Court assistance in international arbitration in Switzerland

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Court assistance in international arbitration in Switzerland

KAUFMANN-KOHLER, Gabrielle

KAUFMANN-KOHLER, Gabrielle. Court assistance in international arbitration in Switzerland.

International Construction Law Review, 1990, vol. 7, p. 339-357

Available at:

http://archive-ouverte.unige.ch/unige:44112

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1 / 1

COURT ASSISTANCE IN INTERNATIONAL CONSTRUCTION ARBITRATION IN

SWITZERLAND

GABRIELLE KAUFMANN*

Memher of the Geneva and New York Bars; Partner, Baker

&

McKenzie, Geneva

INTRODUCTION: NEED FOR INTERPLA Y BETWEEN ARBITRAL TRIBUNAL AND COURTS

Becau~e of their very nature (involvement of several parties and related

co-o~dmat1on

problems, duration, compJexity of works, dependence upon phys1cal, geographical, meteorological conditions, etc.), multinational

cons~ruction projects have a high conflict potential. A large majority of the

confhcts which materialise are submitted to international arbitration and such arbitrations often take place in Switzerland, especia1Jy those involving a U.S. or European contractor.

This explains the reasons for one dement of this article's topic, i.e., the one referred to in the second half of the title: international construction

~rbi.trati?n in Switzerland. But what about the first ha1f: court assistance?

. rbitrat1on is a contractuaI, private dispute resolution mechanism. not lnteg.rated in any national court system. This provides for great freedom in shapmg the arbitration process for instance in choosing the arbitrators or in organising the proceedings to t~ke into account the specific needs of a given case. At the same time, however, it means that to be effective arbitration niu.st not only be sanctioned by national law, but also benefit from the assistance of the courts whenever the need for assistance arises.

Court assistance ma~ primarily be needed

(i)

to substitute for the lack of an already constituted body, e.g., to appoint an arbitrator on behalf of a

def~ulting party, (ii)

to

protect the parties' due process rights, e.g., to remove

·a hiased arbitrator or vacate an award rendered in violation of due process, and

~i~i)

to remedy the arbitra tors' Jack of power of coercion, e.g., to enforce prov1s1onal remedies ordered by the arbitrators. In other words, for the arbitration process to achieve its purpose of efficient dispute resolution, t?ere lll_Ust be a dearly defined opportunity for an interplay between arbitral

tribunal and court .

. . As many reader~ will kriow the Iaw applicable to international arbitration

in

Switzerland has recen tly u~dergone a major change predsely intended to

* The author acknowledges with thanks the helpfuf comments and suggestions of David A. Lawson, tnember of the Califomia Bar, Baker & McKenzie, Geneva.

enhance the efficiency of the arbitration process. On the occasion of this change, the legislators have in particular set new rules for this interplay between arbitral tribunal and courts. The purpose of this article is to examine these new Swiss rules in the context of construction arbitration and the ways in which they may help to promote the efficiency of arbitration.

NEW SWISS RULES ON INTERNATIONAL ARBITRATION

The new Swiss rules on international arbitration came into force on 1 January 1989.¹ They are embodied in Chapter 12 of the Private International Law Act of 18 December 1987 which codifies Swiss confticts law .("P.1.L. Act").² Unless the parties agree otherwise, Chapter 12 supersedes for all international arbitrations the former rules contained in the so-called Intercantonal Arbi- tration Convention of27 March/27 August 1969 ("l.A.C.").³

The new rules apply to any arbitration held in Switzerland in which at least one of the parties is a foreign domiciliary (Art. 176( 1) of the P.I.L. Act;

for easy reference, the English translation of Chapter 12 prepared by the Swiss Arbitration Association is reproduced at the end of this article).

Pursuant to recent Swiss case law, the new rules apply to any arbitration pending at the time at which the P.I.L. Act entered into force.⁴ Afortiori does it apply to any arbitration started after the P.l.L. Act came into force on the basis of an arbitration clause entered into prior to 1989. ⁵

The new arbitration rules of the P.I.L. Act significantly improve the legal

. 1 On the new rules, see in particular the following articles cited herein by the author's name only or by the author's name followed by the review's name: Bucher/Tschanz, International Arbitration in Switzerland, Basle and Frankfurt 1988; Lalive/Poudret/Reymond, Le droit de l'arbitrage interne et international en Suisse, Lausanne 1989; Reymond, "La nouvelle loi suisse et le droit de l'arbitrage international-Réflexions de droit comparé'', Revue de l'arbitrage 1989, No. 3, p. 385; Blessing, "The New International Arbitration Law in Switzerland: A-Significant Step Towards Liberalisation'', Journal of International Arbitration 1988, No. 2, p. 9; Lalive, "Le Chapitre 12 de la loi fédérale sur le droit international privé: l'arbitrage international", in Le nouveau droit international privé suisse, Lausanne 1988, p. 209; Lalive, "The New Swiss Law on International Arbitration", Arbitration International 1988, No. l, p. 2; Gaillard, "A Foreign View of the New Swiss Law on International Arbitration'', Arbitration International 1988, No. 1, p. 25; Karrer,

"The Position of the Arbitration Chapter 12 in Switzerland's Private International Law Codification", Bulletin of the Swiss Arbitration Assodalion 1989, No. l, p. 13; Gaillard/Poncet, "Introductory Note to, and Translation of, Switzerland's Statute on International Arbitration", International Legal Materials 1988, p. 37; Tschanz, "The new Swiss International Arbitration Act", International Business Law Journal 1988, No. 4, p. 437; German lnstitute of Arbitration (ed.), Die lnttrnationale Schiedsgerichtsharkeit in der Schweit

{ll)-Das neue Recht ah 1.Januar 1989, Kôln 1989. ..

