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Blogs - Arbitration Case Digest

Award set aside for violation of right to be heard

26.06.2017 – Case Number: 4A_532/2016 (30 May 2017)

The Swiss Supreme Court has partially annulled and remanded an award back to the tribunal.

The award concerned contracts and relevant licences for the operation of a casino and a hotel in the West Bank, in the Middle East. The arbitral tribunal had to assess the relevance of Palestinian criminal law, rendering gambling illegal, on contracts entered into between the Palestinian Authority, a Palestinian company and the claimant investor (a Liechtenstein company). The tribunal found that while the underlying agreements were validly concluded, the specific performance of these contracts was not possible, since this would be in violation of Palestinian law. However, the tribunal held that the claimant could possibly claim for damages resulting from the non-performance of the contracts, but that it had not established the requirements for such damages.

The Supreme Court held that the arbitral tribunal violated the petitioner's right to be heard because it applied the same reasoning for denying the renewal of the casino licence also to the hotel licence, without addressing the petitioner's specific arguments relating to the hotel licence in the award.

This case shows that the parties' right to be heard is protected even in cases where the arbitral tribunal has misunderstood the parties' requests and/or submissions. From a practical point of view, parties should always make sure that submissions and requests for relief are correctly and fully understood by the arbitral tribunal during the proceedings to avoid a significant loss of time and money. (Decision 4A_532/2016.)

Published in Practical Law Arbitration