Commercial Arbitration

Switzerland is a party to the New York Convention (NYC), which was approved by the Federal Parliament on 2 March 1965, ratified on 1 June 1965 and entered into force on 30 August 1965.

Switzerland originally made use of the reciprocity reservation of article I(3) of the Convention, until April 23, 1993, when the reservation was withdrawn following the enactment of chapter 12 of the Swiss Private International Law Act (PIL Act). Since then, all foreign awards, regardless of the country where they have been made, are recognised and enforced in Switzerland pursuant to the provisions of the NYC (article 194 PIL Act).

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Switzerland remains a party to the 1923 Geneva Protocol on Arbitration Clauses in Commercial Matters, although the Protocol ceased to have effect for all contracting states which became parties to the NYC (article VII(2) NYC). The Protocol only applies now for Iraq.

Switzerland is a party to the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), article 54(1) of which provides for ICSID awards to be enforced as if they were final court judgements in the country where enforcement is sought. In practice, this provision, as well as the provisions dealing with recognition and enforcement of foreign awards contained in the bilateral treaties to which Switzerland is a party, hardly have had any significance since article 194 PIL Act came into force and imposed the application of the NYC to all foreign awards, wherever issued (see question 1).

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Since 1 January 1989, international arbitration has been governed by articles 176-194, chapter 12 PIL Act, titled International Arbitration. Chapter 12 applies to any arbitration where “the seat of the arbitral tribunal is in Switzerland and if, at the time of the conclusion of the arbitration agreement, at least one of the parties had neither its domicile nor its habitual residence in Switzerland” (article 176(2) PIL Act).

The provisions contained in chapter 12 PIL Act were originally drafted prior to the adoption of the UNCITRAL Model Law and finalised while discussions regarding the Model Law were still under way. Chapter 12 PIL Act is not, therefore, based on the Model Law and is a stand-alone statute. Chapter 12 is more concise but there are no fundamental differences between chapter 12 and the Model Law.

Articles 176-194 PIL Act afford maximum flexibility and autonomy to the parties with minimum court intervention, while ensuring equal treatment and the parties’ right to be heard in fair adversarial proceedings (articles 182(3), 190(2)(e) and 191(1) PIL Act).

Until 1989, international and domestic arbitration was governed by the 1969 inter-cantonal arbitration Concordat, which continued to govern domestic arbitration until December 31, 2010. It was replaced on 1 January 2011 by articles 353-399 of the new Federal Code of Civil Procedure (CCP). Article 176(2) PIL Act, which provided for the possibility for parties to opt out of Chapter 12 PIL Act in favour of the Concordat pursuant to an express agreement in writing specifically excluding the PIL Act was amended accordingly and now refers to articles 353-399 CCP.

Opting out agreements in favour of the Concordat proved to be scarce because it was generally considered that chapter 12 PIL Act is better suited to international cases. It is too early to assess if the same will remain to be true for articles 353-399 CCP, which on some issues were inspired by chapter 12 PIL Act and provide a much more flexible and more attractive legal framework for domestic arbitration than the Concordat. Party autonomy is at the core of the new provisions, which go as far as allowing parties in domestic cases to opt out of the CCP to apply chapter 12 PIL Act (article 353(2) CCP). Article 393 CCP provides more grounds for setting aside awards than article 190 PIL Act (see question 41) since an award may be set aside when it is “arbitrary in its outcome either because it rests on findings which are manifestly contrary to the facts on record or because it constitutes a manifest violation of the law or of equity.” This allows for much broader scrutiny of the award than under article 190(2)(e) PIL Act which deals with the more restricted concept of an award which is incompatible with public policy. On this basis, parties to international contracts that could lead to an arbitration in Switzerland may wish to consider to opt out of chapter 12 PIL Act if they wish to extend the possibility to challenge the award. Conversely, parties to domestic cases may wish to opt out of the CCP and opt for the PIL Act to limit such grounds. Given the potential effects or difficulties which an opting out provision may give rise to, drafters would be well advised to take professional advice before the agreement is entered into.

