Arbitration awards in Switzerland

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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.

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