2 Feuille fédérale 1988 1, p. 5of12 January 1988; on the P.I.L. Act in general, see Schneider, "The 1987 Swiss Private International Law Act" [1989) l.C.L.R. 113.

5 Published in quadrilingual edition of 1974; note that the J.A.C. remains applicable to domestic

arbitrations. ·

• Supreme Court case reported in Semaine judiciaire 1989, p. 329.

5 For a detailed discussion of Swiss case law on transitory mies and still unsettled issues in this area, see Kaufmann/Byrne-Sutton, "Transitory Rules in International Arbitration in Switzerland," to be published shortly in International Business Law Journal.

Pt. 3] Court Assistance in International Construction Arbitration in Switzerland 34 l

framework of international arbitrations held in Switzerland. In a nutshell, the new rules bring about the following main improvements:

(a) they broaden the parties' autonomy in procedural matters. The parties are now by and large free to set up the procedure as they wish.

(b) The new rules further strengthen the arbitrators' powers in procedural an~ substantive matters. Unless the parties have agreed otherwise, the arbitrators are free to settle the procedural rules. Moreover, subject to the parties' choice of Iaw, they are free to select the law applicable to the merits. Furthermore, they are free in applying such law, as their award cannot be reviewed on the merits except on very restrictive public policy grounds.

(c) The new rules Iastly restrict the grounds and simplify the procedure for challenging arbitral awards. They even allow parties which are not domiciled in Switzerland to waive fully any challenge in court.

. These innovations are in keeping with the generaJ trends which are found

tn most recently enacted arbitration statutes and place Switzerland among the most user-friendly arbitration sites.

SELECTED AREAS OF COURT ASSISTANCE

Court jurisdiction in aid of arbitration

The

P.I.L. Act provides that the courts have jurisdiction to appoint and rernov~ arbitra tors (Arts. 179(2) and (3) and 180(3) ), to enforce provisional rerned1es ordered by the arbitral tribunal (Art. 182(2)), to compel the Production of evidence (Art. 184(2)) to vacate awards (Art. 191), to accept the deposit and certify the enforceability of awards (Art. 194). In addition, the P.I.L. Act also contains a provision for residual court jurisdiction aimed at resoJving any difficulties not expressly covered by the rules just referred to

·(Art. 185). Lastly, as will be discussed below, the courts may also

i~te.rvene

to sorne extent in matters of joinder and consolidation, although th1s 1s not expressiy provided in the P.I.L. Act.

In

the following discussion we will on purpose refrain from going into the technicalities of ail the areas ~f court assistance, but will rather focus on some of

th~

more complex ones, which may be of particular interest to the reader of this Review.

Appointment of arbitrators

P'"'t · e zmmary comments: freedom in procedural matters

Before entering into details one should remember that the P.I.L. Act grants the parties broad discretion' in terms of procedure. This is a general principle, which the P.I.L. Act consistently foJlows, be it in matters of formation of the

tribunal, removal of the arbitrators, as well as of organisation of the procedure before the arbitrators. In this latter respect, the parties--or the arbitrators if the parties fail to do so-may either choose a set of existing arbitration rules or set up their own rules. Since there exists no set of rules specifically designed for such type of arbitrations, a majority of international construction arbitrations held in Switzerland are governed by the I.C.C. Rules.⁶

Even when the parties or the arbitrators choose a set of rules, numerous aspects of the procedure remain unsettled and it is highly advisable that the parties, or failing them the arbitrators, take advantage of their discretion to taîlor the proceedings for the specific dispute. For instance, depending on the circumstances, one may provide for an interim award on liability, or decide to try certain easily-severable issues separately. As a further example, it is generally good practice to hold preliminary meetings at which the arbitrators discuss with counsel the organisation of the procedure, especially of the evidentiary proceedings. Although the flexibility existing under the P.I.L.

Act would allow oral proceedings of the type used in English construction arbitration, arbitrators sitting in Switzerland rely extensively on written pleadings, which appears less time-consuming in the end result.

Party autonomy with respect to the appointment of arbitrators

The P.I.L. Act deals with the appointment of arbitrators in Article 179, which reads as follows:

"The arbitrators shall be appointed, removed or replaced in accordance with the · agreement of the parties.

In the absence of such an agreement, the matter may be referred to the court where the arbitral tribunal has its seat; the court shall apply by analogy the provisions of cantonal law concerning the appointment, removal or replacement of arbitrators.

Where a court is called upon to appoint an arbitrator, it shall make the appointment, unless a summary examination shows that no arbitration agreement exists between the parties."

Accordingly, the parties are free to agree on the method for appointment of the arbitrators. Of course, they are also free to require arbitrators with specific qualifications, e.g., they may require an arbitrator with a civil engineering background or an arbitrator who is listed on the arbitrators' list of a specific organisation such as F.I.D.I.C. Contrary to the practice in some domestic construction arbitration systems, arbitrators sitting in international construc- tion arbitrations in Switzerland are most often lawyers. ⁷

If the parties do not agree on an appointment method or if the method agreed upon fails, the court at the place of arbitration has jurisdiction for the

6 The national set of construction arbitration rules, S.l.A. Directive 150, is used for domestic arbitrations only.

1 On the reasons, see, e.g., Schneider, "Arbitration of Construction Disputes", p. 215, in German Institute of Arbitration (ed.), Contracts and Dispute Settlement in Civil Engimering and Construction Plants, vol.

