A. LEGISLATION AND RULES
A.1 Institutions, rules and infrastructure
In light of the revised law on statutory arbitration clauses that entered into force on 1 January 2023, the Swiss Arbitration Center (SAC) has issued “Supplemental Swiss Rules for Corporate Law Disputes” (“Supplemental Swiss Rules“), supplementing the existing Swiss Rules of International Arbitration (“Swiss Rules“).
The Supplemental Swiss Rules apply to all arbitration proceedings that relate to a corporate law dispute and were initiated on or after 1 January 2023, pursuant to a statutory arbitration clause contained in the articles of association of a corporate entity and refers to the Swiss Rules.
The Supplemental Swiss Rules propose a Model Statutory Arbitration Clause, which contains both recommended content required for a valid statutory arbitration clause and optional content. Furthermore, the Supplemental Swiss Rules contain additional rules that account for the specificities of corporate law disputes and implemented the minimum requirements that the new law imposes for certain corporate law disputes that can lead to an arbitral award having direct legal effects not only toward the parties but also other persons (so-called affected persons). Finally, the Supplemental Swiss Rules amplify the arbitral tribunal’s discretion in dealing with requests for interim and emergency relief to ensure that such relief is granted in the most efficient and/or effective manner.
Another change in the rules of Swiss arbitral institutions is that the International Council of Arbitration for Sport (ICAS) amended its Statutes and Procedural Rules (jointly, “CAS Code“) applicable before the Court of Arbitration for Sport (CAS). The new CAS Code entered into force on 1 February 2023. The amendments include two changes. The first one is that the ICAS elects three instead of two vice –presidents, in accordance with Arts. S6 and S7. The second one renames the Legal Aid Commission to the Athletes’ Commission.
B. CASES
B.1 SFSC Decision 4A_294/2022 — Exhaustion of the appeal process is a question of jurisdiction
In Decision 4A_294/2022, the Swiss Federal Supreme Court (SFSC) dismissed an appeal against a partial award by the CAS. In this decision, the SFSC held that the alleged failure to exhaust the appeal procedure is a question of jurisdiction and therefore needs to be examined in the context of a challenge to jurisdiction in accordance with Art. 190 para. 2 lit. b of the of the Swiss Private International Law Act (PILA).
After an employment contract between an Egyptian football player (B.) with football club A (FC A), which is a member of the Egyptian Football Association (EFA) and the International Federation of Association Football (FIFA), was extended, B., FC A and another non-Egyptian football club C (FC D) signed a transfer agreement that contained a provision prohibiting B. from working for another football club in Egypt for three years after signing, and an arbitration clause that referred to the jurisdiction of FIFA and to the application of the EFA statutes and regulations, which both contained dispute settlement clauses. After B. reached an agreement with FC D to terminate his employment, he signed an employment contract with another football club in Egypt (FC E). This caused FC A to file a claim with the EFA Dispute Settlement Committee demanding, among other things, liquidated damages of USD 2 million for B.’s breach of the transfer contract by signing with FC E.
The EFA Dispute Settlement Committee declined its jurisdiction to hear the case because one of the three parties to the dispute was not domiciled in Egypt. In a following claim with the FIFA Dispute Resolution Chamber, jurisdiction was once again declined as, according to the FIFA Dispute Resolution Chamber, it was an internal dispute between an Egyptian player and a club. Finally, FC A initiated proceedings before the Arbitration Center of the Egyptian National Olympic Committee, which found itself competent and issued an arbitral award in which it obliged B. to pay FC A USD 2 million. B. then appealed this award to the CAS in Lausanne. The CAS issued a partial award on its jurisdiction in which it found itself competent to hear the case. B. appealed this award before the SFSC based on Art. 190 para. 2 lit. b PILA.
In its decision, the SFSC first confirmed that it was a jurisdictional appeal in accordance with Art. 190 para. 2 lit. b PILA. It held that the alleged failure to exhaust an internal appeal procedure (i.e., to appeal a decision of the Dispute Resolution Chamber of EFA to the Arbitration Center and then to the FIFA Dispute Resolution Chamber) before the case is brought to the CAS is a question of jurisdiction and therefore needs to be examined in the context of a challenge to jurisdiction in accordance with Art. 190 para. 2 lit. b PILA.
The SFSC then confirmed the interpretation of the EFA Rules and the Rules of the Arbitration Center by the CAS arbitrator that only three instances are mandatory. The SFSC opposed the reasoning brought forward by the appellant, according to which the three-tier appeal procedure of the EFA regulations was amended by the regulations of the Arbitration Center as a lex specialis. Consequently, the SFSC dismissed the appeal.
