ASA Comments on Revision of Swiss International Arbitration Law
12.05.2017 - ASA – the Swiss Arbitration Association – submits its comments in the official consultation on the proposed revision of Swiss international arbitration law (Chapter 12 of the Private International Law Act).
General philosophy of the proposed revision and of ASA’s comments
ASA – the Swiss Arbitration Association, entirely shares the assessment expressed in the Swiss government’s explanatory report on the revision proposal (available in German and French), according to which Chapter 12 of the Private International Law Act continues to be considered as a “high-quality, innovative arbitration law” some 30 years following its adoption. It is particularly appreciated for its clarity and conciseness, as well as for the fact that it affords to parties maximal autonomy and procedural flexibility within a transparent and legally protected framework. Chapter 12 of the Private International Law Act continues to hold an exceptional place in international comparisons. Its originality and uniqueness, as well as its fundamental principles, must be preserved.
ASA therefore welcomes the general direction of the revision proposal. Its basic principles are in line with the precepts of the motion by which the Swiss Parliament mandated the Swiss executive to “touch up” the law with a view to reinforcing the attractiveness of Switzerland as an international arbitration centre. Indeed, Chapter 12 of the PILA has proven its worth in practice, so that there is no need whatsoever for any fundamental changes.
The “light revision” proposed by the preliminary draft includes the follow-up of established federal case law, aims to improve legal certainty and clarity and adapts Chapter 12 to recent developments. From ASA’s point of view, the guiding principles of the proposed revision are sound. Any new provisions should regulate only “as much as necessary,” and “as little as possible,” given that one of the basic pillars of private arbitration, and of Chapter 12 in particular, is party autonomy. It should continue in its nature to be universally applicable, such that no specific provisions (for instance distinguishing ad hoc, institutional, investment or sports arbitration) are necessary.
One of the legislative priorities must be to improve the ease of understanding of Chapter 12 for foreign users. Unlike any other federal law, Chapter 12 is specifically aimed at foreign users, whether foreign parties who choose Switzerland as a seat, or foreign lawyers or arbitrators who are involved in a Swiss-based arbitration proceedings. With respect to this, ASA particularly considered the following aspects of the revision proposal:
- Codification of the gaps filled by the case law of the Swiss Federal Court over the last three decades (e.g. the adaptation of requirements for independence and impartiality of the arbitral tribunal to recognised international standards; the admissibility of revision against international arbitration; and the interpretation, correction and supplementation of arbitral awards).
- Removing references to other laws from Chapter 12, such as was the case with the reference to the Swiss Civil Procedure Code in Article 179. Chapter 12 should, as far as possible, be fully understandable and applicable on a self-standing basis.
ASA’s comments are mostly supportive of the positions expressed in the explanatory report on the revision proposal, and include suggestions for further improvements. ASA’s submission can be read in full here (currently in German only, an English translation will follow). It is the result of a dedicated ASA working group comprised of Bernhard Berger, Andrea Meier, Christian Oetiker, Michele Patocchi, and Nathalie Voser.
A few examples of specific comments
The following are selected examples of where ASA felt a particular approach was needed:
- Duty to notify procedural violations. ASA considers that this central, uncontroversial principle of procedural law should be codified in the PILA. It thus proposes an addition to Article 182 PILA.
- 30-day appeal deadline. ASA feels that the existing short window for challenges of arbitral awards should be maintained in order to continue to foster a swift and efficient process, and believes that a reference to this deadline should appear in Chapter 12 itself, for instance in Article 190 PILA.
- Scope of the law. ASA generally welcomes the clarification regarding the concept of non-residence in Switzerland for purposes of the application of the law, and makes some suggestions for increased clarity (Article 176 (1) PILA).
- Written form requirement for arbitration agreements. The majority of the respondents in ASA’s internal consultation process felt that the “half-in writing” proposal in the explanatory report, whereby a party could accept by conduct a proposed written arbitration agreement by executing the underlying contract, was the right approach. (Article 178 (1) PILA).
- Appointment, refusal, removal, replacement of arbitrators. In keeping with its position that Chapter 12 of the PILA should, as far as possible, stand alone from other laws especially for the sake of foreign users, ASA generally supports the replacement of references to the Swiss Federal Code of Civil Procedure by self-explanatory rules. (Article 179-180 PILA).
- Arbitration agreements without a designated seat. ASA generally welcomes the proposal of the explanatory report to “save” incomplete arbitral clauses and to use the initial state court judge (“juge d’appui”) to determine the seat where the arbitration agreement does not specify it, or simply specifies “arbitration in Switzerland”. (Article 179(2) PILA).
- Appointment in multiple-party proceedings. ASA welcomes the proposal to regulate this subject in the Act, and proposes some drafting improvements. (Article 179 (2bis) PILA).
- Disclosure requirement. ASA believes that the arbitrators’ duties of disclosure should be distinguished from the actual grounds for removal and has made a proposal to that effect. (Article 179 (4) PILA).
- Impartiality. ASA welcomes the government’s proposal to align the statutory text with Swiss case law and modern international practice. (Article 180 (1c) PILA).
- Due diligence. ASA welcomes the government’s proposal to codify Swiss case law on the due diligence required from the parties with respect to the grounds for challenge. (Article 180 (2) PILA).
- Revision on grounds for challenge subsequently discovered. ASA welcomes the proposed inclusion of a reference to revision, while suggesting specific language to address the relevance of the time at which new grounds for challenge are discovered. (Article 180 (4) of the PILA).
- Provisional measures. While welcoming the proposal that recognizes the principle of competing jurisdictions between the arbitral tribunal and the state courts, ASA proposes some specific language to allow for a party to request Swiss state court assistance in enforcing provisional measures ordered by arbitral tribunals seated abroad. (Article 183 (2) PILA).
- Taking of evidence. ASA welcomes the proposed amendment and goes further in proposing specific language to facilitate access to Swiss state courts in support of foreign arbitral proceedings when necessary in order to seek the production of evidence. (Article 184 (2) and (3) PILA).
- Remedies, corrections and additions. ASA welcomes the introduction of self-explanatory provisions on these issues, which improves their user-friendliness for foreign users. (Article 189a PILA).
- Revision. ASA generally supports the codification of Swiss Federal Supreme Court case law providing for revision as a means to set aside an award as a result of the later discovery of new facts or evidence, or due to the impact of criminal proceedings. In keeping with the philosophy of party autonomy however, it suggests language allowing for exclusion of revision by means of an express declaration of the parties. (Article 190a PILA).
- Waiver of annulment. ASA proposes to reconsider the possibility of allowing also parties domiciled in Switzerland to waive their right to challenge the award (and the request for revision). (Article 192 PILA).
- Value in dispute, English language. ASA welcomes a proposed clarification removing the restrictions to challenges against arbitral awards on the basis of the value in dispute. ASA also generally supports an amendment allowing for submissions to the Swiss Federal Supreme Court to be drafted in English, with some suggestions to improve the wording of the proposed revision on this point. (Article 77 (1) of the Law on the Federal Supreme Court).