4, Koln 1984.

Pt. 3]

Court Assistance in International Construction Arhitration in Switzerland

343

~ppointment

^{(Art. 179(2)).} The arbitrator appointed by the court must be

~ndependent

of the parties and meet any additional requirements which may ave been agreed upon between the parties.⁸

':Vhen requested to appoint an arbitrator, the Swiss court will merely

rev~ew

whether there exists a prima facie arbitration agreement.⁹ It does not rev1ew the enforceability of the arbitration dausè, even if

it

is disputed by

?n: ⁰: the parties. Under Swiss Iaw such review is within the scope

of

the JUnsd1ctîon of the arbitrators, whose decision on jurisdiction may be chaI-

lenged in court (Art. 190(2)(b)).

Swiss }udge as appointing autkoriry selected by the parties

I t often occurs that the parties in the arbitration clause or in a la ter agreement select

a

Swiss judge or judicial body as the appointing authority. Whenever they do so and one of the parties requests the agreed judge to appoint an arbitrator, Article l 79(3) of the P.I.L. Act provides that the judge is under an ?bligation to proceed with the appointment unless there is no prima facie arbitration clause. This provision settles

a

controversy which had arisen because the Chief Justice of the Supreme Court had in some instance refused to

?1ake

the appointment on the ground that the· enforceability

of

the

a~bitration

agreement was disputed¹⁰ or that the dispute Iacked any connection With Switzerland. 11

Judge not bound by procedural rules

A:tide 179(3) makes no reference to any rules. Hence, the judge wiII proceed Without being bound by any procedural rules.

He

does not act

qua

judge and

a r

e~ent Supreme Court case held that no appeal

.

lies from 1s ec1s10n. h' d . . n I n

~articulai."

the judge may, but

is

not required to, give the defendant an PPortunity to be heard on the appointment. - . .

. On a more practical note, one may add that, instead of entrustmg a JU?ge With the appointment the parties may for instance, also resort to the services

Ofth G ' ' . . d

. e eneva Chamber of Commerce and Industry, wh1ch acts m accor ance WJth its own rules for the appointment of arbitrators.¹³

: :ucher/Tschanz, p. 61; Lalive in Arbitration /nlernalional, p. 11. .

10 Supreme Court case Wetco Ltd., reported in Semaine judiciaire 1980, p. 443. . . . AT F 108 J upreme Court cases Paperconsult SA reported in A.T.F. 88 I 100 and El Obetdt, reported ¹⁰ • • •

a~8 ^l

li .

12 Supreme Court case Amoco, reported in Bulletin of the Swiss Arbitra/ion Association 1983, No. l, P· H.

13 To date, this decision is not reported · 1

Ab' · · · fc fi June

1980 ^r Uration Directives of the Geneva Chamber of Commerce and Industry as m orce rom ft ft d · These directives are limited to the Chamber's function as appointing authority. They are not u • 11

e ged arbitration rules.

Removal of arbitrators

Party autonomy

The relevant provision of the P.I.L. Act, Article 180, bas the following contents:

.. "An arbitrator may be challenged:

(a) if be does not meet the requirements agreed by the parties;

(b) if the arbitration rules agreed by the parties provide a ground for challenge; or (c) if circumstances exist that give rise to justifiable doubts as to bis independence.

A party may challenge an arbitrator whom it has appointed or in whose appointment it has. participated only on grounds of which it became aware after such appointment.

The ground for challenge must be notified to the arbitral tribunal and to the other party without delay.

ln the event of a dispute and to the extent to which the parties have not determined the procedure for the challenge, the court of the seat of the arbitral tribunal shall decide;

its decision is final."

Pursuant to the general principle of party autonomy governing Chapter 12 of the P.l.L. Act, the parties are thus free to agree on the procedure and on the grounds for removal of arbitra tors, subject to compliance with the general rule that arbitrators must be independent. They can do so either directly by stating the grounds and procedure in the arbitration clause or indirectly by reference to institutional arbitration rules. It is only in the absence of a different agreement by the parties that the court at the place of arbitration has jurisidiction over the removal.

Grounds for removal

Under Article 180(1) of the P.I.L. Act an arbitrator shall be removed if he does not meet the standards set directly by the parties; or by the institutional rules seleçted by the parties, or iflegitimate doubts arise about his independ- ence. There is no general definition of independence. Whether the standards of independence are met must be examined on a case-by-case basis.

In this context one should note that-in theory at least-the same standards apply to the chairman and the party·appointed arbitrators¹⁴ and that the arbitrators have a duty to disdose any circumstances which may jeopardise their independence.¹⁵

Procedural aspects

Challenge bejore an arbitral institution. If the parties have selected a removal authority other than the local court, such authority bas exclusive jurisdiction

14 Supreme Court cases Centrozap reported in A.T.F. 92 1 271 and Black Clawson, reported in A.T.f.

105 la 247; with some nuances, see Lalive/Poudret/Reymond, pp. 339-34-0.

