In decision 4A_345/2017, the Swiss Supreme Court rejected a challenge to set aside an award based on an alleged violation of procedural public policy.
In an Italian-language decision, the Swiss Supreme Court refused to set aside an award rendered by a sole arbitrator for an alleged violation of procedural public policy.
A dispute arose between several parties regarding an agreement to divide the commercial rights to 393 films between the contracting parties. The parties argued over the access to and property rights to the films and advanced reciprocal damage claims.
After the first sole arbitrator stepped down, the replacement arbitrator, applying the Swiss Code of Civil Procedure (SCCP), decided by way of a procedural order, that certain pieces of evidence were no longer admitted to the arbitral record, contrary to the preceding arbitrator's decision. The petitioner contended that this amounted to a violation of procedural public policy.
The Swiss Supreme Court held that according to the SCCP, the rules the parties chose as the applicable procedural rules, a replacement arbitrator can decide on procedural steps that have to be repeated. Therefore, the sole arbitrator had the discretion to revisit previous decisions by the first arbitrator. The court also reiterated the distinction between partial awards, which preclude further claims on the same matter (res judicata), incidental awards, which have no precluding effect but are binding on the arbitral tribunal within the same proceedings and procedural orders, which have no binding effect whatsoever.
The decision clarifies the relationship between procedural rules, here the SCCP, and procedural public policy when it comes to the repetition of arbitral steps by replacement arbitrators or tribunals. Although it is rather unusual that parties choose the SCCP as the applicable procedural rules, the decision is nevertheless relevant for international arbitrations seated in Switzerland, as many of the major institutional rules have similar rules regarding replacement tribunals and related repetition of procedural steps, (see for example, Art. 15(4) ICC Rules).
Case: Decision 4A_345/2017 (4 July 2018).