B.2 SFSC Decision 4A_184/2022 — Time limit for appealing an arbitral award
In Decision 4A_184/2022, the SFSC did not grant a request for revision of a partial award and a final award based on subsequently discovered facts and evidence by the Republic of India (“Claimant“).
The respondent initiated arbitration proceedings against the Claimant at the Permanent Court of Arbitration due to an alleged breach of an investment protection agreement between Germany and India and demanded a payment of USD 270 million. In an interim award, the arbitral tribunal first confirmed its jurisdiction, which the Claimant unsuccessfully appealed before the SFSC. In the final award on 27 May 2020, the arbitral tribunal ordered the Claimant to pay damages in the amount of USD 93.3 million plus interest, which remained unchallenged.
On 2 May 2022, the respondent filed a request for revision with the SFSC of both the partial and the final award due to subsequently discovered facts and evidence in accordance with Art. 190a para. 1 lit. a PILA.
The SFSC did not grant this request for the review of either the partial award or the final award based on subsequently uncovered facts and evidence. It held that even though both the partial and the final award constitute reviewable arbitral awards, only the final award could be reviewed. The request for review of the partial award was declined as the SFSC had already decided on the jurisdiction of the case during a previous appeal, and therefore, the decision of the SFSC and not the preceding partial award is subject to the revision proceedings.
Regarding the review based on subsequently uncovered facts and evidence submitted, the SFSC held that the application for revision must be submitted within 90 days of sufficient knowledge of the ground for revision. This is the case if the party can rely on it with sufficient certainty, even though it might not be able to prove it with certainty. Accordingly, it was not the final decision of the Indian Supreme Court on the question of whether a company was dissolved due to fraudulent acts that triggered the 90-day period, but previous knowledge about the underlying facts and the proceedings before the lower courts. The 90-day period to request a revision under Art. 190a para. 2 PILA starts at the time of the party’s awareness thereof and independently of a final authoritative determination by a judicial authority. The applicant, therefore, failed to meet this time period.
B.3 SFSC Decision 4A_486/2022 — Ne bis in idem is not applicable to decisions of associations
In Decision 4A_486/2022, the SFSC rejected an appeal against a CAS award and held that the decision of an association-internal judicial body neither constitutes a judicial decision nor an arbitral award.
After the tennis players A. and B. had been charged and convicted of extortion and participation in a criminal organization based on a fixed tennis game, as well as excluded and fined from their national tennis association, the Tennis Integrity Unit (UIT) also launched an investigation into a possible breach of the Uniform Tennis and Anti-Corruption Program corruption guidelines. This led to A. being fined and suspended by the UIT as well. A. appealed this decision before the CAS, which partially upheld the appeal by reducing the fine. A. then appealed this award before the SFSC.
In the appeal, A. claimed that the principle of ne bis in idem was violated because he was convicted twice for the same matter, once by the UIT and once by the National Tennis Association. In its decision, the SFSC first confirmed that, in principle, the violation of the principle of ne bis in idem would constitute a breach of public policy in accordance with Art. 190 para. 2 lit. e PILA. However, it reconfirmed earlier case law that held that decisions of judicial bodies of associations do not constitute an arbitral award and the principle can therefore not apply to these decisions. In this decision, the SFSC further specified the threefold identity of the principle ne bis in idem, regarding the concerned person, the subject matter and the relevant facts.
B.4 SFSC Decision 4A_41/2023 — Unreviewable arbitration decision
In Decision 4A_41/2023, the SFSC held that an award with the economic interest of a rabbinical arbitral tribunal, in principle, could be appealed before it. However, it rejected the appeal, stressing that a review of an award by the SFSC may be de facto excluded in view of the chosen rules of procedure and the nature of an award that does not state facts or previous proceedings.
Based on the autonomy of the parties, the parties are free to determine the procedure and the regulation of the form and content of the award. However, depending on the chosen procedural rules and the content of the award, problems may arise in connection with the challenge and enforcement of the award. For instance, the rendering of an oral or unreasoned award considerably reduces the chances of an effective appeal as the SFSC, in such a case, can hardly assess whether there is a ground for appeal under Art. 190 para. 2 PILA.
B.5 Law applicable to the assessment of the validity of arbitration agreements pursuant to Art. II para. 3 of the New York Convention
In Decision 4A_19/2023 dated 12 July 2023, the SFSC rejected an appeal against a decision by the Superior Court of the Canton of Zug (Obergericht), which the appellant’s objection to its jurisdiction since it deemed the arbitration clause concluded by the parties to be null and void. Specifically, the parties concluded a contract for the sale of steel subject to Russian law in 2010. It contained an arbitration clause designating the “Court of Arbitration under A. OAO, Moscow.” The designated court of arbitration, however, ceased to exist in 2017, i.e., before the proceedings in front of the state courts of Zug were initiated in 2019.