15 Supreme Court case Z. v. L., reported in A.T.F. 111 la 72.

Pt. 3]

Court Assistance in International Construction Arbitration in Switzerland

345

?Ver the removal and the parties are barred from challenging the arbitrators

In court. This changes the situation as it existed under the J.A.C., since under the

L;A.C.

the parties always retained the right to bring a challenge in court. ¹⁶

I t ls submitted that the arbitral institution must review all grounds for removal set forth in Article 180(

I)

of the P.I.L. Act, even if the institution's rules provide for different grounds.

If

the institution fails to do so, the parties must be deemed entitled to bring an action for removal in court on the grounds not considered by the institution. ¹⁷

From a practical standpoînt, the new rule pursuant to which the authority

ch~sen

by the parties has exclusive jurisdiction over the removal calls for two

main

comments. First of all, it becomes ofutmost importance that the parties select a re1iab1e authority and that such authority foHows a procedure which guarantees minimum due process standards. In this respect, one would wish that the

I.C.C.

modifies its current practice of not disclosing to the parties the reasons for its decisions on removal.

Secondly, this new rule is expected to avoid long delays. Indeed, under the

J.A.C.

the parties were entitled to bring

a

challenge, first, before the selected authority and, thereafter, before the local Swiss court.

The

decision of the court Was subject to two Jevels of appeal, which entailed numerous months

of court

procedure. In the construction industry especially, where the

c~ntractor's

financial condition may be severely affected because the employer Withholds payment on the ground of defects or alleged defects, any improve·

rnent expediting the resolution of the dispute is welcome. This is one example

~{

such an improvement in the P.I.L. Act. There are others, in particuJar in

e

area of challenges against arbitral awards.¹⁸

No appeal from the decision on removal.

Article 180(3)

of

the P.I.L. Act states that the court's decision on the removal is final. Although it is unsettled by case

law

and debated by writers one should construe this provision as ruling out any appeal at the cantonal '1evel but allowing an appeal at the federal lev . e to the Swiss Supreme Court on the ground of violation o const1tut10na 1 ' f · · 1 rights.19

Waiver

of

right to challenge an arbitra/or.

As a further illustration of the P.I.L.

Act's underlying rationale of increasing the efficiency of arbitration, a party

16 s

17 B upreme Court case West/and, reported in A.T.F. 1 J l la 255. ,

18 uch:r/Tschanz, pp. 71 and 72; impliedly Lalive/Poudret/Reymond, P· 344.. . .

tl1 ln t.h~s. respect the P.I.L. Act brings about the following primary changes: (1) ~t does .away with the uc? cnticised challenge on the ground that the award is arbitrary on the ments, which the I.A:C.

rsrovided;. (iî) unless the parties agree otherwise, challenges are brought beforc

on~

^instance

only~

^which

the Swiss Supreme Court· (iii) if none of them is a Swiss domiciliary, the parties may enter mto an

exclusion ' . . d h J f arbitration. Note also

th . agreement thereby waivmg any challenge of the awar at t e P ace o . .

( at wtth the same view towards expediting arbitration, recent cases further held that mtenm awards

e~;ef1 onjurisdiction) can only

be

chaJlenged together with the final award. . p.

4

i. n particular pro: Bucher/Tschanz, p. 72; contra: Lalive/Pottdret/Reymond, PP· 344-345; Blessmg,

is deemed to have waived its right to challenge an arbitrator if it has knowledge of a ground for removal and nevertheless appoints the arbitrator, or if it does not raise a ground immediately after becoming aware of it (Art.

180(2) of the P.l.L. Act). These requirements appear more stringent than they were under l.A.C.²⁰

lmpàct of removal proceedings on the arbitration.

Pending removal proceedings do not stay the arbitration. Thus, unless the parties agree otherwise, the arbitrators are free to decide whether to stay or continue the arbitration pending the outcome of the removal proceedings.

The P.I.L. Act is silent on the consequences of the removal and replacement of an arbitrator. Is it required that evidentiary proceedings are conducted anew? The answer depends on the parties' agreement, including on any institutional rules agreed upon. Failing an agreement, the arbitrators are free to decide on this issue (Art. 182(2)). Their freedom is limited only by the general ru le of equal treatment of the parties in adversarial proceedings (Art.

182(3)).

Provisional remedies

Arbitrators' power to order provisional remedies

In this area, the P.I.L. Act brings a significant change. Under the J.A.C.

only the. courts had the power to order provisional remedies. As opposed to that, the P.I.L. Act vests such power in the arbitrators and provides that upon the request of the arbitral tribunal the court has a duty to enforce the arbitrators' order. The relevant provision reads as follows:

"Unless the parties have agreed otherwise, the arbitral tribunal may, at the request of a party, order provisional or protective measures.

If the party so ordered does not comply therewith voluntarily, the arbitral tribunal may request the assistance of the competent court. Such court shall apply its own law.

The arbitral tribunal or the court may take the granting of provisional or protective measures subject to the provision of appropriate security" (Art. 183).

Types of provisional remedies

The P.l.L. Act does not specify the types of provisional remedies which arbitrators are empowered to order and courts have a duty to enforce.