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Several international associations or bodies relevant to international arbitration are based in Switzerland. Among those located in Geneva are the Arbitration Centre of the World Intellectual Property Organization (WIPO), the Dispute Settlement Bodies of the World Trade Organization, the United Nations Compensation Commission, and the International Air Transport Association (IATA), which also offers an arbitration system that is not limited to its members.

The seat of the Court of Arbitration for Sports (CAS) is in Lausanne and, thus, all CAS cases are governed by chapter 12 PIL Act, regardless of where they take place.

Since 2004, the Chambers of Commerce of Basel, Berne, Geneva, Lausanne, Lugano, Neuchâtel and Zurich have adopted uniform arbitration rules, the Swiss Rules of International Arbitration (Swiss Rules; https://www.sccam.org/sa/en/). The Swiss Rules are based on the UNCITRAL Arbitration Rules. They may be used for cases with seat in Switzerland or abroad (article 1(2) Swiss Rules).

A revised version of the Swiss Rules has been approved by the Chambers of Commerce in October 2011. The amended rules have not yet been published. They are expected to come into force on 1 January 2012.

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Foreign arbitral institutions may freely operate in Switzerland. Geneva and Zurich are among the most frequently chosen seats in ICC arbitration, for example. They are also popular venues for LCIA or ICDR cases.

Switzerland has traditionally been one of the preferred venues for the settlement of inter-state disputes, in particular in Geneva, which hosts the United Nations Office at Geneva (UNOG).

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Courts at both cantonal and federal levels may have jurisdiction in relation to arbitration-related matters. They are generally well-versed in international arbitration matters. There are no specialist arbitration courts.

The Swiss Federal Tribunal, the country’s highest court, has exclusive jurisdiction over actions to set aside arbitral awards rendered in Switzerland (article 191(1) PIL Act). Its case law has become a reference in international arbitration matters. It is regularly cited by foreign courts and generally highly considered by international scholars and practitioners.

The judges of the First Civil Court of the Federal Tribunal are probably amongst the leading judiciaries in international arbitration and have contributed to its harmonious development through their decisions.

First instance cantonal courts at the seat of the arbitration are the supporting courts to appoint an arbitrator in case of difficulty (article 179(2) PIL Act), to decide on the challenge of an arbitrator in case the parties have not determined the procedure for such challenge (article 180(3) PIL Act), and to assist with the taking of evidence when requested (article 184(2) PIL Act). They may also be called upon to enforce provisional or protective measures ordered by arbitral tribunals (article 183(2) PIL Act).

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Pursuant to article 178(1) PIL Act, an arbitration agreement is valid if made in writing, by telegram, telex, telecopier or any other means of communication, such as e-mail, which permits it to be evidenced by a text.

As regards its substantive validity, an arbitration agreement is valid if it conforms either to the law chosen by the parties, to the law governing the subject matter of the dispute, or to Swiss law (article 178(2) PIL Act).

Article 178(2) is a conflict-of-laws provision in favour of the validity of the arbitration clause or agreement.

Article 178(3) PIL Act expressly allows arbitration agreements to concern disputes that have not yet arisen.

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As a general rule, all disputes or matters of a pecuniary nature may be arbitrable (article 177(1) PIL Act), which reflects a broad concept of arbitrability.

Article 177(1) is a substantive private international law rule which applies to all cases with seat in Switzerland, regardless of the parties’ national laws or of the law governing their contract.

In addition, article 177(2) PIL Act provides that a state or an entity controlled by a state cannot rely on its own law to challenge its capacity to be a party to an arbitration or the arbitrability of the dispute.

