In its decision published 21 October 2020, the Swiss Federal Supreme Court (“SFSC”) denied the revision of an arbitral award on the basis that the allegedly new facts were neither “new” nor relevant for the outcome of the arbitral proceedings (case no. 4A_36/2020 (in French)).
Factual background
The reported dispute originated from a distribution agreement between a German company (“A”, claimant) and an American distribution company (“B”, respondent). The agreement contained an arbitration clause incorporating the Rules of Arbitration of the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC Rules”). B initiated arbitration proceedings against A to obtain pending commission payments as well as damages for the breach of the aforementioned contract. Geneva was the seat of arbitration. The arbitral tribunal issued an award ordering A to pay B the damages and commission payments, as the contract between the parties was automatically renewed from year to year until its expiration date. A filed an appeal against this decision with the SFSC, alleging that during a U.S. discovery proceeding that took place after the arbitral tribunal’s decision, the daughter of the founder of B had made certain contradictory statements that would render the contract void.
Although the possibility of a revision of an arbitral award is not expressly foreseen under the Swiss Private International Law Act (“PILA”), the SFSC acknowledges such remedy based on art. 123 of the Federal Supreme Court Act (“FSCA”). A filed the appeal against the arbitral decision claiming that after the date of the award, relevant facts and conclusive evidence was discovered and that the arbitral tribunal’s decision would have been different if it was aware of them. A relied mainly on emails between B and a third party that emerged during the U.S. discovery proceeding and showed different, contradicting dates of the third party distribution agreements, thus proving that those agreements were only created for arbitration purposes.
Only facts and evidence that could not be discovered in arbitral proceedings entitle to a revision of an award
A revision can only be justified on the basis of facts that already have existed during the arbitral proceedings, but were not known to the claimant.
In the case at stake, the U.S. discovery proceeding that revealed the purported new facts took place only after the arbitral tribunal had rendered its decision. Nevertheless, the SFSC decided that there was a lack of scrutiny as A should have carried out its due diligence prior to the award. Namely, the SFSC concluded that it would have been possible for A to assert those facts in previous proceedings, namely by calling the daughter of the founder of B as witness to testify. The SFSC confirms that Section 33 of the SCC Rules in particular provide for such possibility during arbitration proceedings.
Facts and evidence must be material for the decision at stake
In addition to being “new”, facts and evidence that entitle a party to request the revision of an arbitral award must have been material to the outcome thereof. In other words, the contested decision must be based on incorrect or incomplete facts, which can be corrected by taking into account facts or evidence presented after the arbitral proceedings, leading to a different legal outcome.
In the dispute at stake, the SFSC decided that this was not the case. The arbitral tribunal did not rely on the terms and conditions of the submitted legal documents, such as the date or the involvement of the daughter, but assessed and determined the validity of the distribution agreement merely on other circumstances of the case. Thus, the SFSC considered it unlikely that the arbitral tribunal, in knowledge of the new facts, would have ruled differently and in the claimants favour.
With its decision, the SFSC confirmed the rather strict approach it has followed so far in relation to revision of arbitral awards in international arbitration matters.