Therefore, one may consider that the arbitrators may order any type of remedies, including, for instance, injunctions to continue carrying out certain works and directions for the preservation of evidence. ²¹ I t is open whether

20 Under the J.A.C. there was an exception for "irreparable" defects; Supreme Court case reported in A.T.F. 107 la 161.

21 Lalive/Poudret/Reymond, pp. 363--364; Bucher/Tschanz, p. 87.

Pt. 3]

Court Assistance in International Construction Arbitration in Switzerland

347 the ar.bitrators' powers extend to the issuance of an order provisionally

~~ard1ng a

certain sum to the contractor pending final resolution of the ispute, but there are undoubtedJy good arguments which would support such a request.22

However broad the arbitrators' power may be, the courts have no duty to enforce provisional remedies which are not provided by the local rules of civil P~?cedure. Hence, a provisional award of the type just referred to (similar to

a

summary award" under

the I.C.E.

Arbitration procedure) would not be enforced in

a

Swiss court, which does not mean that it would not serve any purpose .at aH. Indeed, on the one hand, the employer may comply with it

~oluntanly

and, on the other hand, it may be relied upon in a foreign court,

1 not to enforce it, at least as strong prima facie evidence for a pre-award attachment. In addition, it would make dilatory tactics useless .

. Moreover, the arbitra tors' powers do not extend to attachments, ²³ i.e., the

~eizure of property which is not the subject matter of the action as security or collection on the forthcoming award, and similar relief under foreign law.

Court having jurisdiction

!f

the tribunal finds it necessary to enforce its order, it may apply to the court ior a · ssistance.

Any

Swiss court at the place where relevant property 1s · l ocate d or

~cts

must be performed or enjoined, i.e., not only the court at the place of

ar~itration,

has jurisdiction to enforce the arbitra tors' order. .

h

f the assets are located or the acts must be performed

in

a country other t an Switzer1and the Swiss courts Jack jurisdiction to enforce the provisional

rerned ·

_Ies and the civil proced ure rules of the fore1gn country wt govern any

' · · · ·11

co~:t

assistance for enforcement of provisional remedies ordered by the arl Itrators. I t is argued that in such a situation, as an exception to the general fcru e, the parties not only the arbitral tribunal shou1d be entitled to move

or en orc~ment before the foreign court. f( ' ²⁴ ' ^-

No exclusive power of the arbitra/ors to grant provisional remedies

The parties are free to choose between moving for provisional remedies before the

ar

b' Itrators

or

before the court

at

the

place

where the property

or ng.

· h ts

are

located. Although there are no cases on this issue so far, this understandmg

~Ppears

to reflect the generally-accepted construction .of Article 183 of the

·1

:L. Act.²⁵ It remains to be seen however whether m the event that the arb1t ration is pending and the property and rights are locate m witzer an ' · · ' ' d · S · 1 d

22 L r /

23 Ba ive Poudret/Reymond, pp. 364-365.

2• _~ B h ucher/Tschanz , . p 87 . .

shou]d :c er/T~chanz, p. 90; Lalive/Poudret/Reymond, p. 368, are of the opinion that on[» the parues

2s L ppear m the foreign court.

ahve/Poudret/Reymond, p. 369; Blessing, pp. 49-50; Reymond, P· 405.

the court may not remand an application for provisional remedies to the arbitral tribunal.

Miscellaneous procedural aspects

Only the arbitral tribunal is entitled to request the court's assistance; t~e

parties have no such right (Art. 183(2) of the P.l.L. Act). The court acts ~n

accordance with locàl civil procedure. The parties may, however, appear m court and have standing to appeal the court's decision to the extent an appeal is available under the relevant civil procedure.

Procedure to compel the production of evidence General comments

The parties' autonomy extends to the evidentiary proceedings. The parties- or failing them the arbitrators-may either settle certain issues by ad hoc rules (e.g., whether non-expert witnesses may submit written statements, whether the arbitra tors wîll appoint their own expert or rely on experts ret~i1:1ed. by the parties, whether witness examinations will be adversarial or inqms1tonal, to what extent discovery of documents will be accepted, whether a party is entitled to inspect evidence which is in the possession or control of another pa.rty) or refer to a set .of existing rules, e.g., to the rules for the taking of ev1dence of the International Bar Association. ·

Whatever the applicable rules, the arbitral tribunal wiU take the evidence itse!f. H.owever, it ~acks any coercive power in the event that a p~rty ^{in the} arbitration or a third party fails to co-operate in the taking of ev1dence. In suc? an e~entuality, the P.1.L. Act provides in the following terms that the arbitral tnbunal, or the parties with the tribunal's consent, may request the court's assistance:

"The arbitral tribunal shall itself take the evidence .

. Where the assistance of state authorities is needed for taking evidence, the arbitral tribunal or a party with the consent of the arbitral tribunal may request the assistance of the court of the seat of the arbitral tribunal. Such court shall apply its own law (Art.

184)."

As a matter of fact, arbitrators seldom resort to court assistance when a party does not co-operate in the taking of evidence. Rather, they take such conduct into consideration when weighing the evidence before them and may . go as far as construing it as an admission of the disputed fact. On the other hand, the arbitrators may under the circumstances call on the court if third party evidence is sought, e.g., to hear a witness who bas failed to appear before the arbitra tors or to issue letters rogatory for deposition of witnesses abroad who are notable or willing to travel to the place of arbitration.

Pt. 3] Court Assistance in International Construction Arbitration in Swit;;:,erland 349 Procedural aspects

The court having jurisdiction to provide assistance in evidentiary matters is the court at the place of arbitration. The court has a duty to act and cannot review whether the arbitral tribunal has jurisdiction or whether the evidence sought is relevant and pertinent.

