Swiss Arbitration Joint Seminar by Homburger and Rentsch Legal January 24, 2013
Welcome Rudolf Rentsch, Rentsch Legal André Regli, Ambassador of Switzerland Felix Dasser, Homburger January 24, 2013 2
Switzerland as Venue for Dispute Resolution Felix Dasser, Homburger January 24, 2013 3
CZ SK CH: Close, but not too close January 24, 2013 4
... and quite similar Similar size 41,000 km 2 vs. 78,900 km 2 (CZ) and 48,850 km 2 (SK) 8m people vs. 10.5m (CZ) and 5.4m (SK) Swiss politicians January 24, 2013 5
with increasing trade relationships (in million CHF) Czech Republic Slovak Republic Export Import Export Import 2000 758 604 216 331 2011 1568 2153 497 669 +107% +256% +130% +102% FDI: CH Ranking 6 15 January 24, 2013 6
General Framework Internal stability, external neutrality Independence (not part of the European Union) Open market, own currency Reliable, modern infrastructure Long tradition as venue for international dispute resolution since 19th century Legal practitioners with extensive international experience and language skills January 24, 2013 7
Statistics of the International Chamber of Commerce Switzerland as venue (total number of new cases 2008-2011): France Switzerland UK USA 436 385 266 162 Swiss arbitrators (average of yearly percentage 2008-2011): Swiss UK German French 13.7% 13% 8.8% 7.8% Law chosen by the parties (average of yearly percentage 2008-2011): English Swiss US French 12.7% 11.5% 8.6% 7.1% January 24, 2013 8
Why Swiss Arbitration? (1 2) Often chosen as neutral and convenient venue In more than 70% of international commercial arbitration cases, none of the parties are Swiss Traditional "Arbitration Cluster" guarantees expertise and infrastructure Swiss Arbitration Association (www.arbitration-ch.org) Two globally acknowledged arbitration centers: Geneva and Zurich Far-reaching subject-matter arbitrability: any dispute involving a financial interest is arbitrable Efficient case management with short hearings, but still full right to be heard January 24, 2013 9
Why Swiss Arbitration? (2 2) Power of arbitral tribunals to issue interim measures of protection Consensual approach: Swiss lawyers are used to de-escalate disputes Many arbitration cases are settled, often with the help of the arbitrators Very flexible Arbitration Act with emphasis on party autonomy Merely 19 mostly common-sense articles Experienced and arbitration-friendly courts Very efficient dispatch of challenges against awards January 24, 2013 10
Arbitration Rules in Switzerland Most arbitration proceedings are institutional, only few are ad hoc. The most often used commercial arbitration rules: International Chamber of Commerce (revised 2012) Swiss Rules of International Arbitration (revised 2012) UNCITRAL Arbitration Rules (ad hoc; revised 2010) A "semi-alternative": the Liechtenstein Rules 2012 January 24, 2013 11
Is Arbitration Recommendable, Anyway? January 24, 2013 12
If not: Litigation in Switzerland (1 2) Choice of forum provisions acknowledged as a matter of course Cf. 2007 Lugano Convention Efficient courts with ample experience in international cases No "homeward bias" Also acceptable with a Swiss counterparty Unlikely to attract "nuisance suits" Advance on costs Very little document production "Loser pays" Strict proof required No punitive damages January 24, 2013 13
Litigation in Switzerland (2 2) Emphasis on written evidence No protracted cross-examination Courts help parties to find early settlement 2/3 of all cases at the Zurich Commercial Court are settled at an early stage cost-efficient, less disruptive for business, companies can do business together again Easy enforcement throughout Europe under the Lugano Convention But: local-language requirement (except, partly, for exhibits) January 24, 2013 14
Swiss Contract Law for Convenience Swiss contract law is similar to German, Czech and Slovak law Codified law: Code of Obligations Good faith as core test for the interpretation of contracts Short contracts suffice Very little mandatory law Ample experience of lawyers and judges arbitrators with international transactions and agreements under Swiss contract law January 24, 2013 15
Conclusion Swiss venue and law are well-established tools in international commerce if projects turn sour. January 24, 2013 16
The Swiss Rules of International Arbitration Mariella Orelli, Homburger January 24, 2013 17
