Revision of Swiss law on International Arbitration

The provisions of Swiss law concerning international arbitration can be found in the twelfth chapter of the Federal Private International Law Act (PILA). To the extent that the parties have not excluded this in their agreement to arbitrate, these provisions of law are applicable to all international arbitration proceedings before arbitral tribunals with their seat in Switzerland.

The current law dates from 1987. In light of more recent developments, the Swiss parliament has enacted a revised version of the twelfth chapter of the PILA and of several related provisions in other statutes. One central purpose of the revision is to further increase the attractivity of Switzerland as a place for international arbitration. Taking into account the jurisprudence of the Swiss Federal Supreme Court (FSC), new provisions which make the law more user friendly have been introduced. Great weight continues to be given to the autonomy and the flexibility of the parties to determine the rules applicable to the procedure. The following are the most important legal innovations of this revision, which enters into force and effect as of January 1, 2021:

For parties, counsel and arbitrators from abroad, the new possibility of submitting legal briefs in English to the FSC will be of interest. This change was implemented by a revision of the federal law on the procedure before the federal supreme court (Bundesgerichtsgesetz) in parallel to the revision of the PILA.
The revision also enables arbitral tribunals with their seats outside of Switzerland to profit from a direct access to the Swiss courts. The new art. 185a PILA gives arbitral tribunals with their seat abroad and the parties of procedures before such arbitral tribunal direct access to the Swiss juge d’appui. This possibility is available in order to enforce conservatory measures which were ordered in foreign arbitration proceedings or to seek the assistance of the Swiss courts in adducing evidence in Switzerland. This creates a direct interface between foreign arbitral tribunals and the Swiss courts and avoids the need of formal requests for international legal assistance.
In codification of the current jurisprudence of the FSC, the new art. 178 para. 4 PILA expressly provides for the validity of arbitration clauses in the incorporating documents of legal entities and foundations as well as in one sided legal acts, if they comply with the form requirements of agreements to arbitrate (“documented in writing or in another form which establishes the terms of the agreement by text”).
The duty of the parties to lodge procedural objections immediately is now explicitly provided for in art. 182 para. 4 PILA. The parties are required to “promptly” object against violations of the applicable procedural rules (e.g. the bias of an arbitrator) at the risk of forfeiting this right if they do not do so. The legislator has not provided for a deadline and it appears advisable not to wait longer than 10 days after the discovery.
To the extent that the parties have not included the respective provisions in their agreement to arbitrate, the rules for the appointment, replacement and removal of arbitrators are now more detailed and user friendly (art. 179 – 180b PILA). The same applies for the provisions concerning the correction, clarification and supplementation of arbitral awards by the arbitral tribunal.
Already in the past, the only legal remedy against an award of an arbitral tribunal with its seat in Switzerland has been an appeal to the FSC. The cognition of the FSC is extremely limited and only provides for remedies against the violation of five fundamental procedural principles. The law now also includes the possibility of applying to the FSC for a revision of an arbitral award in the event that materially relevant new facts or pieces of evidence are discovered which could not – despite due care – have been brought forward earlier (excluding facts and evidence which arose after the arbitral award was rendered). As is the case with respect to an appeal to the FSC, this possibility can be excluded by the parties based on art. 192 para. 1 PILA if the parties are both neither domiciled in Switzerland nor otherwise closely connected with Switzerland. The only exception from this exclusion is with respect to the discovery of criminal acts committed to the detriment of a party.

As of January 1, 2021, the revised provisions of the PILA will also be applicable to agreements to arbitrate which were concluded prior to the enactment of the law.

Our specialists in Litigation and Arbitration are at your disposal to discuss the implications of this revision with you in more detail, to assist you in drafting agreements to arbitrate or to represent you in arbitration proceedings in Switzerland.