The court applies its own rules of procedure (Art. 184(2)). lt is open to question to what extent the court should take into account the procedural rules applicable to the arbitration. The court itself proceeds with the requested rneasures, e.g., with hearing a witness or issuing letters rogatory. This seems to imply that assistance can only be granted for an evidentiary measure provided by local rules of civil procedure.

The request for court assistance may be filed by either the arbitral tribunal or a party with the arbitrators' consent. It is not required that both parties agree. In this context, a mention of the practice in connection with discovery of documents rnay be apposite. The concept of discovery is unfamiliar to continental practitioners. As a rule, each party is free to select the documents which it intends to produce without being under an obligation to file in evidence writings detrimental to its position. This being said, if one party identifies relevant documents in the possession of the other party, it may

·request the arbitrators to order production. When reviewing the merits of such a request, the arbitrators will consider such factors as whether the evidence is relevant and material .to the case, whether the same information is already proven by other evidence on record, whether the requesting party has a contractual or statutory right to obtain that very information, whether the requested party is under a good faith duty to provide the evidence, etc.

If the parties wish to have discovery available, they may state so in the terms of reference or-even better, because they are more likely to agree--in the arbitration clause itself. Such an agreement would then most likely be binding upon the arbitrators.

If the arbitrators order production and the party so ordered fails to compiy, then the arbitral tribunal or the other party with the latter's consent may, although this is rarely clone in practice, apply for court assistance. Even

though discovery in the English (or even more ~i:nerican) meaning of ~he ^/,, term is an unfarniliar concept, there are rules of c1v1l procedure empowenng

the courts to order production of documents. Hence, this would constitute a

rneasure provided by local rules, with which the courts have a duty to co- \', opera te.

J

oinder or consolidation

General comments

The P.I.L. Act contains no express provision on joinder or consolidation of arbitrations and, of course, no case law exists yet in this area. Moreover,

the field of multiparty arbitration is highly complex and the procedural requirements and avenues, even as they existed before the enactment of the P.l.L. Act, are by and large untested in court. Hence, any discussion of this topic remains tentative by force of circumstances.

This being said, some provisions of the P.1.L. Act and general principles have a bearing on joinder and consolidation and one may attempt to summarise the legal situation in the following terms.

Summary of legal situation

(a) No one can be made a party to an arbitration unless he is bound by an enforceable arbitration clause. Whether an arbitration clause is enforceable against a given person or legal entity is a question governed by the law applicable to the arbitration clause. Under Article 178(2) of the P.I.1:· Act an arbitration clause is governed either by the law chosen by the parties to this effect, or by the law governing the main contract, or by Swiss law. ln other words, if the arbitration clause is enforceable àgainst a party under only one of these three bodies of law, that party can be joined in the

arbitration. .

ln practice, the question will, for example, arise in connection with consortia. Let us assume that the contractor is a consortium formed of several partners out ofwhich only one partner appears as a party to and has executed a certain sub:ontract. Are the non-signatory partners bound by the arbitration clause? The i~sue also often aris~s with respect to groups of corporations: can a parent or s1ster company, wh1ch has not signed the arbitration clause but was active in the negotiations or performance of the con tract; be joined as a defendant? ln both examples, the answer lies with the substantive law of contracts governing the arbîtration clause.

(b) Still subject to the foregoing general rule that a party must be bound by the arbitration clause, it appears admissible to join a party during the course of the arbitration, for instance if the defendant raises a counterclaim and names as counter-defendants jointly the claimant and another party which was not previously a party to the arbitration. A similar situation may be found if, in an arbitration between contractor and employer on a dispute involving variations and delays, the contractor wishes to join a subcontractor, who in hîs opinion is résponsible for the delays. Because of the general rule set forth above, this joinder requires, however, that the arbitration clause in

the subcontract be worded accordingly.²⁶ .

Such a joinder may, admittedly, raise questions of equal treatment of the parties because the party joined later did not have an opportunity to appoint an arbitrator. One may attempt to solve this either by providing for an

26 For an example of such an arbitration, see, e.g., Dubisson, "Arbitration in Subcontracts of International Projects'',joumal of International Arhitration 1984, No. 3, p. 197.

Pt. 3] Court Assistance in International Construction Arbitration in Switzerland 351 appropriate mechanism in the arbitration clause(s) or by arguing that joint obligees have an implied duty to appoint a common arbitrator and that,

therefore, the party joined later is bound by its co-obligee's choice.^{27 .}

(c) If a dispute involves more than two parties under arbitration clauses embodied in different contracts, it appears that the Swiss court called upon to appoint the arbitrators may appoint one sole arbitral tribunal, provided the contracts may be construed as one single transaction taking into account the relationship between the parties and the risk of confticting decisions.²⁸

Depending on the circumstances, this may for instance be the case of a joint venture contract and ancillary agreements involving more than two parties. However, it is not the case of main contract and subcontracts, as

these~ although relating to the same project, would not be regarded as one single transaction.

(d) If separate arbitral tribunals ~re already set up, the court has no power to consolidate the two arbitrations (unlike, for instance, in the Netherlands).

(e) Lastly, the court called upon to appoint an arbitrator in an arbitration closely linked to another one which is already pending, may appoint the same arbitrators. This could be so in a situation in which a first arbitration is pending between the employer and the contractor and another one is pending between the contractor and a subcontractor and both proceedings involve the same questions arising out of the same project.^{29 .}

CONCLUSION

Court assistance is an indispensable corollary of effective arbitration, provided there is a balance between granting as much assistance as required to aid · the arbitration process and as little assistance as possible to avoid abuses for dilatory purposes. 1 ^t is anticipated that by reducing and strengthening court assistance at the same time, the P.I.L. Act provides a legal framework which will eff ectively strike such a balance.

