Back
Latest News
Evolution of Swiss Domestic Arbitration Regulations: Enhancing Flexibility and Party Autonomy
Evolution of Swiss Domestic Arbitration Regulations: Enhancing Flexibility and Party Autonomy
Introduction
In 2000, the Swiss Constitution was modified, and as a result, the Swiss Federation now has the authority to make decisions on procedural law. On the first of January 2011, the Swiss Code on Civil Procedure (CCP) became operational, bringing together the 26 cantonal procedural regulations that had previously existed. Additionally, the Swiss Federation was granted the authority to implement uniform regulations for domestic arbitration procedures due to this transfer. The Concordat on Arbitration of 1969, which harmonized cantonal procedural regulations on domestic arbitration, will be superseded by Part 3 of the CCP entitled "Arbitration" on January 1, 2011. This change will take effect. It is the goal of the CCP to preserve the distinction between domestic and international arbitration, with the processes of international arbitration being controlled by Chapter 12 of the Swiss Private International Law Act (PILA). This article aims to explain the primary concepts and objectives of the new rules on domestic arbitration, as well as to emphasize the most significant modifications in comparison to the provisions already in place under the Concordat.
The goal of Switzerland's new domestic arbitration regulations is to make domestic arbitration more appealing to users by introducing fundamental ideas of flexibility and party autonomy. The new CCP, which offers more flexibility and party autonomy, has replaced the Concordat, which was seen to be excessively inflexible and out of date. In addition, the new CCP gives parties the option to completely forego the CCP in favour of Chapter 12 of the PILA, which has more provisions than the international required regulations stipulated under PILA Articles 18 and 19. The absence of a list of required norms, the ability to completely opt out of the CCP, and the default application of state court procedural rules are among the new features of domestic arbitration. There are no constraints in the opting-out clause; any restrictions would have to come from the restrictions on the parties' choice of law. It's unclear, though, if opting into Chapter 12 of the PILA is the sole way for a legal connection to become international or if the parties are still subject to all required Swiss legislation.
The Swiss parties adopt Chapter 12 of the International Civil Procedures Law (PILA) in place of the Convention on Civil Procedure (CCP). The Swiss Sports Association should add a phrase in its arbitration provisions that permits Chapter 12 of the PILA to apply, regardless of the parties' domicile, because the disparity between domestic and foreign arbitration might result in sportsmen being treated unfairly. According to the PILA, every claim involving a pecuniary interest is subject to arbitration, and in situations when a dispute could not meet the requirements for arbitrability, choosing not to participate in the CCP could be advantageous. Additionally, by choosing not to participate in the CCP, domestic prizes are subject to a more thorough examination. Unless the parties agree differently, the CCP is consistent with the norms of international arbitration and gives the arbitral tribunal and state courts the authority to apply temporary remedies. More specific options are available under Article 374 CCP, which permits parties to assert jurisdiction over damages claims in ongoing legal procedures.
The Swiss parties adopt Chapter 12 of the International Civil Procedures Law (PILA) in place of the Convention on Civil Procedure (CCP). The Swiss Sports Association should add a phrase in its arbitration provisions that permits Chapter 12 of the PILA to apply, regardless of the parties' domicile, because the disparity between domestic and foreign arbitration might result in sportsmen being treated unfairly. According to the PILA, every claim involving a pecuniary interest is subject to arbitration, and in situations when a dispute could not meet the requirements for arbitrability, choosing not to participate in the CCP could be advantageous. Additionally, by choosing not to participate in the CCP, domestic prizes are subject to a more thorough examination. Unless the parties agree differently, the CCP is consistent with the norms of international arbitration and gives the arbitral tribunal and state courts the authority to apply temporary remedies. More specific options are available under Article 374 CCP, which permits parties to assert jurisdiction over damages claims in ongoing legal procedures.
If parties declare a set-off with a claim that is outside the purview of the designated arbitral tribunal, the Concordat permits them to terminate the arbitration process. Regardless of whether a set-off claim is covered by the arbitration agreement, another arbitration provision, or a forum selection clause, the arbitral tribunal is empowered to rule on it. An arbitration-friendly remedy is provided under Article 377 CCP, which states that the arbitral tribunal may consider a counterclaim if the arbitration provisions are compatible. With two exceptions—the Federal Supreme Court and the superior court in the canton of the arbitration site—the original text of the CCP preserved the appeals process as it was outlined in the Concordat. During the consultation process, this was criticized since it was thought to be one of the primary causes of domestic arbitration's inferiority to international arbitration. The Federal Supreme Court is now the default court under the CCP, which only allows for one occasion. Ex aequo et bono decisions may be trusted to the arbitral tribunal by the parties; nevertheless, Article 187 PILA allows for greater freedom, whereas the CCP reflects the terms of the Concordat.
Conclusion
The objectives of granting procedural flexibility and upholding party sovereignty have been achieved by the new domestic arbitration framework in Switzerland, offering domestic parties a viable substitute for state courts. This is anticipated to increase domestic arbitration in Switzerland, especially for those parties who would rather avoid going to court. The benefit of increased predictability comes at the expense of flexibility, thus changes to the PILA should be made carefully. Additionally, the new system adds mechanisms for numerous claims (consolidation) and several parties (joinder), which can discourage parties from selecting arbitration. In international arbitration, party autonomy and predictability are vital, and any violation might discourage parties from selecting arbitration. Before a disagreement occurs, parties should include provisions in their contractual framework for joining third parties and consolidating claims.
Written By: Vaishnavi Rastogi
Supervised by: Adv. Kalyan Khrishna Bandaru
Supervised by: Adv. Kalyan Khrishna Bandaru
- The new Swiss domestic arbitration regulations prioritize flexibility and party autonomy.
- Parties can opt out of the CCP in favor of PILA Chapter 12, expanding their procedural options.
- The changes aim to bridge the gap between domestic and international arbitration standards, promoting fairness and efficiency.
