Sign-up for our monthly newsletter!

Sign-up for the M&A Perspective Newsletter!

Sign-up for the Arbitration Case Alert Newsletter!

 
Blogs - Arbitration Case Digest

Requirements to validly opt out of rules governing domestic arbitration in favour of those governing international arbitration

27.06.2019 – Case Number: 4A_540/2018 (7 May 2019)

In a recently published French-language decision, slated for publication in the official court reporter, the Swiss Supreme Court ruled for the first time on the requirements that must be met in order for parties to a domestic arbitration to opt out of the provisions of Part 3 of the Civil Code of Procedure (CPC) in favour of those governing international arbitration, as set out in Chapter 12 of the Swiss Private International Law Act (PILA).

The legal regime that applies to an arbitration seated in Switzerland is of great importance given the broader grounds for setting aside an award provided in Article 393 of the CPC compared to those set out in Article 190(2) of the PILA.

In this case, the parties to a Court of Arbitration for Sport (CAS) arbitration had signed an Order of Procedure, upon the CAS' proposal, which provided that "the provisions of Chapter 12 [PILA] shall apply, to the exclusion of any other procedural law".

Referring to its case law relating to Article 176(2) PILA, the Swiss Supreme Court found that, in order to be valid, an opting-out agreement had to, among other things, expressly exclude the application of the CPC. However, the Supreme Court found that it was not necessary that the parties expressly refer to the exact legal provisions they intend to exclude. The parties' intent to exclude Part 3 of the CPC, clearly and unambiguously, can result from the wording used in their (written) agreement. Here, the wording "to the exclusion of any other procedural law" was sufficient. Accordingly, the opting-out provision contained in the Order of Procedure was valid.

In its decision, the Swiss Supreme Court did not rule on the question of when the parties can conclude an opting-out agreement without the consent of the arbitrators. However, the Supreme Court appears to find problematic that a panel could be forced to arbitrate a dispute based on a different set of rules than those that applied when it was appointed. (Decision 4A_540/2018 (7 May 2019).)