27 On these issues see Supreme Court case West/and, reported in Bulletin of tk Swiss Arbitration Association 1984, p. 203 and Habscheid, "Zum Problem der Mehrparteienschiedsgerichtsbarkeit", Swiss Essays on Inurnational Arbitration, l.C.C.A. Congress 1984, p. l 73.

28 Bucher/Tschanz, p. 62.

29 This was for instance affirmed under French law in a case before the Paris Tribunal de Grande Instance, Setec, Revue de l'arbitrage 1987, p. 63.

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SWISS PRIVATE INTERNATIONAL LAW ACT

CHAPTER 12: INTERNATIONAL ARBITRATION

I. Scope of application. Seat of the arbitral tribunal Article 176

1. The provisions of this chapter shall apply to any arbitration if the. sea~ of the arbitral tribunal is in Switzerland and if, at the time when the arb1trat10n agreement was concluded, at least one of the parties had neither its domicile nor its habituai residence in Switzerland.

2. The provisions of this chapter shall not apply where the parties have in writing excluded its application and agreed to the exclusive application of the procedural provisions of cantonal law relating to arbitration. .

3. The seat of the arbitral tribunal shall be determined by the parues, or the arbitration institution designated by them, or, failing both, by the arbitra tors.

II. Arbitrability Article 177

L Any dispute involving property³⁰ may be the subject-matter of an arbitr~tion.

2. If a party to the arbitration agreement is a state or an enterpnse or

?rganisat.ion controlled by it,³¹ it cannot rely on its own law in order to c?ntest its capacity to be a party to an arbitration or the arbitrability of a dispute covered by the arbitration agreement.

III. Arbitration agreement Article 178

1 ..

A_s regards its form, an arbitration agreement shall be valid if m.ade. in wn.tmg, by ~el~gram, telex, telecopier or any other means of commumcat10n wh1ch perm1ts 1t to be evidenced by a text.

2. As regards its substance, an arbitration agreement shall be valid if it con~orms either to the law chosen by the parties, or to the law governing t~e

· subject-matter of the dispute, in particular the law governing the mam contract,³².or if it conforms to Swiss law.

30 ln French: "de nature patrimoniale"-in German: "jeder vermôgensrechtliche Anspruch"-in ltalian: "qualsiasi pretesa patrimoniale". The term covers any kind of property (real and persona) property, tangible and intangible assets of ail kind}.

31 In French: "une entreprise dominée ou [une] organisation contrôlée"-in German: "ein staatlich beherrschtes Unternehmen oder eine staatlich kontrollierte Organisation"-in Italian: "un' impresa dominate ... o un' organizzazione controllata da uno Stato".

32 In French: "contrat principal"-in German: "Hauptvertrag"-in Italian: "contratto principale".

This means of course the contract in connection with which the arbitration agreement was made.

Pt. 3] Court Assistance in International Construction Arbitration in Swit;:.erland 353 3. The validity of an arbitration agreement cannot be contested on the ground that the main contract may not be valid or that the arbitration agreement concerns disputes which have not yet arisen.

IV. Arbitral tribunal J. Constitution

Article 179

1. The arbitrators shall be appointed, removed or replaced in accordance with the agreement of the parties.

2. In the absence of such an agreement, the matter may be referred to the court where the arbitral tribunal has its seat: the court shall apply by analogy the provisions of cantonal law concerning the appointment, removal or replacement of arbitrators.

3. Where a court is called upon to appoint an arbitrator, it shall make the appointment, unless a summary examination shows that no arbitration agreement exists between the parties.

2. Challenge of arbitra/ors

Article 180

}. An arbitrator may be challenged:

(a) if he does not meet the requirements agreed by the parties;

(b) if the arbitration rules agreed by the parties provide a ground for challenge; or .

( c)

if

circumstances exist that give rise to justifiable doubts as to his independence.

2. A party may challenge an arbitrator whom it has appointed or in whose appointment it has participated only on groùnds of which it became aware after such appointment. The ground for. challenge must be notified to the arbitral tribunal and to the other party w1thout delay.

3. In the event of a dispute and to the extent to which the parties have not determined the procedure for the challenge, the court of the scat of the arbitral tribunal shall decide; its decision is final.

V.

Lis pendens³³

Article 181

The arbitral proceedings shall be pending from the time when one of the

s³ This notion, which in the present context may be unfamiliar to non-Continental jurîsts, serves a fonction comparable to that of the "commencement of the proceedings".

/

parties submits its request to the arbitrator or arbit~ators. designated in .the arbitration agreement or, in the absence of such des1gnat1on, from the t1me when one of the parties initiates the procedure for the constitution of the arbitral tribunal.

VI. Procedure 1. Principle Article 182

1. The parties may, directly or by reference to arbitration rules, determi~e the arbitral procedure; they may also submit it to a procedural law of the1r

choice. ·

2. Where the parties have not determined the procedure, the arbitral tribunal shall determine it to the extent necessary, either directly or by reference to a law or to arbitration rules. · ·

3. Whatever procedure is chosen, the arbitral tribunal shall ensure equal treatment of the parties and the right of the parties to be heard in an adversarial procedure. ³⁴

2. Provisional and protective measures Article 183

1. Unless the parties have agreed otherwise, the arbitral tribunal may, at the request of a party, order provisional or protective measures.