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The Federal Tribunal has acknowledged in several cases the extension of an arbitration agreement to third parties in cases where such parties had clearly expressed their intention to be bound by the arbitration agreement, through conduct or in their contract. This was affirmed in cases dealing with assignment of contracts, the assumption of a debt, or the incorporation of an arbitration agreement by reference or in general conditions. Other cases have acknowledged the extension of an arbitration agreement to a third party which participated in the performance of the contract containing the arbitration clause and it could be inferred from such participation that the third party actually intended to be bound by the arbitration clause.

The PIL Act is silent on the questions of the participation of a third party through joinder or a third-party notice. Pursuant to the principle of party autonomy, any participation of a third party would require the consent of all concerned parties.

In contrast, the Swiss Rules provide for the possibility of a joinder in a compelling fashion in article 4(2).

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The consolidation of separate arbitral proceedings may only occur if all parties involved agree to it.

Article 4(1) Swiss Rules is innovative on this question and provides for the possibility of consolidating separate arbitral proceedings when the parties are already involved in other arbitral proceedings governed by the Rules. Consolidation may even be ordered by the Chambers administering the arbitration where the parties to the new request are not identical to those in the prior pending proceedings on condition that, taking into account all circumstances, including the links between the two cases and the stage of the already pending proceedings, a consolidation appears justified. Such is the case where the disputes are closely linked, with similar underlying facts and similar evidence required, and the pending proceedings would not be delayed by the consolidation.

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The group of companies doctrine is not recognised under Swiss law. Consequently, obligations incurred by a subsidiary are generally not extended to a parent company or to other companies within the same group.

The corporate veil can be pierced, however, and a non-signatory corporate parent may be deemed to be bound to an arbitration agreement in certain rather exceptional cases. Such was the case, for example, when the parent company was particularly closely involved in the negotiation and performance of the contract containing the arbitration clause, thus creating the appearance that it was a party to that contract, or where the parent company’s or the subsidiary’s reliance on its distinct legal identity was deemed to constitute an abuse of right under the circumstances of the case. There is such an abuse, for example, when the parent company assigns the contract containing the arbitration clause to a subsidiary that is obviously insufficiently capitalised, continuously intervenes in the affairs and management of the subsidiary, and/or co-mingles the assets of the two companies.

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The separability or severability of the arbitration clause is acknowledged in article 178(3) PIL Act, which states that the arbitration agreement cannot be contested on the ground that the main contract is not valid.

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Article 186(1) PIL Act affirms the competence-competence principle by providing as a rule that “the arbitral tribunal shall decide on its jurisdiction”. Its decision may be challenged before the Federal Tribunal (article 190(2)(b) PIL Act) without suspension of the arbitration proceedings.

An arbitral tribunal sitting in Switzerland may decide on its jurisdiction notwithstanding the fact that an action having the same subject is already pending between the same parties before a state court or another arbitral tribunal, “unless there are serious reasons to stay the proceedings” (article 186(1)bis PIL Act; see also article 7 PIL Act).

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The arbitration agreement must identify the parties bound by it, reflect their consent to arbitrate, and define the disputes which may be the subject of an arbitration.

Ideally, it should indicate that the seat of the arbitral tribunal will be in Switzerland, the applicable law, the composition of the arbitral tribunal, and the language of the arbitration. In ad hoc cases referring to the UNCITRAL Rules of Arbitration, it is best to provide for an appointing authority in case of difficulty in constituting the arbitral tribunal.

When neither of them is domiciled in Switzerland, the parties may include an express waiver of any action to set aside the award in their arbitration agreement (article 192(1) PIL Act).

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Both institutional and ad hoc arbitration are commonly practiced in Switzerland. Ad hoc cases are often truly ad hoc and do not refer to the UNCITRAL Rules.

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It is always advisable to draft a multi-party arbitration agreement with precise definitions of the parties, to provide for mandatory notification to all other parties of any request to arbitrate, and to describe the exact procedure to be followed to constitute the arbitral tribunal.

Multi-party agreements should also provide for an appointing authority which will nominate all three arbitrators if a party or a group of parties fail to appoint an arbitrator.

