In principle, if an application for an annulment of an arbitral award is upheld, the Supreme Court may cancel only the award (the so-called 'cassatory' nature of the setting aside proceeding). However, as shown by a recent decision, the Supreme Court's findings underlying a cancellation for the violation of a party's right to be heard seem to qualify as directions for the arbitral tribunal which must remake the decision.
The formal nature of the right to be heard has long been recognised by the Supreme Court. Applied strictly, it entails that an award affected by a violation of such right must be set aside, irrespective of whether the violation affected the outcome of the case. However, the Supreme Court's more recent practice tends to depart from a strict application of the formal nature of the right to be heard and to require the applicant to establish a causal link between the asserted violation and the (adverse) outcome of the case.
The Supreme Court recently set aside an arbitral award issued in a domestic arbitration on the grounds that the arbitral tribunal had drawn consequences from one of two contradictory findings without providing any reasons for its decision. Considering that the test to admit a violation of the right to be heard is the same in domestic and international arbitrations, this decision may be relevant to international arbitration, even though it pertained to domestic arbitration.
The Supreme Court recently dealt with the issue of state immunity in the context of the enforcement of an arbitral award and with the relationship between Swiss procedural law and the New York Convention. It found that state immunity prevents the enforcement of an arbitral award against a foreign state if there is no sufficient connection between the claim and Switzerland, and that this situation does not conflict with Switzerland's obligations under the New York Convention.
The Supreme Court recently rejected a challenge against a partial arbitral award for an alleged violation of the right to be heard and incompatibility with substantive public policy. The case pertained to a contract under which an Austrian company was to supply railway machinery to a Russian company. In its reasoning, the court made a number of considerations which practitioners should bear in mind when challenging an arbitral award.
The Supreme Court recently confirmed its jurisdiction to decide claims secured by a retention right as provided for by Swiss law. The court found that even if the arbitration agreement rather restrictively referred to disputes arising out of the mandate agreement, it had to be understood in good faith as also encompassing disputes in relation to the conclusion and termination of that agreement.
In a recently published decision, the Supreme Court set aside an arbitral award on the grounds that the arbitral tribunal had wrongly accepted jurisdiction. Once the existence of an arbitration agreement is established, its scope and content are broadly construed under the assumption that, if they chose to enter into an arbitration agreement, the parties intended to have an arbitral tribunal with broad jurisdiction.
In a recently published decision, the Supreme Court set aside an arbitral award on the grounds that the parties had not consented to submit their dispute to arbitration. The decision shows the importance of the distinction between a subjective and objective interpretation. Awards should thus clearly identify for each finding of contractual interpretation whether it stems from subjective or objective interpretation.
In a recently published decision, the Supreme Court rejected a challenge on the basis that the arbitral tribunal's refusal to appoint a tribunal expert was not a violation of the applicant's right to be heard. With respect to the annulment proceedings and grounds for annulment, this decision seems to express limitations to the formal nature of the right to be heard in adversarial proceedings, at least in respect of the right to adduce evidence.
In a recently published decision, the Supreme Court held that an arbitration clause contained a valid waiver of challenge against the award. The court also held that such a waiver extended to the applicant's subsidiary request for revision. When interpreting arbitration clauses to determine whether they contain such a waiver, the term 'appeal' should be understood as referring to the remedy that parties have against an award in Switzerland, namely the challenge proceedings.
In a recently published decision, the Supreme Court partially annulled an award on the grounds that the arbitral tribunal had failed to take into account the claimant's argument in support of one of its prayers for relief. The dispute arose in connection with a tourism project regarding the construction and operation of a hotel and casino in the West Bank. The agreement was governed by Swiss law and provided for arbitration in Zurich.
The Supreme Court recently refused to interfere with a sole arbitrator's decision to extend the timeframe to file the statement of claim. The question may arise again at the enforcement stage in the context of Article V(1)(d) of the New York Convention, which provides that recognition and enforcement of an award may be refused, among other things, if "the arbitral procedure was not in accordance with the agreement of the parties".
