30 October 2018

Revision of the Swiss arbitration act

The Swiss government has published details of the project to revise the Swiss arbitration act as contained in the Chapter 12 of the Swiss Private International Law Act (PILA).

On 24 October 2018, the Swiss government published details of its project for the revision of the Swiss arbitration act. The draft bill is based on a preliminary draft and report published last year and the comments received thereon.

Increased user-friendliness

One of the main aims of the current revision is to increase further the user-friendliness of the Swiss arbitration act, in particular in the interest of the numerous users from abroad. Indeed, the government proposes to include a number of features into the arbitration act itself which have to date been included in other laws, and to translate some aspects of the Swiss Federal Supreme Court's case law into the act. In addition, the government intends to make a few clarifications and amendments to smoothen certain practical aspects governed by the arbitration act.

New features in the arbitration act

The draft bill proposes the inclusion of the rules on the appointment and the replacement of arbitrators whereas the current law refers to the Swiss Civil Procedure Code in this respect. Equally, the draft propounds more elaborate provisions on the challenge of arbitrators and a new article on their dismissal. Including these provisions in the arbitration act will render them more accessible, in particular for foreign users. With regard to the challenge of arbitrators, the draft clarifies that the parties must apply due diligence when assessing the impartiality and independence of arbitrators.

The current arbitration act grants the arbitral tribunal the right to address a Swiss state court in case of non-compliance with interim measures, or evidentiary orders, issued by the arbitral tribunal. The draft proposes extending this possibility to the parties of arbitral proceedings and to arbitral tribunals and parties of foreign arbitral proceedings. This is an important extension of the Swiss state courts' support of arbitral proceedings in Switzerland and abroad. Furthermore, the draft clarifies that the possibility of supporting arbitral proceedings also exists if the place of arbitration within Switzerland is not specified ("Arbitration in Switzerland").

In addition, the proposal provides the possibility of requesting the revision of an arbitral award if a party discovers grounds for challenging an arbitrator only after the arbitral proceedings have terminated and the time-limit to challenge the award has lapsed. It is submitted that this ground for revision is not strictly necessary. If it is included, the Federal Supreme Court should apply this ground restrictively to avoid undue delaying tactics.

New provisions based on standing case-law

One of the most important aspects of the Swiss Federal Supreme Court's case law is the parties' duty to object immediately against any breach of procedural rules. A party who does not do so forfeits its right to invoke such breach later, including challenge proceedings before the Swiss Federal Supreme Court. The draft bill rightly proposes to include this fundamental principle in the act explicitly.

Furthermore, the draft bill wants to enact a number of features established by the Swiss Federal Supreme Court in relation to arbitral awards. It contains new provisions on the correction, interpretation and completion and the revision (not to be mixed-up with the challenge) of arbitral awards. Also, the act sets out the time-limit of 30 days for challenging an award that was hitherto contained in domestic procedural law.

Clarifications and amendments

The draft propounds to clarify that the application of the Swiss arbitration act (as compared to the arbitration act governing domestic arbitrations) should depend on the parties of the arbitration agreement, not the parties of the arbitral proceedings (which are not necessarely identical). This amendment of the current case law of the Federal Supreme Court is welcome because it ensures the predictability of the applicable procedural framework at the time when the parties enter into an agreement.

A topic hotly debated after the release of the preliminary draft last year was the proposal to allow submissions in English (in addition to German, French, and Italian) in the challenge proceedings before the Swiss Federal Supreme Court. The draft bill still contains this proposal, also for the revision of arbitral awards. This proposal deserves support. However, one may expect that it will be again hotly debated in parliament. Among others, the Swiss Federal Supreme Court has expressed a negative view on this proposal.

Conclusion

The government proposal for amending the Swiss arbitration act adheres to the principle "if it ain't broke, don't fix it". It is indeed important to maintain the character of the Swiss arbitration act as a concise law dealing only with the necessary aspects of arbitral proceedings. The proposed inclusions and amendments increase the user-friendliness and are, therefore, within the purpose of this revision. Lawyers always have many ideas how to improve a law further. However, it seems right to abstain from including rules on aspects that do not necessarily require rules within the arbitration act itself. It is submitted that the balance stricken by the government is now right and deserves support.

Our Dispute Resolution Team will be happy to answer any further questions you may have.

Author: Christian Oetiker

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