Pursuant to Art. II para. 3 of the New York Convention, state courts must, in principle, recognize an arbitration agreement concluded by the parties and may only affirm their jurisdiction if such agreement is null and void, inoperative or incapable of being performed. It is generally recognized that the New York Convention is to be interpreted autonomously. However, according to the SFSC, this only holds true in part for its Art. II para. 3.
Thus, the SFSC found that the New York Convention does not contain substantive rules to assess whether an arbitration agreement is void, inoperative or incapable of being performed. The autonomous content of Art. II para. 3 of the New York Convention is limited to specifying generic terms, each encompassing various contractual grounds based on which the enforcement of an arbitration agreement may be denied. These contractual grounds must be assessed based on the law applicable to the arbitration agreement — in analogous application of Art. V para. 1 lit. a of the New York Convention.
In the present case, the applicable Russian law opted for a rather formalistic approach, requiring in particular that the arbitral tribunal or the relevant arbitration rules be designated specifically in the arbitration agreement. The arbitration agreement contained in the contract in question designated an arbitral tribunal that no longer exists and was therefore null and void under the applicable Russian law (arguably, also incapable of being performed). Moreover, the arbitration agreement also does not provide a sufficient basis for ad hoc proceedings, which would require a new arbitration agreement to be concluded. The SFSC thus concluded that the cantonal courts of Zug did not violate the New York Convention when declaring themselves competent.
B.6 No duty of arbitrator to disclose publicly available information
In Decision 4A_100/2023 dated 22 June 2023, the SFSC set aside a CAS award for having wrongly admitted a time-barred request for disqualification of an arbitrator. A dispute arose from an employment contract between an Austrian coach and a Croatian football club (“Club“), containing a jurisdictional clause in favor of the Court of Arbitration of the Croatian Football Federation (CFF). When the FIFA Players’ Status Chamber (PSC) declared itself competent to decide on the claim the coach filed against the Club, the Club appealed this decision to the CAS. Five months after appeal proceedings between FIFA and the Club started, the arbitrator nominated by the Club amended his declaration of acceptance and independence with information that was already disclosed on his CV and on his CAS profile, namely that he was also on the list of arbitrators of the CFF Court of Arbitration.
After this disclosure, FIFA challenged the arbitrator’s appointment and requested his disqualification, and the arbitrator was removed from the panel by the ICAS Challenge Commission by a decision that could not be appealed. The proceedings then continued and the CAS rendered its final award dismissing the Club’s appeal. On 14 February 2023, the Club filed an application to set aside the award before the SFSC.
In its decision, the SFSC emphasized that according to Art. 179 para. 6 CH-PILA, which entered into force on 1 January 2021, a person who is asked to become a member of an arbitral tribunal must disclose the existence of circumstances that could give rise to legitimate doubt as to their independence or impartiality without delay. This duty of disclosure, however, is not absolute but exists only in respect of facts that the arbitrator has sufficient reason to believe are not known to the party who could rely on them. Moreover, the parties have a duty of curiosity with regard to possible grounds for disqualification. A party may thus not only rely on the declaration made by the arbitrator but must also make certain inquiries itself. Any grounds for disqualification must be raised immediately and a party may not wait to invoke it to prevent a potentially unfavorable outcome of the proceeding. This applies to both grounds of which the party was actually aware and that the party could have known with due care.
In the present case, the SFSC found that the arbitrator had no obligation to disclose information publicly available on his CAS profile and that FIFA manifestly failed to comply with its duty of curiosity by not consulting this information. FIFA’s request for disqualification was therefore filed too late and should have been dismissed.
B.8 Transfer of arbitration agreement in the case of state succession
In Decision 4A_575/2022, dated 7 August 2023, the SFSC rejected an appeal of the Republic of South Sudan in which it challenged a sole arbitrator’s award issued under the ICC Rules. The sole arbitration had confirmed his jurisdiction based on an arbitration agreement contained in a license agreement for the operation of a telecommunications network concluded in 2003. The Republic of South Sudan argued that the relevant contract was not transferred when it gained independence from the Republic of Sudan in 2011.
The SFSC noted that the principle of state succession in general, and specifically with regard to arbitration agreements, is controversial. In the present case, however, it concluded that this issue would not need to be addressed since an economic agreement concluded in 2012 between the Republic of South Sudan and the Republic of Sudan clearly allocated the license agreement, including the arbitration agreement it contained, to the Republic of South Sudan. Moreover, in a ministerial decree of the same year, the Republic of South Sudan accepted the licensee as a “duly licensed Telecommunications Operator[s] within the Republic of South Sudan under the terms and conditions of [its] original license[s] issued by the Republic of Sudan.” Lastly, the Republic of South Sudan continued to uphold the contractual relationship after gaining independence in 2011, thereby expressly referring to the license agreement in question. The transfer of the specific license agreement was, therefore, sufficiently established, and the appeal was dismissed.
