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Urs Zenhäusern and Joachim Frick


A.1       Legislation

On 19 June 2020, the Swiss Parliament enacted the revision of Switzerland’s International Arbitration Law, i.e., Chapter 12 of the Swiss Private International Law Act (PILA). The revised Act entered into force on 1 January 2021.

The revision selectively adjusted and modernized some of the current provisions of Chapter 12. Most notably, it included the codification of the jurisprudence of the Swiss Federal Supreme Court, the adaption of the law to recent developments in international commerce and arbitration, the elimination of ambiguities as well as the increase of user-friendliness. Among the key changes and clarifications are:

  1. Swiss International Arbitration Law applies if at least one party to the arbitration agreement does not have its domicile, habitual residence, or seat in Switzerland at the time of conclusion of the agreement, irrespective of a later change in a party’s domicile or seat.
  2. An arbitration agreement may be concluded in unilateral legal acts or instruments, such as last wills, bylaws, trust deeds, or articles of association.
  3. Arbitration agreements are valid if made in writing or in any other form that allows the agreement to be evidenced by a text. This includes e-mails and other forms of modern communications as means to prove the existence of an arbitration agreement.
  4. If the parties in their arbitration agreement have not agreed otherwise, an arbitral tribunal consisting of three members shall be constituted. The Swiss state court at the seat of the arbitration is competent to appoint the arbitrators in the case where the parties have not specified the procedure. Absent any seat chosen by the parties, or in the event that the arbitration agreement just refers to “arbitration in Switzerland,” the Swiss state court seized first will appoint the members of the arbitral tribunal.
  5. Also, in the case of a multi-party arbitration, the state court may appoint all members of the arbitral tribunal.
  6. Foreign arbitral tribunals and foreign parties may directly ask Swiss state courts for enforcing interim relief or for rendering assistance for the taking of evidence for use in a foreign arbitration.
  7. In line with the longstanding case law of the Swiss Federal Supreme Court, it is now expressly stipulated that a party who knows, or should have known, of procedural irregularities must immediately object; otherwise, they may not later complain about a violation of the procedural rules.
  8. In setting aside and revision proceedings against arbitral awards, parties are allowed to file submissions in English. However, the Swiss Federal Supreme Court will still render its decisions in one of Switzerland’s official languages (German, French, Italian, Rumantsch Grischun), and the respondent also remains free to file the reply either in English or in one of the official languages.
  9. In particular, the possibility to use English – as the predominant language in international arbitration – now before the Swiss Federal Supreme Court was highly praised by many Swiss arbitration practitioners. However, given that the Swiss Federal Supreme Court firmly objected to this amendment when it was discussed in the Swiss Parliament, the practical impact of this revision may remain small. A party wishing to challenge an award will be well advised to think twice about whether submitting a setting aside application in English will indeed increase its – already limited – chances of success.


B.1       Violation of public policy (BGer 4A_248/2019 and BGer 4A_398/2019 dated August 25, 2020)

The Swiss Supreme Court rejected a request from the South-African Athlete Mokgadi Caster Semenya and the Athletics South Africa Association (ASA) to set aside a decision of the Tribunal Arbitral du Sport (TAS) to apply new “Eligibility Regulations for the Female Classification (Athletes with Differences in Sex Development)” of the International Association of Athletics Federation. The regulations require that the female athletes, during a period of six months prior to a competition, lower their level of testosterone below a certain level and keep it below this level as long as they want to compete in the women category in international competitions.

The TAS had rejected the claim of Semenya and ASA that the new regulations would be discriminating since they apply exclusively to athletes with the genome 46 XY DSD who show a level of testosterone like men. The TAS concluded that the regulations would indeed apply only to the specific athletes, but such differentiation would be required, bearable and proportional to protect the integrity of the female competitions. The TAS had found that, based on various expert opinions submitted to it, testosterone is the main factor determining the different performance of the sexes in athletism and that women with the genom 46 XY DSD have a level of testosterone comparable to men, which gives them a clear competitive advantage over female athletes without the genom 46 XY DSD.

The Swiss Supreme Court was bound by the factual statements of the TAS and could only examine whether the decision of the TAS would violate principles of public policy (ordre public). Since it is legitimate to protect the fairness of the competition, the court concluded that there was no violation of public policy. This in view also of the interests of other athletes running in the same category. While the medical examinations eventually required medical treatment to lower the level of testosterone, and significantly affect the right of integrity of the human body, it does not affect the core of this right. This is particularly so since the examinations are undertaken only by qualified medical doctors and always with the consent of the athlete concerned. The TAS correctly had also not questioned in any manner the sex of the concerned athletes.