Multi-party provisions are often best addressed by reference to arbitration rules which deal with this in a comprehensive and clear manner (eg, article 8 Swiss Rules, article 10 ICC Rules, article 8 LCIA Rules, article 9 SIAC Rules, among others).

Where the performance of a contract may be delegated to a third party or is guaranteed by a third party, it is prudent to insert the same arbitration clause in all agreements and to secure the advance agreement of the third party to a consolidation of all proceedings related to the performance of the main contract.

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Arbitral proceedings are commenced by a notice or a request for arbitration addressed by the claimant to the respondent, or to the arbitral institution chosen by the parties to administer their disputes. There are no limitation periods or mandatory rules as to the form or content of the request for arbitration in international arbitration in the PIL Act (the former issue is a matter of the substantive governing law and not one of procedure or arbitration law).

Article 181 PIL Act provides that an arbitration is pending from the moment the arbitrators designated in the arbitration agreement are seized with the claim or when one of the parties initiates the procedure for appointing the arbitral tribunal.

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Pursuant to article 187(1) PIL Act, the arbitral tribunal must apply the law or the rules of law chosen by the parties. In the absence of such a choice by the parties, the arbitral tribunal is to apply the law or the rules of law with which the case has the closest connection (id).

The closest connection principle embodied in article 187(1) PIL Act constitutes a specific conflict-of-laws rule from which the arbitral tribunal cannot deviate.

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A party’s choice of an arbitrator is only limited by the grounds for a challenge of the arbitrator under article 180(1) PIL Act. In particular, the arbitrator must meet the qualifications agreed upon by the parties and be independent from the parties.

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Foreigners may – and very commonly do – act as arbitrators in Switzerland. Depending on the nationality of the arbitrator, a visa may be required to enter Switzerland for hearings or meetings.

There are no Swiss tax consequences when a non-Swiss resident acts as an arbitrator.

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If the mechanism agreed by the parties for the selection and appointment of arbitrators fails, the competent cantonal court at the seat of the arbitral tribunal may appoint them, unless a summary examination of the case shows that no arbitration agreement exists between the parties (article 179(2) and (3) PIL Act).

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Swiss law does not specifically address the question of immunity or liability of arbitrators. The arbitrator’s contract with the parties (receptum arbitri) is a sui generis type of mandate under Swiss law, for which she or he is liable in case of breach. However, such liability is considered to be limited to gross negligence and intentional misconduct when the arbitrators are acting in their judicial capacity.

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In non-administered arbitrations, the arbitral tribunal usually requests advance payments for fees and costs from the parties. These are kept in special accounts (separate from the chairperson’s or his or her firm’s accounts) and an accounting is submitted to the parties in the end of the case or at agreed intervals.

If the parties fail to pay the requested advances, the tribunal may order the stay of the proceedings until payment or, indeed, terminate the proceedings.

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An arbitrator can successfully be challenged if:

a) she or he does not meet the qualifications agreed upon by the parties;

b) there exists a ground for a challenge under the applicable rules of arbitration; or

c) objective circumstances may give rise to justifiable doubts in the eyes of a reasonable party, as to the independence of the arbitrator (article 180(1) PIL Act).

Article 180(2) PIL Act limits challenges by providing that “no party may challenge an arbitrator nominated by it, or whom it was instrumental in appointing, except on a ground which came to the party’s attention after such appointment.” This ground “must be notified to the arbitral tribunal and to the other party without delay.”

In the absence of a contrary agreement, the competent cantonal courts of the seat of the arbitration have jurisdiction to decide upon challenges of arbitrators (article 180(3) PIL Act).

While the IBA Guidelines may be considered by the court or the institution deciding upon the challenge, they are not binding, unless the parties have agreed upon their application. The Federal Tribunal has referred to the IBA Guidelines as a contribution to the development of best practices in international arbitration but stressed the importance of the particular circumstances of the case to decide on the challenge.

