LexisNexis

Switzerland’s revised international arbitration law from a litigation perspective

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Dominik Elmiger
LALIVE, Zurich
delmiger@lalive.law

Switzerland is one of the leading places for international arbitration proceedings and enjoys an excellent reputation, not least due to the internationally recognised Chapter 12 of the Swiss Private International Law Act (PILA), which conclusively governs Switzerland’s international arbitration law. Although it entered into force more than 30 years ago, Chapter 12 is recognised amongst practitioners as an innovative and clear law that provides parties with utmost flexibility. In order to not only preserve Switzerland’s leading position in international arbitration but to improve its attraction and to compete with the modernised arbitration rules of other venues, the Swiss Parliament approved the final draft bill of proposed revisions to Chapter 12 on 19 June 2020. The revised Chapter 12 will enter into force on 1 January 2021.

The revised Chapter 12 also brings about changes relevant to a litigation perspective, in particular with regard to (i) setting aside proceedings before the Swiss Federal Supreme Court (FSC) with the new possibility of filing submissions in English and (ii) Swiss state court assistance in support of foreign international arbitration proceedings.

Setting aside proceedings before the Swiss Federal Supreme Court – possibility of filing submissions in English

Article 190 PILA provides for a (limited) possibility to challenge arbitration awards rendered by an international arbitral tribunal seated in Switzerland before the FSC. Already, The FCS already accepts exhibits in English in setting aside proceedings (unless one of the parties requests translations of the same). The revised Chapter 12 goes even further and allows parties to file their submissions in English as the predominant language in international arbitration. The FSC will, however, still conduct the proceedings and render the judgment in one of the Swiss official languages (ie German, French, Italian, or Rumantsch Grischun). Also, even if the appellant decides to file the setting aside request in English, the respondent will be free to file the reply either in English or one of the official languages.

Although praised by many practitioners, the FSC firmly objected to this amendment. Besides constitutional concerns raised, the FSC inter alia argued that submissions in English would effectively increase its workload as it requires court personnel to work in a foreign language, which is not their working language, even though most are familiar with English. In the end, the FSC’s arguments did not convince the Swiss Parliament, which deemed the possibility of filing English submissions in setting aside proceedings a necessary compromise to help Switzerland maintain its position as a leading place for international arbitration.

However, given the FSC’s firm stance against the amendment and also taking into account the very technical nature of the setting aside proceedings, parties should carefully consider whether they do indeed want to make use of the new possibility or are in all likelihood still better advised to file submissions in one of the Swiss official languages. Hence, the practical effect of the controversially discussed amendment remains to be seen. In any event, the filing of submissions in English will only be possible in setting-aside proceedings against arbitral awards rendered by international arbitral tribunals seated in Switzerland after the entry into force of the revised PILA on 1 January 2021.

Swiss state court assistance in support of foreign international arbitration proceedings

Chapter 12 already provides for access to Swiss state courts in support of international arbitration proceedings seated in Switzerland, eg for interim measures, taking of evidence, and appointment or challenge of arbitrators. With the revised Chapter 12, it is now clarified that such requests will be dealt with in summary proceedings by the competent Swiss court, and the Swiss Civil Procedure Code be amended accordingly.

However, probably the most noteworthy amendment to Chapter 12 concerns Swiss state court assistance for arbitral tribunals seated abroad. At present, interim measures ordered by a foreign arbitral tribunal cannot be enforced in Switzerland. The same holds true for orders with regard to the taking of evidence, where channels of international mutual legal assistance must be followed, which can be a time-consuming exercise.

Based on the new amendment, arbitral tribunals seated abroad or parties to foreign international arbitration proceedings now have the possibility of directly requesting assistance for the enforcement of interim measures ordered or the taking of evidence from the competent Swiss court at the place where the enforcement of the measure or the taking of evidence is sought. As such, the amendment will strengthen the powers of arbitral tribunals seated abroad.

It is noteworthy that with the amendment, the PILA may become more enforcement friendly towards interim measures ordered by an arbitral tribunal abroad than those ordered by foreign state courts. As regards the latter, there is still a debate as to whether these can be enforced in Switzerland if the PILA applies.

Requests to Swiss state courts can be made from the entry into force of the revised Chapter 12, and summary proceedings will be applicable. The alternative route through mutual legal assistance will be still available despite the amendment.

Outlook

The revision of the PILA will further increase the attraction of Switzerland as a place for international arbitration proceedings. From a Swiss litigation perspective, the possibility for arbitral tribunals seated abroad and the parties to request assistance from the Swiss courts with regard to interim measures ordered and the taking of evidence is a welcome amendment as it facilitates the enforcement of interim measures and the taking of evidence in Switzerland.

Although the possibility of filing submissions in English appears to be an attractive feature, practice will show whether parties will indeed make use of the new possibility, which should be carefully considered in each case.

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