In 2017, the Swiss Government released a draft bill aiming at a reform of the Swiss international arbitration legislation. On 9 June 2020, after several rounds of discussions and amendments in the two Swiss parliamentarian Chambers, the final version of the international arbitration law reform was approved.
- Key features of the reformed Swiss international arbitration legislation
The main new features of the reformed Swiss international arbitration legislation (enshrined in Chapter 12 of the Private International Law Act – PILA) concern:
- Clarification that Chapter 12 PILA applies if – at the time of conclusion of the arbitration agreement – at least one of the parties had its domicile, habitual residence, seat, or place of business outside Switzerland. Any change of those geographic elements after the conclusion of the arbitration agreement becomes irrelevant. In addition, for the application of Chapter 12 PILA the arbitral tribunal must have its seat in Switzerland.
- Simplification of the form requirements for an arbitration agreement. An arbitration agreement is formally valid when one party meets the formal requirements, even if the other party does not (e.g., one party accepts the arbitration agreement orally). Moreover, arbitration agreements can be concluded by unilateral acts (e.g., last wills, tender offers, constitution deeds for foundations and trusts).
- Express regulation of the arbitral tribunal’s appointment in multi-party arbitrations if the parties did not agree on specific rules (e.g., by reference to institutional arbitration rules).
- Obligation of the parties to immediately object to any apparent violation of the procedural rules under penalty of forfeiting the right to do so in the further course of the proceedings, in accordance with the Federal Supreme Courts case law.
- List of all available remedies against international arbitral awards rendered in Switzerland that have been accepted by the Federal Supreme Court and not yet expressly provided in Chapter 12 PILA (e.g., revision and correction).
- Submissions to the Swiss Federal Supreme Court in set aside proceedings can be drafted in English language. The other party, however, can choose to file its submission in one of the official languages and the decision by the Federal Supreme Court will necessarily be rendered in an official language (German, French or Italian).
- Major contentious issues: Corruption and submissions in English language
The past debate in the Swiss Parliament was, among others, characterized by two major questions, being (i) whether arbitrators should be vested with additional powers to autonomously investigate in corruption issues and (ii) whether submissions in English language should be allowed in set aside proceedings before the Federal Supreme Court.
The National Council, one of two Chambers of the Swiss Parliament, had in December 2019 already rejected a parliamentarian’s proposal that arbitral tribunals may demand on their own initiative additional evidence in cases of suspected corruption. According to a spokesman of the National Council’s majority, it should not be the task of an arbitral tribunal to enforce higher-ranking state law. In March 2020, a minority of the Council of States, the second Chamber of the Swiss Parliament, proposed again to empower arbitral tribunals with tools to investigate suspected corruption. In support of the motion, a spokesman of the minority stated that civil judges have a duty to report criminal acts of which they have knowledge while arbitrators do not and this different treatment would create a legal loophole. However, the proposal was ultimately rejected with a clear majority of 31 to 13 votes.
Furthermore, the draft bill initially presented by the Government in 2018 provided for the possibility to file submissions in English language in set aside proceedings before the Swiss Federal Supreme Court. The decision, however, should be rendered in one of the official languages (German, French or Italian). While the National Council went one step further and wanted the Federal Supreme Court to even enclose a sworn English translation to its decisions, the Council of States voted against any form of English submissions. In the end, the two Chambers agreed to meet halfway and to endorse the Government’s proposal to allow party submissions in English language.
- What comes next?
The draft bill will now be voted once again by both parliamentarian Chambers at the end of their summer debate session on 19 June 2020. Thereafter the reformed provisions will be published in the Official Federal Gazette. Within 100 days from its publication, 50,000 voters or 8 Cantons can ask to submit the reform to referendum. Once this deadline has expired, the relevant provisions will be added to the Official Compilation with an indication as to their entry into force.
- History of the Chapter 12 PILA reform
The current Swiss international arbitration law (Chapter 12 PILA) came into force in 1989 and has since not been subject to major legislative review. Following up on a parliamentarian initiative, the Swiss Government proposed in January 2017 a “revision light” of Chapter 12 PILA aiming at modernizing the international arbitration law. According to the relevant explanatory note, the draft bill contains updates in line with the settled case law of the Swiss Federal Supreme Court, eliminations of ambiguities, improvements of legal certainty and legal clarity and the alignment of Chapter 12 PILA with recent developments in international arbitration. Overall, the Swiss Government followed a “so much as necessary and as little as possible” approach to preserve as far as possible party autonomy – one of the main characteristics of Swiss arbitration law compared to other jurisdictions.
After the publication of the draft bill, the Swiss Government held a consultation round with Swiss law associations, law faculties and institutions (inter alia the Swiss Federal Supreme Court) and released an updated draft bill in October 2018. The updated draft bill has now been debated in the Parliament for 6 months.
(This article is an updated version of an article published earlier on Global Arbitration News)