In its decision dated 7 May 2019, the Swiss Federal Supreme Court (SFSC) clarified the requirements of a parties’ agreement to exclude the domestic arbitration regime – regulated in the third chapter of the Code of Civil Procedure (CCP) – in favour of the rules on international arbitration under the 12th chapter of the Private International Law Act (PILA) (case No. 4A_540/2018 (in French), selected for publication in the official court reporter).
In a nutshell, parties to a Swiss domestic arbitration can opt out of the procedural provisions for domestic arbitration under the CCP and opt into the lex arbitri for international arbitration under the PILA even if there is no international character of the arbitration pursuant to the test under Article 176(1) PILA. The primary consequence of such an opting out is that the parties cannot refer anymore to the wider grounds for annulment of the award under the CCP, but only to the more limited grounds under the PILA. The possibility to opt out into the international arbitration regime was originally introduced to avoid the unequal treatment that existed in the field of sports arbitration between Swiss and non-Swiss domiciled athletes against the mostly Swiss headquartered international sports federations.
Article 353(2) CCP provides in this regard that “[t]he parties may exclude the application of [Chapter Three] by making an express declaration to this effect in the arbitration agreement or a subsequent agreement, and instead agree that the provisions of the Twelfth Chapter of the PILA apply. The declaration must be in [writing or in any other form allowing it to be evidenced by text]”.
The reported dispute originates from an arbitration procedure before the Court of Arbitration for Sport (CAS) between the FIFA and its former Secretary General, Jérôme Valcke, concerning the sanctions imposed by the FIFA Ethics Committee upon Mr. Valcke.
In the arbitration before the CAS, the parties signed a Procedural Order providing, inter alia, for the following wording: “In accordance with the terms of the present Order of Procedure, the parties agree to refer the present dispute to the Court of Arbitration for Sport […]. Furthermore, the provisions of Chapter 12 of the Swiss Private International Law Statute (PILS) shall apply, to the exclusion of any other procedural law“.
Mr. Valcke argued before the SFSC that an opting out agreement under Article 353(2) CCP must expressly exclude the application of the CCP’s chapter three. He challenged thus the validity of the agreement entered into by the parties, which generally excludes “any other procedural law” without specific reference to the CCP. The SFSC had thus to decide whether the above opting out agreement fulfills all formal requirements set forth by Article 353(2) CCP.
The SFSC ultimately found that the phrase “any other procedural law” is a sufficiently clear wording to express the parties’ will to exclude the application of chapter three of the CCP. It further stated that it is not necessary for an opting out agreement’s validity to make an explicit reference to certain provisions or to use certain expressions, if the parties’ statements clearly and unambiguously show their intent. Any contrary approach, according to the SFSC, would be unnecessarily formalistic and set aside the parties’ will on a purely formal ground. However, the SFSC explicitly recommended in its decision that the parties expressly refer to both the excluded chapter three CCP and the opted-in chapter 12 PILA.
Moreover, the SFSC recognized the broad consensus among scholars that an opting out of the domestic arbitration regime is possible until the pronouncement of the award. The SFSC further indicated that an opting out after the constitution of the arbitral tribunal would also require the consent of the arbitral tribunal. Otherwise, the arbitrators would be forced to exercise their role under a different regime from that originally accepted. However, the question was ultimately left open because the disputed opting out agreement was directly provided by the CAS and not by the parties.