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Rejection of extension of arbitration agreement to non-signatory

28 June 2017

Authors: Nathalie Voser, Anya George

In a decision dated 16 February 2017, but only recently published, the Swiss Supreme Court rejected a request to set aside a jurisdictional award in which the sole arbitrator had found that there was no basis to extend the arbitration agreement to the respondent, a non-signatory.

The case concerned a real estate brokerage agreement containing an arbitration agreement, between two individuals. The broker sought payment of his commission from the company that ultimately bought the property, which however was not a signatory to the brokerage agreement. According to the main arguments of the petitioner, the company was bound by the arbitration agreement, as the signatory was its representative, or alternatively because it had intervened in the performance of the agreement.

The Supreme Court held that the petitioner had failed to properly challenge the sole arbitrator's main findings on the issue of representation and had confused substantive and jurisdictional requirements in relation to the issue of intervention in the performance of the agreement. The Supreme Court also seemed to imply that the theory of "reverse piercing of the corporate veil" might have served as a basis for jurisdiction in this case, but the petitioner had also failed to make an argument in this respect.

The decision serves as a cautionary reminder that, even though the principle of jura novit curia (the court knows the law) applies both in arbitral proceedings and before the Swiss Supreme Court, this does not relieve the parties from the burden of articulating their case with sufficient clarity. The Supreme Court will only consider arguments that have been properly raised. The decision also addresses, in passing, the parties' right to be heard in connection with requests for document production. (Decision 4A_473/2016.)

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Published in Practical Law Arbitration

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Elliott Geisinger
Elliott Geisinger

Nathalie Voser
Nathalie Voser

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