2: If th~ party so ordered does not comply therewith voluntarily, the arbitral tribunal may request the assistance of the competent court. Such court shall apply its own law.

3. The arbitral tribunal or the court may make the granting of provisional or protective measures subject to the provision of appropriate security.

3. Taking evidence Article 184

1.

The arbitral tribunal shall itself take the evidence.

2. Where the assistance of state authorities is needed for taking evidence, the arbitral tribunal or a party with the consent of the arbitral tribunal may request the assistance of the court of the seat of the arbitral tribunal. Such court shall apply its own law.

34 ln French: "en procédure contradictoire"-in German: "in einem kontradiktorischen Verfahren"- in ltalian: "in contraddittorio". The translation should not be construed, of course, as a choice of

"adversarial" against "inquisitorial" procedure.

Pt. 3] Court Assistance in International Construction Arbitration in Swit~erland 355 4. Other judicial assistance

Article 185

For any further judicial assistance the court of the seat of the arbitral tribunal shall have jurisdiction.

VII. J

urisdiction Article 186

1. The arbitral tribunal shall decide on its own jurisdiction.

2. Any objection to its jurisdiction must be raised prior to any defence on the merits.

3. The arbitral tribunal shall, in general, decide on its jurisdiction by a preliminary decision.

VIII. Decision on the merits

J. Applicable law Article 187

I. The arbitral tribunal shall decide the dispute according to the rules of law chosen by the parties or, in the absence of such a choice, according to the rules oflaw with which the case has the closest connection.

2. The parties may authorise the arbitral tribunal to decide ex aequo et bono.

2. Partial award

Article 188

Unless the parties have agreed otherwise, the arbitral tribunal may make partial awards.

3. Arbitral award

Article 189

1. The arbitral award shall be made in conformity with the rules ofprocedure and the form agreed by the parties.

2. In the absence of such agreement, the award shall be made by a majority decision, or, in the absence of a majority·, by the presiding arbitrator alone.

1 t shall be in writing, reasoned, dated and signed. The signature of the presiding arbitrator shall suffice.

IX. Finality. Setting aside 1. Principle

Article 190

1. The award is final from the time when it is communicated.

2. Proceedings for setting aside the award may only be initiated:

(a) where the sole arbitrator has been incorrectly appointed or where the arbitral tribunal has been incorrectly constituted;

(b) where the arbitral tribunal has wrongly declared itself to have or not

to have jurisdiction; .

(c) where the award has gone beyond the daims submitted to the arbitral tribunal, or failed to decide one of the daims;

(d) where the principle of equal treatment of the parties or their right to be heard in adversarial procedure³⁵ has not been observed.

(e) where the award is incompatible with public policy.

3. As regards preliminary decisions, setting aside proceedings can only be initiated on the grounds of the above paragraphs 2(a) and 2(b); the ume- limit runs from the communication of the decision.

2. Competent court

Article 191

1. Setting aside procee~ings may only be brought before the Federal Supr~'?e Court. The procedure 1s governed by the provisions of the Federal Jud1cial Organisation Act relating to public law appeals.36

2. However, the parties may agree that the court of the seat of the arbitral tribunal sh~ll decide in lieu of the Ferlerai Supreme Court; its decision is final. For th1s purpose the Cantons shall designate a sole Cantonal court.

X.

Exclusion agreements Article 192

1. Where none of the parties has its domicile, its habituai residence, or a busines~ est.ablishment in Switzerland, they may, by an express statement in the arb1trat1on agreement or by a subsequent agreement in writing, exclude all setting aside proceedings, or they may Iimit such proceedings to one or several of the grounds listed in Article 190, paragraph 2.

35 ln French: "en procédure contradictoire" (if. note ad Art. 182). The German and Italian texts do not contain this expression.

36 ln French: "recours de droit public"-in German: "staatsrechtliche Beschwerde"-in Italian "ricorso di diritto pubblico".

Pt. 3]

Court Assistance in International Construction Arbitration in Switzerland

357 2. Where the parties have excluded ail setting aside proceedings and where the awards are to be enforced in Switzerland, the New York Convention of

lOJune 1958 on the Recognition and Enforcement of Foreign Arbitral Awards shall apply by analogy.

XI. Deposit and certificate of enforceability

Article 193

1. Each party may at its own expense deposit a copy of the award with the Swiss court of the scat of the arbitral tribunal.

2. At the request of a party, that court shall certify the enforceability of the award.

3. At the request of a party, the arbitral tribunal shall certify that the award has been made in conformity with the provisions of this Act; such certificate has the same effect as the deposit of the award.

XII. Foreign arbitral awards

Article 194

The recognition and enforcement of a foreign arbitral award is governed by the New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

* * *

Chapter 1 of the Law: "General Provisions" contains the following provisions:

VI. Arbitration agreement

Article 7

If the parties have concluded an arbitration agreement covering an arbitrable dispute, a Swiss court seized of it shall decline jurisdiction unless:

(a) the defendant has proceeded with its defence on the merits without raising any objection;

(b) the court finds that the arbitral agreement is null and void, inoperative or incapable of being performed; or

(c) the arbitral tribunal cannot be constituted for reasons manifestly attributable to the defendant.