According to four recent arbitral decisions, the concept of 'public policy' does not depend on the nature of the underlying dispute; the transfer of bribes is incompatible with public policy only to the extent that bribery is established but not taken into account by the arbitral tribunal; the violation of personality rights is not incompatible with public policy, unless there is a serious violation of fundamental rights; and the rules on the burden of proof are not part of public policy.
The Supreme Court recently admitted a request for revision of an arbitral award based on the subsequent discovery of new evidence in relation to bribery. The court recalled that the revision of arbitral awards can be sought based on the Federal Tribunal Statute and that, among other things, newly discovered evidence must prove either newly discovered facts or facts that were already known in the main proceedings but remained unproven.
In a recent decision, the Supreme Court had to deal with the independence of an arbitrator who was a lawyer in a large international law firm. The court found that there was no indication of a conflict of interest and left undecided the question of whether a revision of an international arbitral award could be sought based on the subsequent discovery of grounds to challenge an arbitrator.
The Supreme Court recently ruled that the parties to an arbitration can validly agree to limit the first phase of the proceedings to one round of written submissions, and that the enforcement of this agreement does not violate the parties' right to be heard. In another recent case, the court held that a dissenting opinion issued by an arbitrator is not part of the arbitral award, has no legal effects and must not be taken into account by the court when deciding a challenge against the award.
The Supreme Court recently annulled an arbitral award for failure to comply with a mandatory pre-arbitration requirement. It held that failure to comply with such a requirement leads to the suspension of the arbitration proceedings until the requirement has been complied with. Despite holding that there may not be a solution applicable to all cases, the decision provides some legal certainty regarding the consequence of failure to comply with a mandatory pre-arbitration requirement.
In a recent decision, the Supreme Court found that an arbitral tribunal may have jurisdiction based on the arbitration agreement contained in a draft contract. The court made clear that the principle of autonomy of the arbitration clause can apply even if the main contract never came into existence and that the invalidity of the main contract may actually affect the validity of the arbitration clause.
A recent decision confirms that the Supreme Court continues to rely on its well-established practice regarding the parties' right to be heard. However, this practice may be perceived to be quite strict for the party that must accept the arbitral tribunal's (sometimes unjustified) refusal to examine the arguments submitted to it, as the court itself acknowledged.
In a recent decision the Supreme Court partially annulled a Court of Arbitration for Sport arbitral award for violation of the plaintiff's right to be heard. This decision confirms that in specific circumstances, arbitral awards may be partially annulled. It also clarifies that public policy does not prevent parties to arbitration from agreeing to limit the arbitrators' power to review the case.
The Supreme Court recently issued a new decision dealing with the principle of res judicata. The decision makes clear that the liberal approach advocated when assessing the identity of the parties should not apply when assessing the identity of the claims. It further seems to exclude application of an international concept of res judicata in Switzerland.
The Supreme Court has confirmed that there is no incompatibility with public policy where a Swiss arbitral tribunal ignores a foreign decision which, although vested with final and binding effect in the country of origin, cannot be recognised in Switzerland under the New York Convention. This decision confirms the well-settled principle that res judicata is public policy.
The Supreme Court has confirmed that bribery may constitute a ground for annulment of arbitral awards, to the extent that bribery is established and the arbitral tribunal has refused to consider it in the challenged award. In this case, the tribunal found that proof of objectionable conduct on the claimant's part had not been submitted and reiterated that the principle that criminal law has precedence over civil law is not part of procedural public policy.
The Supreme Court recently held that procedural orders on the discontinuation or stay of arbitration proceedings cannot be challenged, unless they contain an implicit decision on jurisdiction. When drafting procedural orders on the discontinuation or stay of arbitration proceedings, arbitrators should indicate whether they intend to make any final determination as to jurisdiction, so parties have no doubt as to the challenge being available.