B.2       Jurisdiction of the Arbitral Tribunal (BGer 4A_124/2020 of November 13, 2020)

The decision concerned the question of whether an entity of a group company that had not signed an arbitration clause would also be bound by the arbitration clause which another company of the group had signed, due to the fact that the entity to some extent was present in the contract negotiations, participated in the performance of the contract and had delivered a key technical document to which the main contract had referred. In view of the sum of these factors, an ICC arbitral tribunal seated in Geneva in a partial final award on jurisdiction held the entity to be bound by the arbitration clause based on principles of good faith.

The Supreme Court could examine the issue freely as it concerned a legal, not a factual, question. The Supreme Court concluded that based on the contractual documentation it was sufficiently clear that the entity acted as a sub-supplier of the diesel motors that were needed for the power station which had to be delivered under the main contract. The entity did not interfere with the conclusion of the main contract and the counterparty should have been aware that it was not a direct contractual party. Accordingly, the entity was not bound by the arbitration agreement and there was no implicit agreement of the entity with the arbitration clause. The Supreme Court sent the case back to the arbitral tribunal to examine whether there may have been an assignment of obligations by the company to the entity, based on which the entity could nevertheless be bound by the arbitration clause.

B.3       Right to be heard and ordre public (BGer 4A_36/2020 of August 27, 2020) (Revision of an arbitral award)

Company A, a German manufacturer of pasta products, entered into an exclusive importation and sales agreement with Company B under which Company B had the exclusive right to distribute pasta in certain countries, including the United States. In December 2013, Company A informed Company B about its intention to set up its own distribution structure for the American market. Likewise in December 2013, Company B entered into an exclusive distribution agreement with Company D for the sale of pasta of Company A in the United States. In November 2016, Company B and Company D entered into a settlement agreement under which Company B paid Company D an amount of USD 2.2 million since Company B was unable to supply the agreed pasta due to the lack of supply by Company A. In 2017, Company B initiated arbitration against Company A and a Geneva-based arbitral tribunal awarded damages to Company B.

In 2020, Company A filed a request for revision of the arbitral award. Company A claimed that through discovery proceedings in New York it had obtained new information about the settlement agreement (allegedly dated November 2016), i.e., that it was not yet concluded in January 2017 and that it was simulated in anticipation of a dispute between Company A and Company B.

The Supreme Court rejected the request. It concluded that the allegedly new information could have already been obtained during the arbitration, in particular by hearing a specific witness, since Company A already had reasons to request such witness statement at that time.

B.4       Scope of an arbitration clause (BGer 4A_248/2020 of October 20, 2020)

  1. Inc., domiciled in the Seychelles, had granted a loan to a Scottish limited partnership C & Co. The general partner of C & Co. was a Liechtenstein foundation. D. had single signatory power for both the foundation as well as the limited partnership. He signed the loan agreement by adding “Board Member, for General Partner / for C & Co.” on the signature line.

In the course of a dispute about the loan between B. Inc. and C & Co., B. Inc. seized certain assets of the Liechtenstein foundation. The Liechtenstein foundation sued B. Inc. before the Zurich District Court. B. Inc. referred to the arbitration clause in the loan agreement signed by D. and successfully objected to the jurisdiction of the District Court. On appeal, the Zurich High Court confirmed the decision.

The Zurich courts concluded that the arbitration clause applied also with respect to the general partner. This is because the general partner is by law at least subsidiarily liable for the debts of the partnership, similar to a party who had co-accepted a debt and therefore would also be bound to the arbitration clause governing the debt (BGE 134 III 565). This would apply even more since D. had personally signed the loan agreement with the arbitration clause and he could therefore not claim that he was not aware of the arbitration clause.

The Liechtenstein foundation requested the Supreme Court to set aside the decision since it would not be party to the arbitration agreement. The Swiss Supreme Court first summarized its (controversial) practice under article 7 PILA according to which a state court in the case of an alleged arbitration clause in favor of an arbitral tribunal seated in Switzerland, like in the case at hand, has only a limited right to review. This is contrary to the situation where an arbitration clause refers to an arbitral tribunal seated outside Switzerland.

The Supreme Court then, stressing its limited right to review, upheld the arbitral tribunal’s decision. It concluded that the signature of D. with the mentioning “for General Partner” would – for the purpose of assessing jurisdiction – be a sufficient indication that the arbitration clause shall also be binding for the Liechtenstein foundation. A full review and final decision will then have to be taken by the arbitral tribunal, however, when deciding on its jurisdiction.