Challenges are decided upon by a standing Special Committee designated for this purpose under the Swiss Rules, whose decision is final (article 11 Swiss Rules). No reasons are given for the Committee’s decision.

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In the absence of an agreement by the parties to the contrary, the arbitral tribunal may, on motion of one party, order conservatory measures to maintain the status quo or regulate the status of a legal relationship by interim measures for the duration of the proceedings (article 183(1) PIL Act). Arbitrators may order any type of measures, including orders for temporary performance or the freezing of assets or measures unknown in Swiss law.

The jurisdiction of the arbitral tribunal to order provisional measures is parallel to that of the competent domestic courts.

Arbitral tribunals may request the assistance of the court of the seat to enforce interim measures they have ordered (article 183(2) PIL Act).

Swiss courts do not grant anti-suit injunctions where proceedings are brought elsewhere in breach of an arbitration agreement. Following the principle of competence-competence, they leave the determination of the validity of an arbitration agreement to the arbitral tribunal alone.

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According to the prevailing view in case law and legal commentary, orders for the provision of security for costs constitute interim measures within the meaning of article 183(1) PIL Act. Accordingly, both the arbitral tribunals and the local courts have parallel jurisdiction to make such orders. In practice, such orders are granted in certain limited circumstances only.

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The arbitral tribunal must ensure equal treatment of the parties and their right to be heard in fair adversarial proceedings (article 182(3) PIL Act). Together with the parties, it is bound by the general duty of good faith in procedural matters, which derives from article 2 of the Swiss Civil Code (CC), which requires parties to cooperate in the establishment of the relevant facts by adducing evidence. Article 2 CC further implies that the parties are to raise any objection they may have to the arbitral tribunal’s jurisdiction or to the conduct of the proceedings without delay (article 186(2) PIL Act).

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There is no default, strictly speaking, in arbitration and the respondent’s refusal to participate does not paralyse it. Provided that the respondent was given reasonable notice of the start of the case and the opportunity to present its case – and its fundamental procedural rights were thus respected –, a default award is valid and enforceable under Swiss law.

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All common types of evidence are admitted (documents or testimonial evidence, experts, etc).

The arbitral tribunal must conduct the taking of evidence and cannot delegate it to one or two of its members. It enjoys wide discretion in the appraisal of the adduced evidence.

The IBA Rules are taken into account where the parties agreed on their application. They are also often referred to by analogy.

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The arbitral tribunal (or a party, with the consent of the arbitral tribunal) may request the assistance of the competent courts at the seat with the taking of evidence (article 184(2) PIL Act). The court may, for example, order a witness domiciled in the canton to attend a hearing or request judicial assistance from other Swiss or foreign authorities.

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While far-reaching pre-trial discovery or extensive document production is not the norm under Swiss law, it is acknowledged that the parties’ general duty to cooperate in good faith in the proceedings (article 2 CC) may require their production of documents they might not have intended to rely on.

The party requesting production must identify the specific documents and demonstrate that they are material to its case. If so, the arbitral tribunal will generally order production. It is entitled to draw a negative inference from a party’s refusal to comply with that order, which seldom occurs or, if it does, is generally not expressly stated in the award.

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The respect of the parties’ right to be heard does not make it mandatory to have a final hearing on the merits. Post-hearing briefs are often closing the parties’ arguments on the merits.

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Yes, an arbitral tribunal with its seat in Switzerland may conduct hearings and procedural meetings anywhere suitable or convenient.

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In the absence of a contrary agreement by the parties, “the arbitral award shall be made by a majority, or, in the absence of a majority, by the presiding arbitrator” (article 189(2) PIL Act). In case of diverging views between the arbitrators, the chairperson is empowered to decide alone.

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The PIL Act does not limit the relief available from an arbitral tribunal. Limitations may, however, result from the law governing the contract, the laws of the place(s) where enforcement of the award will be sought or the parties’ agreement. Where Swiss substantive law is applicable, the arbitral tribunal may fill gaps and even amend or rescind the contract in certain circumstances. It can also grant specific performance and cannot award punitive damages.

