"US Spotlight" blog series: demystifying Swiss arbitration for the US litigator (Volume 7 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").
Hearings, tantamount to USDC trials, are not mandatory in Swiss arbitration, and the tribunal may decide the case on the written submissions and evidence alone. Art. 15(2) Swiss Rules. While the right to trial in a civil case in USDC is not without some exceptions, FRCP 38 and the Seventh Amendment to the US Constitution establish the overwhelming presumption that if a party to a civil action in USDC demands a jury trial, it will get it. There is no analog in Swiss arbitration. Should a hearing take place, the scheduled hearing date is much less likely to move in Swiss arbitral proceedings than a trial date set in USDC: punctuality is a core value of the system prioritized by tribunals. Art. 25(1) Swiss Rules.
Final cut-off date
The final cut-off date is set a week or two after the deadline for the rejoinder. Respondents sometimes hold back certain arguments at the SOD phase and bring them for the first time in the rejoinder. While this in theory is not how the system is intended to operate, it is a potential reality that a claimant must be prepared to deal with. The final cut-off date provides the claimant with a small time cushion to seek leave to respond to any arguments raised in the rejoinder that were not raised by the respondent prior to the claimant submitting its reply. The final cut-off date is also the final deadline, except for in extraordinary circumstances, for either party to submit evidence that may be cited and relied upon in the proceedings. The final cut-off date essentially serves as the closure of the written submissions and exchange of evidence stage of the proceedings, on par with USDC close of discovery and also final deadline for substantive filings, e.g. motions for summary judgment. Hearing preparation can now begin. Unlike in USDC, the phase between the final cut-off date and hearing in Swiss arbitration is not filled with a flurry of trial-related filings, e.g., motions to suppress evidence. Rather, with the exception of a single pre-hearing meeting to settle on the logistics of the hearing, the parties and tribunal may not hear from one another between the final cut-off date and the morning that the hearing commences.
Settlement discussions can happen at any time during the proceeding and it is contemplated that the tribunal may take steps to facilitate the settlement of the dispute. Art. 15(8) Swiss Rules. This is consistent with Swiss arbitral proceedings' goal of making disputes go away as efficiently as possible. The potential for tribunal involvement lies in contrast with USDC cases, where parties may well employ a mediator but the judge does not commonly participate in settlement discussions.
While settlement — with or without the involvement of the tribunal — can happen at any time, practically speaking, setting logistics and specifics of the hearing in motion by way of the pre-hearing meeting is a strong indication that there will be no settlement and that the parties have resolved to carry the arbitral proceeding through to the final award. Surprising facts that come to light, or a particularly poor showing by one of the parties, at the hearing, may of course provoke a post-hearing settlement.
Should a settlement agreement be reached at any time prior to the final award, the parties may request that the tribunal record the settlement agreement in the form of an award, though the tribunal has no obligation to draft any reasoning in such instances. Art. 34 Swiss Rules.