"US Spotlight" blog series: demystifying Swiss arbitration for the US litigator (Volume 2 of 10)
This blog series provides the US litigator with a practical understanding of Swiss arbitration. It compares a Swiss arbitral proceeding under the Swiss Rules of International Arbitration ("Swiss Rules"), though other rules, e.g., the International Chamber of Commerce ("ICC") Rules, are often used, with a dispute in US Federal District Court ("USDC").
The organizational conference
After the arbitrators have been nominated and confirmed by the SCAI, they will convene the organizational conference. While it is possible to attend this conference telephonically, it is good practice to do so in person. When the client accompanies her outside counsel to the conference, it sends a strong message to the tribunal that the case matters. This conference is tantamount to a combined FRCP 26(f) conference and early FRCP 16 pre-trial conference in USDC.
In a collaborative, sometimes conversational, manner, the parties and tribunal will determine whether or not the tribunal has jurisdiction over the proceedings, the language of the proceedings, which is often English, that each arbitrator has accepted his or her charge, and a high-level summary of the dispute including the amount claimed. It is likely that instructions as to the deposit of costs, which is an estimate of the tribunal's costs for the proceeding that are paid up front in accordance with Appendix B to the Swiss Rules, will be given at this time. Art. 41 Swiss Rules. The costs of the tribunal, which correspond to both the amount in dispute and amount of effort the tribunal expends, will be substantially higher than USDC court costs, e.g., up to CHF 422'500 for a CHF 5M dispute.
The applicable substantive law will be confirmed to the extent possible. Art. 33(1) Swiss Rules. While the substantive law to be applied may be Swiss law, it may as well be the substantive law of either of the parties' domiciles or the substantive law of a non-Swiss neutral jurisdiction. Care will have of course been taken during the nomination of the arbitrators to ensure each arbitrator is comfortable applying the requisite substantive law.
The basic procedural framework will be governed by Swiss procedural law, viz., lex arbitri. The majority of the procedural rules that the tribunal will employ will be agreed upon. There will be some flexibility built into the procedural rules, subject to input from the parties and tribunal. Since a goal of Swiss arbitral proceedings is for the parties to efficiently reach a commercially minded resolution, the tribunal will work to avoid hang-ups due to procedural technicalities. This procedural flexibility, viz., reasonableness, may feel different from the belt and suspenders procedural rigidity commonly practiced in USDC.
A case specific procedural framework will be agreed upon. This will include an agreement as to how communications between the parties, and the parties and the tribunal, will be delivered - e-mail may suffice. It will also include the format of written submissions, the procedure for submitting fact and expert witnesses' testimony, the rules of evidence, the procedure for submitting documents, and whether or not there will be a document production phase in the proceedings.
The tribunal will also set the date of the hearing, and then work backwards in time to set reasonable deadlines, pursuant to Art. 15(3) Swiss Rules, for the SOC, SOD, Statement of Reply to the SOD ("Reply"), Rejoinder to the Statement of Reply ("Rejoinder"), and any document production phase of the proceedings. This provisional timetable is at once less complex than a FRCP 16(b)(1) scheduling order—e.g., there are far fewer discovery inspired deadlines to contend with—and more complete—e.g., while a FRCP 16(b)(1) order need not set a trial date, most foreseeable case deadlines, including the all-important hearing date, are captured with the Art. 15(3) Swiss Rules inspired provisional timetable.
The organizational conference is high time for any technical challenges, e.g., to the authority of the tribunal or that the proper substantive law is applied, to be raised. Parties shall be deemed to have waived their right to object to non-compliance with the Swiss Rules if they are aware of such non-compliance and do not promptly object. Art. 30 Swiss Rules.