Court rejected a challenge to set aside an award based on an alleged violation of the right to be heard.
In a French-language decision, the Swiss Supreme Court refused to set aside an award rendered by an International Chamber of Commerce (ICC) tribunal for an alleged violation of the right to be heard.
The underlying dispute between the parties concerned the construction of the respondent's new headquarters. The parties' agreement was subject to Algerian law. After several disputes arose, the parties reciprocally terminated the agreement. The terminations notwithstanding, the claimant (contractor), refused to vacate the construction site, which prompted the respondent to lodge various counterclaims including one claiming daily penalties for each day the claimant remained on site after the termination. The arbitral tribunal partially granted the counterclaim and awarded damages for the unjustified continued presence of the claimant on site. It did so by applying the principle of equity and a contractual clause that it noted was not strictly applicable to the question at hand. The claimant applied to set aside these findings of the tribunal, arguing that they violated its right to be heard because no party had advanced any argument based on equity and the contractual clause applied was, by the tribunal's own assessment, not applicable.
The Swiss Supreme Court held that the application of the principle of equity and the contractual clause in question by the arbitral tribunal should not have been surprising to the parties. It explained that the principle of equity forms part of Algerian law and that the parties mentioned the principle on multiple occasions in their submissions. The court reiterated that arbitral tribunals are responsible for determining the law (iura novit curia) and that therefore the application of the law could only in very exceptional circumstances violate the parties' right to be heard (for example, where the application of a legal principle is completely unexpected).
The court also observed that a decision based on equity without the parties' authorisation could, at the very most, be an irregularity that has to be addressed from the viewpoint of procedural public policy, a ground that was not invoked by the claimant and therefore could not be examined by the court.
Case: Decision 4A_525/2017 (9 August 2018).