In a decision published on September 23, 2022, the Swiss Federal Supreme Court (“SFSC”) ruled on the request for a revision of an arbitral award rendered under the UNCITRAL Rules, in which the arbitral tribunal had rejected Croatia’s allegations of corruption (case no. 4A_69/2022 (in French)). In its decision, the SFSC clarified that a broadly worded waiver clause may be interpreted to exclude the remedy of revision.
General legal framework for the extraordinary remedy of revision
Revision of awards is an extraordinary remedy under Swiss law. If the request for revision is granted, the SFSC will annul the arbitral award and remit the case to the arbitral tribunal. Pursuant to article 190a(1) of the Private International Law Act (PILA), the SFSC can, among others, review an international arbitral award based on newly discovered material facts or evidence that existed prior to the issuance of the award but could not be produce in the earlier proceedings despite due diligence (lit. a) or in case criminal proceedings have established that the arbitral award was influenced by a criminal act to the detriment of the party requesting revision (lit. b).
In case neither party is domiciled in Switzerland, the parties may waive their right to appeal an arbitral award, except for the right to revision pursuant to article 190a(1)(b) PILA, which may not be waived.
In 2009, the Croatian state and a Hungarian oil and gas company, called MOL, concluded agreements transferring management control of a Croatian energy company, INA, to MOL. Croatia initiated a Swiss-seated arbitration under the UNCITRAL Rules against MOL, arguing that the agreements should be declared null and void as MOL had allegedly acquired management control of INA through a bribe paid by MOL to Croatia’s former Prime Minister, Ivo Sanader. The UNCITRAL tribunal rejected Croatia’s claims.
In the following, Croatia requested the SFSC to set aside the UNCITRAL award, which request was however dismissed as the parties had expressly waived the possibility of challenging an award.
In 2019, Sanader was convicted of bribery, a decision which was upheld by the Croatian Supreme Court. Croatia subsequently filed a request for revision before the SFSC, claiming that the Croatian Supreme Court decision, which confirmed the bribery conviction, amounted to new material evidence (article 190a(1)(a) PILA) and established that the award had been influenced by a criminal act (article 190a(1)(b) PILA).
The decision of the SFSC
The SFSC declared the request inadmissible on the first ground and rejected Croatia’s revision request on the second ground.
First ground: Revision due to discovery of new material facts or evidence
The SFSC held that the revision had not been filed within 90 days of the alleged new evidence coming to light as required by article 190a(2) PILA.
Furthermore, the SFSC stated that the underlying agreement contained a waiver of appeal pursuant to article 192(1) PILA, which precluded Croatia from requesting revision of the first ground. Up to this decision, the impact of the revised PILA on an existing arbitration agreement had not been determined by the SFSC. Due to the fact that the arbitration clause predated the entry into force of the revised PILA, this issue was particularly crucial. The court noted that the waiver clause was broadly worded and that it is “difficult to hold that such agreement does not imply an exclusion of revision requests” in the absence of an express statement to the contrary.
Lastly, Croatia was relying on the 2021 Croatian Supreme Court decision and facts contained therein which post-dates the contested award. The request for revision would therefore be rejected, even if it were admissible, as a party cannot base its revision request on facts or evidence that came into existence after the award was issued as per article 190a(1)(a) PILA.
Second ground: Revision due to the award being influenced by a criminal act
Croatia argued that the criminal convictions for bribery by the Croatian courts were binding and would warrant an annulment of the UNCITRAL award.
In this decision, the SFSC confirmed that article 190a(1)(b) PILA is also applicable to criminal proceedings which had taken place abroad, as long as these proceedings adhere to the basic procedural guarantees prescribed by the ECHR and the International Covenant on Civil and Political Rights. In addition, it is irrelevant whether the crime was committed by a party to the arbitration or a third party. The deciding factor is whether a causal link (direct or indirect) exists between the crime and the outcome of the arbitration.
Contrary to the opinion of the Croatian courts, the arbitral tribunal had denied all credibility of Croatia’s key witness. This divergence in assessment was deemed insufficient by the SFSC to establish that the award was influenced by a criminal act under article 190a(1)(b) PILA. The SFSC also declared that the tribunal was not bound by the findings of a criminal court.
On top of that, the SFSC held that the criminal conviction for bribery does not automatically amount to perjury before the UNCITRAL tribunal. In any case, the statements of the convicted persons were not material to the outcome of the arbitration and consequently the criminal conviction does not prove that the award had been influenced by a criminal act.
The decision is of high importance as the SFSC clarifies that a broadly worded waiver clause can be understood as excluding the extraordinary remedy of revision, even if it does not contain a reference to article 190a PILA or was drafted before the revised PILA came into force on 1 January 2021.