In a decision that provides guidance to parties bound by the General Conditions of the International Federation of Consulting Engineers in respect of dispute adjudication board (DAB) pre-arbitration duty, the Supreme Court recently held that DAB pre-arbitration procedure qualifies as a mandatory pre-arbitration step. However, such a step cannot be relied on in case of an excessive delay in the constitution of the DAB.
The Supreme Court recently confirmed an arbitral award which had denied the res judicata effect of a foreign court decision on the ground that the foreign court did not analyse the question submitted to the arbitrators. The decision provides detailed guidance on res judicata and does not close the door to an assessment of the party-identity requirement that is not strictly formalistic.
The Supreme Court recently partially set aside an arbitral award on the grounds that the arbitral tribunal had wrongly denied jurisdiction over the non-signatory parent of a party to the arbitration agreements on which the arbitration proceeding was based. The court found that this parent had become a party to the arbitration agreements based on the principle of good faith.
The principle of autonomy of arbitration agreements provides that an arbitration clause represents a standalone agreement. In a recent decision, the Supreme Court confirmed that the termination of the arbitration agreement must have no effect on the main agreement. Parties which would like to derogate from this rule should say so expressly in the arbitration agreement.
The Supreme Court recently confirmed that an arbitral award may be annulled if the sole arbitrator was not properly appointed. This ground for challenge was not limited to the grievance of the arbitrators' lack of independence and impartiality, but included the possibility to invoke a breach of the parties' agreement on the tribunal's constitution. Such challenge must be brought immediately.
The Supreme Court recently refused to review the merits of a challenge against an arbitral award in which the arbitrators had declined jurisdiction after having established the parties' common intent to terminate the arbitration agreement. The court rejected the plaintiffs' argument that the arbitral tribunal had violated their right to be heard in issuing a decision which would have taken them by surprise.
An athlete recently challenged a two-year ban before the Supreme Court on the grounds of infringement of the right to be heard. The athlete argued that the arbitrators had ignored the subsidiary argument developed in his written submission. However, the defendant had established that the argument was immaterial to the resolution of the dispute. The court denied any breach of the right to be heard and dismissed the challenge.
The Supreme Court recently annulled an arbitral award on the grounds that the arbitrator had failed to explain why it had not taken into account the deductions submitted by a financial expert and respondent (violation of the right to be heard). The court reiterated the principles regarding the test for arbitral awards to comply with the parties' right to be heard. It also stated that, in specific circumstances, an award may be annulled partially.
The Supreme Court recently confirmed that a mandatory provision of foreign law should be taken into consideration by an arbitral tribunal sitting in Switzerland when deciding whether a claim may be subject to arbitration. The court recalled that the arbitrability of a specific claim may be denied if foreign legal provisions submit such a claim to the state courts' mandatory jurisdiction, provided that these provisions belong to public order.
The Swiss Supreme Court recently confirmed that an ad hoc arbitral tribunal seated in Geneva was regularly constituted within the meaning of the Private International Law Act where French courts had appointed the co-arbitrator of the Israeli respondent in the arbitration proceeding. The domestic court seized to appoint the co-arbitrator was located in France and not Switzerland, which the parties had then chosen as the seat of arbitration.
The Supreme Court recently rendered decisions in four arbitration-related cases. The issues under discussion included settlement and the pacta sunt servanda principle, whether an international arbitral award must be reasoned, legal capacity and waiver of a reasoned award.
The Supreme Court recently revisited the question of the impact of the party's bankruptcy on the continuation of arbitration. Restrictions to arbitration contained in foreign law provisions which do not affect the parties' legal capacity are irrelevant to an arbitration in Switzerland.
The Supreme Court recently opted for a flexible and pragmatic interpretation of the New York Convention, confirming Switzerland's reputation as an arbitration-friendly forum. It admitted that in certain circumstances, a party seeking enforcement in Switzerland of an award issued in English may be exempt from producing a certified comprehensive translation of the entire arbitral award into one of the Swiss national languages.