B.5       Jurisdiction over subsidiary, calculation of damages (BGer 4A_12/2019 of April 17, 2020)

An English company Z had sued the Swiss company A before an arbitral tribunal on the basis of an exclusive license agreement to operate certain bars in airports and train stations around the world. It claimed that A had violated the exclusive rights conferred by the license agreement to Z. A objected that some item of damages claimed by Z related to the sub-license agreement between Z and its subsidiary, to which it was not a party. Z replied that the license agreement entered into with A gave it a direct claim for damages suffered by its subsidiary. In particular, it referred to a contract in favor of third parties (article 112 of the Swiss Code of Obligations). A refuted the arguments, arguing in particular that the license agreement did not contain any clause in favor of a third party and that the arbitral tribunal lacked jurisdiction with respect to the subsidiary.

Upon review, the Supreme Court held that the answers to these questions are matters of substance. This is despite the fact that the arbitral tribunal had resolved them in part in the chapter devoted to its jurisdiction. Accordingly, the appellant could not ask the Federal Court to review the merits of these questions by means of a complaint based on an alleged lack of jurisdiction under article 190 paragraph 2 lit. b PILA. Interestingly, in view of the allegation of a breach of the Ordre Public the Supreme Court reviewed in particular a dissenting opinion of one of the arbitrators. It concluded, however, that the dissenting arbitrator took issue only with the assessment of the proofs made by his two co-arbitrators, reproaching them also for having ignored some of the arguments of a party. However, his dissenting views did not concern issues within the notion of the ordre public.

B.6       Right to be heard in a public hearing, Ordre Public (BGer 4A_486/2019 of August 17, 2020)

The Turkish football clubs Fenerbahce and Trabzonspor ranked first and second in the national league at the end of the season 2010/2011, with an equal number of points but with Fenerbahce having scored more goals in direct games against Trabzonspor. With its first rank, Fenerbahce qualified for the group phase of the UEFA Champions League. In summer 2011, the Turkish police conducted an investigation into the potential manipulation of 19 matches. Some representatives of Fenerbahce were involved and Fenerbache was excluded from the Champions League, with Trabzonspor replacing it. Trabzonspor in addition wanted to be awarded also the title of national champion. The ethic counsel of the Turkish football association TFF denied the request, arguing that some officials but not the football club itself were involved in the scandal. Trabzonspor approached UEFA and FIFA without success, which both in essence denied jurisdiction with respect to a national championship.

Trabzonspor filed for arbitration with the TAS against the decision of the TFF. The TAS denied the legal standing of Trabzonspor in the proceedings. It also rejected a request of Trabzonspor to have a public hearing. Trabzonspor filed an appeal to the Swiss Supreme Court, alleging a violation of the Ordre Public, of its right to be heard and of the right of a public procedure under article 6 section 1 of the European Convention on Human Rights.

The Swiss Supreme Court rejected the claim. Article190 paragraph 2 PILA would exhaustively list the grounds for an appeal. A breach of the European Convention on Human Rights (ECHR) is not listed, nor does a breach of the ECHR necessarily constitute a breach of the Ordre Public. Furthermore, the allegation that the TFF (or FIFA) had breached principles of good faith (article 2 of the Swiss Civil Code) by not sanctioning Fenerbache with a deduction of points, does likewise not amount to a breach of the ordre public; not every breach of good faith qualifies as breach of the ordre public.

Furthermore, even assuming that article 6 chapter 1 ECHR was applicable and that a public hearing should in principle have been held, the TAS in the view that the Supreme Court had sufficiently reasoned, in the course of careful and thorough consideration, its refusal to hold a public hearing in light of the legal principles of article 6 chapter 1 ECHR, specifically citing the case Mutu and Pechstein vs. Switzerland of the European Court of Human Rights. It had pointed out that the first (not public) hearing was preliminary in nature and concerned only purely legal and highly technical matters, the underlying facts of which were not disputed. Indeed, the parties’ opposing views concerned only the complex legal consequences of non-controversial facts. The arbitrators had also considered that their decision regarding the preliminary hearing remains without prejudice as to the holding of a possible subsequent hearing – dealing with the merits of the case.


Dr. Urs Zenhäusern is a Partner in the Dispute Resolution team at Baker McKenzie in Zurich. He practices mainly in the areas international arbitration and litigation. He advises clients on antitrust law and sports law, as well as legal matters related to unfair competition and distribution, agency and licensing contracts. He is a frequent writer and speaker at seminars on litigation and arbitration law, as well as intellectual property law topics. He has also been appointed as lecturer at the University of Fribourg and the Swiss Federal Institute of Technology in Zurich, and for the MBA Post-Graduate Program at the University of St. Gallen. Dr. Urs Zenhäusern can be reached at and + 41 44 384 1243.


Joachim Frick is a partner in Baker McKenzie's Zurich office focusing on arbitration, litigation and regulatory disputes work. He regularly represents corporate and commercial clients in national and international disputes and acts as arbitrator.