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Swiss Supreme Court clarifies conditions for opting-out of Swiss law on international arbitration and the limits of appeal on arbitrators' fees

29 January 2014

Authors: Nathalie Voser, Mirina Grosz

In a German-language decision dated 19 November 2013, the Swiss Supreme Court clarified the strict conditions for opting-out of Swiss law as the lex arbitri in international arbitration (that is, chapter 12 of the Swiss Private International Law Act (PILA)).

The Supreme Court confirmed the limited grounds of appeal available against a final award rendered in international arbitration. The court reiterated that decisions on cost allocation between the parties in an international arbitration can only be challenged before the Supreme Court within the limitations of Article 190(2) of the PILA. In contrast, the Supreme Court confirmed its judgment in Decision 136 III 597, in which it had ruled that an arbitral tribunal does not have the power to issue an authoritative decision on arbitrators' fees. As an issue arising out of the arbitrator’s agreement with the parties, any disputes about the arbitrators' fees are to be submitted to a court of first instance or a different arbitral tribunal. However, an international arbitral tribunal's decision on the arbitrators' fees cannot be subject to appeal before the Supreme Court.

The present decision further clarifies the Supreme Court’s reasoning in Decision 136 III 597, which had been subject to criticism in Switzerland. It highlights the different grounds of appeal available for international and domestic arbitration in Switzerland, due to the fact that the Swiss Civil Procedure Code (CPC), in contrast to the PILA, expressly provides a ground of appeal for domestic arbitration if the arbitral tribunal's fees are deemed to be obviously excessive. Despite the fact that the merits of this decision may remain the subject of disagreement in practice, the Supreme Court's persuasive confirmation of its case law provides further legal certainty for arbitration in Switzerland. (Decision 4A_254/2013.)

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Published in Practical Law Arbitration


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