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Dissenting opinions may be issued but are not common.

The Federal Tribunal has clarified that dissenting opinions do not form part of the award and that the dissenting arbitrator(s) cannot require that the opinion be attached to the award or that it be communicated to the parties together with the award, unless otherwise agreed by the parties.

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Unless otherwise agreed in the arbitration agreement, “the award shall be in writing, supported by reasons, dated and signed. The signature of the presiding arbitrator is sufficient” (article 189(3) PIL Act).

The award must also generally comply with the applicable rules of procedure and be in the form agreed upon by the parties (article 189(1) PIL Act). Contract drafters should address specific form requirements in the arbitration clause whenever it is likely that the award will have to be enforced in a country where specific or unusual formalities are required for the award to be recognised and enforced (eg, the signatures of the arbitrators must by notarised, all pages of the awards signed, etc).

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The most important time limit parties must be aware of is the 30-day time limit from notification of the award within which it can be challenged under article 190 PIL Act (see, article 191 PIL Act, articles 77 and 100(1) Swiss Federal Supreme Court Act). Any later challenge will be dismissed as inadmissible.

Arbitral tribunals have the power and jurisdiction to correct an award even in the absence of an agreement to this effect by the parties. The time limit within which an application for the interpretation or correction of an award is to be lodged is disputed: the prevailing view amongst commentators is that the same time limit as that applicable to set aside an award should apply by analogy; others consider that the time limit should start running only upon the discovery of a mistake in the award that is to be corrected.

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There is no general rule that “costs follow the event” in Swiss arbitration law. Depending on the applicable arbitration rules, practice shows that the losing party usually has to bear a percentage or all the reasonable arbitration and legal costs and expenses incurred by the other side.

Compensation for in-house counsel or management time has been granted in a few cases, but this remains a matter of circumstances.

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Under Swiss law, issues of interest relate to the merits of the case. They are, therefore, to be decided pursuant to the law governing the dispute.

When Swiss law is the applicable law and the arbitral tribunal grants interest, the award shall indicate for each claim, including for claims for costs, the applicable interest rate and the date from which interest starts to run.

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Only the violation of fundamental principles of procedural law, due process, or the Swiss legal order may give rise to the setting aside of an award. Article 190(2) PIL Act sets out the limited grounds for this to happen:

a) the sole arbitrator was not properly appointed or the arbitration tribunal not properly constituted;

b) the arbitral tribunal wrongly accepted or declined jurisdiction;

c) the tribunal’s decision went beyond the claim submitted (ultra petita), or it failed to decide one of the claims (extra petita);

d) the principle of equal treatment of the parties or their right to be heard in fair adversarial proceedings was not respected; or

e) the award is incompatible with public policy.

The Federal Tribunal has full cognition only in cases relating to the jurisdiction of the arbitral tribunal. Otherwise, it does not address the merits of the case, except to a limited extent when it reviews the compatibility of the results of the award with public policy.

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An award may be revised in cases where it may have been influenced by a criminal action or misdemeanour, or where the applicant subsequently learned of important facts or conclusive new evidence that could not be raised before the issuance of the award and which would have changed its outcome. The PIL Act does not address this question to which article 123 of the Swiss Federal Tribunal Act regarding the revision of judgments applies by analogy.

The Federal Tribunal has exclusive jurisdiction to hear applications for revision of awards.

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Exclusion agreements may only occur when none of the parties is domiciled in Switzerland (article 192 PIL Act); otherwise, it is not possible to exclude applications to set aside awards.

The waiver of article 192 PIL Act must be in non-ambiguous terms and in writing. To provide for the award to be “final and binding” in the arbitration clause is not sufficient to constitute a valid exclusion agreement according to case law.

