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Arbitration in Switzerland

Switzerland has long been and still is one of the most preferred places for international arbitrations. Apart from its neutrality this is mainly due to a very arbitration-friendly environment. The laws and the Swiss judiciary are supportive of arbitration.

The lex arbitri for international arbitrations in Switzerland is the Twelfth Chapter on International Arbitration of the Swiss Federal Private International Law Act (PILA) of 1989. Its short and rather general provisions provide solutions to even more recent problems. It does not follow the UNCITRAL Model Law. For domestic arbitrations, Article 353 to 399 of the Swiss Federal Code on Civil Procedure (CCP) apply; they replace the former Concordat, however, will not be dealt with in the following.

The Twelfth Chapter applies to all arbitrations if the seat of the arbitral tribunal is in Switzerland and if, at the time of the conclusion of the arbitration agreement, at least one of the parties had neither its domicile nor its habitual residence in Switzerland. The seat of the arbitral tribunal shall be determined by the parties, or the arbitral institution designated by them or, failing both, by the arbitrators (Article 176 PILA).

Any dispute of financial interest may be the subject of an arbitration in Switzerland. A state or an enterprise held by, or an organization controlled by a state, cannot invoke its own law in order to contest its capacity to arbitrate or the arbitrability of the dispute covered by the arbitration agreement (Article 177 PILA).

There is full party autonomy both as regards the constitution of the arbitral tribunal – subject to the challenge of an arbitrator based on the usual grounds (Article 179 PILA) – and for the procedure. The parties may, directly or by reference to rules of arbitration, determine the arbitral procedure, and also choose a procedural law of their choice. If the parties have not done so, the arbitral tribunal shall determine the procedure as far as necessary, either directly or by reference to a statute or to rules of arbitration. In any case, the arbitral tribunal shall ensure equal treatment of the parties and the right of both parties to be heard in adversarial proceedings (Article 182 PILA). The arbitral tribunal shall itself conduct the taking of evidence (Article 184 PILA).

The arbitral tribunal decides itself on its jurisdiction, notwithstanding an action on the same matter between the same parties already pending before a state court or another arbitral tribunal, unless there are serious reasons to stay the proceedings. A plea of lack of jurisdiction must be raised prior to any defence on the merits (Article 186 PILA).

As for its decision on the merits, the arbitral tribunal shall decide the case according to the rules of law chosen by the parties or, in the absence thereof, according to the rules of law with which the case has the closest connection. The parties may authorize the arbitral tribunal to decide ex aequo et bono (Article 187 PILA).

An award, which is final from its notification, may only be annulled if at least one of five different grounds is fulfilled: (a) if the sole arbitrator was not properly appointed or if the arbitral tribunal was not properly constituted; (b) if the arbitral tribunal wrongly accepted or declined jurisdiction; (c) if the arbitral tribunal's decision went beyond the claims submitted to it, or failed to decide one of the items of the claim; (d) if the principle of equal treatment of the parties or the right of the parties to be heard was violated; (e) if the award is incompatible with public policy. Preliminary awards can be annulled only on the above grounds (a) and (b) (Ar-ticle 190). The sole judicial authority to set aside awards is the Swiss Federal Supreme Court which renders its decisions on challenges of awards within on average five months.

The recognition and enforcement of a foreign arbitral award in Switzerland is governed by the New York Convention of 1958.

Switzerland is the home of three major arbitral institutions, the Swiss Chambers' Arbitration Institution, the Court of Arbitration for Sport (CAS) and the WIPO Arbitration and Mediation Center.

The Swiss Chambers' Arbitration Institution revised its so-called Swiss Rules in 2012 ('Swiss Rules'). The original 2004 rules substituted the former rules of seven Chambers of Commerce and Industry within Switzerland, among them Basel, Geneva and Zurich. The Arbitration Court is the administering body composed of experienced international arbitration practitioners; it is assisted by a Secretariat.

The Swiss Rules provide for a light administration. Whilst there is no scrutiny of the award, the draft award has to be submitted to the Arbitration Court for approval of the determination on costs by the arbitral tribunal. The seat of the arbitration designated by the parties may be in Switzerland or in any other country.

The Swiss Rules contains some innovative solutions which distinguish them from other institutional rules: Art. 4 and 8 contain special provisions on consolidation and joinder and for multi-party arbitration and multi-contract situations. Art. 15(8) Swiss Rules provides, that, with the agreement of the parties, the arbitral tribunal may take steps to facilitate the settlement of the dispute before it; any such agreement by a party shall constitute a waiver of its right to challenge an arbitrator's impartiality based on the arbitrator's participation and knowledge acquired in taking the agreed steps.

Art. 21(5) Swiss Rules provides that the arbitral tribunal shall have jurisdiction to hear a set-off defence even if the relationship out of which the defence is said to arise is not within the scope of the arbitration clause, or falls within the scope of another arbitration agreement or forum-selection clause.

Art. 42 provides for an expedited procedure and Art. 43 for emergency proceedings. Whilst interim measures of protection are now commonplace in institutional rules, Art. 26(3) provides that, in exceptional circumstances, the arbitral tribunal may rule on a request for interim measures by way of a preliminary order before the request has been communicated to any other party, provided that such communication is made at the latest together with the preliminary order and that the other parties are immediately granted an opportunity to be heard.

The Court of Arbitration for Sport (CAS) was created for the settlement of sports-related disputes by offering arbitration and mediation rules specifically drafted for sports disputes. Its seat is in Lausanne and it has two further offices in Sydney and New York. In its ordinary arbitration procedures, disputes from contractual relations or torts are dealt with. Its appeal arbitration procedure is designed for decisions taken by the internal bodies of sport organisations. For the Olympic Games and other major sport events, the CAS establishes an ad hoc division.

The WIPO Arbitration and Mediation Center is another independent and impartial body for the resolution of international commercial disputes between private parties. Being a part of the Word Intellectual Property Organisation, its arbitration, expedited arbitration, mediation and expert determination rules consider specificities of disputes in technology, entertainment and other intellectual property matters. Both contractual disputes, for example, cases relating to patent and software licences, trademarks, and research and development agreements, and non-contractual disputes such as patent infringements can be submitted. The Uniform Domain Name Dispute Resolution Policy is also administered by the WIPO Center.

Finally, the Swiss Arbitration Association (ASA) is a non-profit association which does not itself administer arbitrations but, in its quarterly ASA Bulletin, publishes articles and materials such as awards and court decisions.