In this decision, the SFSC also clarified that a party may challenge an award due to a lack of jurisdiction of the arbitral tribunal, even if the parties agreed to waive the right to appeal. The SFSC emphasized that for a waiver of the right to appeal to be valid and enforceable, the parties must be bound by an arbitration agreement in the first place. Consequently, the review of the subjective scope of an arbitration agreement coincides with the review of the enforceability of the waiver of the right to appeal.
B.9 SFSC Decision 4A_148/2023, 4A_146/2023 and 4A_144/2023 — The autonomy of an arbitration clause and extension of an arbitration clause to non-signatory third parties
In Decisions 4A_148/2023, 4A_146/2023 and 4A_144/2023, the SFSC provided important clarifications on the concept of autonomy of an arbitration clause, in this particular case, with regard to a party’s lack of legal capacity to act, and the extension of an arbitration clause to non-signatory third parties, in this case, due to involvement in the execution of a contract.
The underlying dispute relates to a group of companies (“Group“) that was founded by A.A. and managed together with his four sons, A.B., A.C., A.D. and A.E. Different subsidiaries of the Group concluded various loan agreements between June 2010 and November 2011 and a debt assumption agreement in January 2021, all of which contained identical arbitration clauses.
On 4 February 2021, two Dutch subsidiaries, F. and H., initiated arbitration proceedings against A.A., his sons and two Panamanian subsidiaries, Y. and Z., seeking repayment of two of the loans. Two of the sons (A.B. and A.C.), A.A., Y. and Z. challenged the validity of the arbitration clause and the jurisdiction of the arbitral tribunal.
On 31 January 2023, the arbitral tribunal issued an interim award affirming its jurisdiction. Y. and Z. (case no. 4A_148/2023), the sons (A.B. and A.C.) (case no. 4A_144/2023) and A.A. (case no. 4A_146/2023) appealed this interim award to the SFSC on the grounds of lack of jurisdiction in accordance with Art. 190 para. 3 in conjunction with Art. 190 para. 2 lit. b PILA.
Y. and Z. mainly argued that A.A. lacked the legal capacity to act, and therefore, the arbitration clause could not have been validly concluded. In its decision, the SFSC reconfirmed earlier case law according to which the arbitration clause must be evaluated separately from the main contract. The SFSC also acknowledged that there are exceptions to this rule but concluded that such exceptions did not apply in this case. According to the SFSC, the legal capacity to act is a relative concept and must be examined individually in relation to a specific act. A person might lack the legal capacity to conclude a debt assumption agreement but might nevertheless have the legal capacity to agree to an arbitration clause. The SFSC, therefore, confirmed the arbitral tribunal’s conclusion that A.A.’s legal capacity to act had to be assessed solely with regard to the arbitration clause and not with regard to the debt assumption agreement as a whole.
A.A., A.B. and A.C. further argued that the arbitral tribunal unjustifiably extended the scope of the arbitration clause contained in the loan agreements beyond the companies signing these loan agreements to them as non-signatory third parties. In its decision, the SFSC confirmed earlier case law, according to which the arbitration clause extends to non-signatory third parties if they interfere in the performance of a contract in a way that can be deemed to have agreed to the arbitration agreement. In this case, the arbitral tribunal had, in the opinion of the SFSC, correctly considered that the involvement of A.A., A.B. and A.C. in the execution and performance of the disputed loan agreements demonstrated their willingness to be bound by the arbitration agreement contained therein.
B.10 SFSC Decision 4A_13/2023 — Impartiality and independence of an arbitrator
In Decision 4A_13/2023, the SFSC confirmed its previous practice, according to which the parties can be expected to use the most important online search engines or consult sources that may provide indications of an arbitrator’s possible partiality.
In May 2021, B. initiated ICC arbitration proceedings against A. The arbitral tribunal was constituted by August 2021, and the final award was issued on 20 November 2022. A., in the sequel, appealed the award before the SFSC based on Art. 190 para. 2 lit. a PILA and argued that the tribunal was improperly constituted.
A. argued that it found out only after the award was issued that the law firm of one of the arbitrators was closely connected to the legal representative of B. The two law firms apparently had the same office address in some Italian cities, and two websites even showed that B.’s legal representative had acted as a lawyer for the arbitrator’s firm.
The SFSC, however, concluded that these facts could have been discovered earlier, as the parties of international arbitration proceedings could be expected to consult international industry websites and search engines for lawyers that are available in the English language.