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The recognition and enforcement of foreign arbitral awards in Switzerland are governed by the NYC (article 194 PIL Act). Article V(1) NYC sets out the grounds for non-enforcement, which are taken into account only to the extent that they are raised and proven to exist by the party opposing the enforcement of the award. These grounds are interpreted restrictively by Swiss courts, which assume a pro-enforcement stance.

According to article V(1)(e) NYC, a party can object to the enforcement of a foreign award on the basis that the award “has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.”

To our knowledge, the Federal Tribunal has not yet decided a case concerning an application to enforce an arbitral award that had been set aside in its country of origin. However, based on current case law regarding the application and interpretation of article V(1)(e) NYC, it is doubtful that the Federal Tribunal would go as far as allowing the enforcement of an award that has been set aside at the seat of the arbitration, unless extraordinary circumstances.

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Swiss courts have consistently adopted an enforcement-friendly stance, construing the grounds for a refusal to enforce an award narrowly and always by reference to the NYC (article 194 PIL Act).

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Immunity of states or state entities from enforcement is not absolute but limited to what is necessary to protect the exercise of their sovereign powers (iure imperii) in Switzerland.

Enforcement of foreign awards is generally carried out through attachment proceedings, the award being recognised during the course of the proceedings. The following three cumulative conditions must be met to obtain enforcement over the assets of a state or state entity in Switzerland:

a) the award relates to a claim arising from a legal relationship which could also be established in the same or similar form between two private parties, the state or the state entity acting like any private party (iure gestionis);

b) the assets against which enforcement is sought are not dedicated or assigned to sovereign tasks and are not immune from enforcement. If they are affected to sovereign tasks, there must have been an express waiver of immunity by the concerned state or state entity; and

c) there is a sufficient connection between the act or transaction out of which the claim against the state or state entity arises and Switzerland (so-called “Binnenbeziehung”). Such connection is not considered as given under current case law when the link between the claim and Switzerland consists solely in the location of the debtor’s assets in Switzerland. The fact that the seat of the arbitral tribunal which issued the award was in Switzerland does not constitute a sufficient link either.

If all conditions are met and enforcement granted, the assets may be seized provided there is no bilateral or other treaty between the concerned state and Switzerland containing specific provisions rendering the assets in question immune from enforcement (eg, article 22 of the 1961 Vienna Convention on Diplomatic Relations).

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Arbitration is not confidential by law. However, it is considered to be private and should not be publicised. Arbitrators are bound by a general duty of confidentiality with respect to the proceedings, which is implicit in their contract with the parties. This does not, however, apply to the parties themselves or to third parties involved in the arbitration (witnesses or expert-witnesses). It is for the parties to provide for confidentiality in their agreement with third parties or to agree on the general confidentiality of the arbitration, either expressly or by reference to arbitration rules containing confidentiality obligations.

Swiss counsel have a professional duty of secrecy regarding all aspects of their work, including arbitration. To breach it constitutes a criminal act.

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Documents do not become confidential by the mere fact that they were produced as evidence in an arbitration. To the extent that the parties did not agree that they should be kept confidential, and provided that they were lawfully obtained, such documents can, in theory, be relied upon in other proceedings. This remains, however, a controversial issue for which specific advice should be sought. In any event, counsel is always subject to the obligation of secrecy discussed in question 47.

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Counsel and arbitrators are bound by the ethical rules of their respective bars. The arbitral tribunal’s duty to grant equal treatment to the parties is likely to trigger the application of the stricter of counsels’ differing ethical standards.

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Swiss law adheres to the principle jura novit curia in international arbitration, allowing the arbitral tribunal to appreciate the legal implications of the facts before them and base its decisions on legal rules other than those invoked by the parties. However, in compliance with the requirements of the parties’ right to be heard in adversarial proceedings, arbitrators must put the legal rules or considerations they may intend to use to the parties before making a decision in all cases where the parties could not reasonably have considered such rules as pertinent to the resolution of the dispute.

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