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Swiss Supreme Court sets aside arbitral award on jurisdictional grounds

25 June 2014

Authors: Nathalie Voser, Benjamin Moss

In a French-language decision dated 7 April 2014, the Swiss Supreme Court partially upheld an application to set aside an award issued by an International Chamber of Commerce (ICC) International Court of Arbitration tribunal on the grounds that it incorrectly declined jurisdiction over another party.

In particular, the Supreme Court found that the arbitral tribunal had committed an error in its reasoning by concluding that the parent company of a signatory party was not bound by the contracts containing the applicable arbitration agreements. The parent was not a signatory to these contracts, but appeared to assume responsibility for the contractual obligations of its subsidiary. The arbitral tribunal concluded that the company merely acted as a representative to its subsidiary and, therefore, was not a co-contractor.

The Supreme Court, however, concluded that the parent, by virtue of its statements and behaviour, had given the appearance that it was a party to the contract. Therefore, the applicant could, in good faith, believe that the parent company was bound by the contracts' terms, including the arbitration agreements. Relying on the contractual principles of reliance and good faith, the Supreme Court found that the parent was indeed a party to the arbitration agreements. However, the Supreme Court referred the case back to the arbitral tribunal for a new decision, as the final outcome of the jurisdictional issue depended on an examination of the transfer of a relevant division within the parent to another affiliate. (Decision 4A_450/2013.)

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Published in Practical Law Arbitration


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