Swiss Rules of Arbitration For the text of the Swiss Rules and further information relating to arbitration under the Swiss Rules, including model arbitration clause and costs, see: www.sccam.org January 24, 2013 18
Swiss Rules: Main Features Tradition Innovation Cost effectiveness January 24, 2013 19
Swiss Rules: Tradition The Swiss Rules are: new rules (in force since 2004, revised 2012) BUT tested rules since based on the UNCITRAL Rules January 24, 2013 20
Swiss Rules: Innovation Major differences between the Swiss Rules and the UNCITRAL Rules: Swiss Rules: rules for institutional arbitration Swiss Rules as a cutting edge set of arbitration rules, e.g. multy-party proceedings, jurisdiction for set-off claims fast-track procedure January 24, 2013 21
Swiss Rules: Innovation (cont.) Administration "Light" institutional arbitration BUT very limited involvement of the institution impact on costs and efficiency January 24, 2013 22
Swiss Rules: Further "Assets" The Swiss Chambers are experienced arbitration institutions Perfect fit for arbitration in Switzerland and for truly international cases Free choice of the arbitrators, language and counsel January 24, 2013 23
Swiss Rules: Cost Effectiveness Tools to ensure efficiency: Provisional timetable Conscious decision against ICC-style terms of reference or scrutiny of the award Mandatory fast-track arbitration for cases with less than CHF 1 Mio in dispute
Swiss Rules: Cost Effectiveness Predictable administrative costs Average duration of proceedings: ca. 1 year: significant savings in terms of representation costs! Power of the institution to review the costs fixed by the Arbitral Tribunal for its own work January 24, 2013 25
Pro-Arbitration Bias of the Swiss Courts Georg Naegeli, Homburger January 24, 2013 26
Arbitration Friendly Statutory Framework 12 th Chapter (on International Arbitration) of the Private International Law Act (PILA): Only basic rules Ample room for parties and arbitral tribunal to design the procedure Federal Supreme Court (FSC) as only instance for challenges against arbitral awards Only limited grounds for appeal Tendency of Federal Supreme Court to uphold challenged awards January 24, 2013 27
Grounds for Appeal a) Improper Constitution of Arbitral Tribunal b) Jurisdiction c) Infra or ultra petita d) Due process (right to be heard; equal treatment of parties) e) (Procedural or substantive) public policy January 24, 2013 28
Statistics Number of Decisions 1989 HY 2009 25 20 15 10 5 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 HY January, 2013 29
Decisions on the Merits 1989 HY 2009 (229) 6.5% (partial) Setting aside (15) 93.5% January, 2013 30
2009 2012: Increasing Case Numbers! 1989 HY 2009: 229 decisions on the merits Ø 11 per year 2009 2012: 89 decisions on the merits - Ø 30 per year Court of Arbitration of Sport cases! 7.14% challenges upheld Success rate higher in sport arbitration cases vs. commercial cases: 7.84% vs. 6.38% January 24, 2013 31
Number of Cases Success of Appeal under Art. 190 PILA 120 dismissed % 100 80 10.1 % 89.9 % 3.9 % 96.1 % 100 % 60 40 20 3.1% 96.9 % 5 % 95 % 0 lit. a lit. b lit. c lit. d lit. e Art. 190 Para. 2 PILA January, 2013 32
Grounds for Appeal a) Improper Constitution of Arbitral Tribunal: 3.1% b) Jurisdiction: 10.1% c) Infra or ultra petita: 5% d) Due process (right to be heard; equal treatment of parties): 3.9% e) (Procedural or substantive) public policy: 0% January 24, 2013 33
1 st Expample of Violation of Substantive Public Policy Footballer terminates fix term contract two years before expiration New club signs hold-harmless provision Award: EUR 12 million damages to the former club. New club bankrupt. Footballer: no cash. FIFA: 90 day deadline to pay the fine, failing which ban on footballer FSC: Violation of fundamental privacy rights excessive curtailment of the footballer's economic freedom neither proportionate nor necessary sanction. January 24, 2013 34
Deferral of Swiss Courts to Arbitral Tribunals PILA: Swiss courts shall decline jurisdiction in favor of arbitral tribunal if parties have concluded an arbitration agreement Exception (inter alia): Void arbitration agreement FSC: only summary examination of the validity of the arbitration agreement Only if seat of arbitration is in Switzerland Respect of the Kompetenz-Kompetenz of the arbitral tribunal. Confirmation of jurisdiction by arbitral tribunal can be appealed to the FSC. Full review by FSC January 24, 2013 35
Arbitration and Bankruptcy I (The Vivendi Decision 2009) Multi-party arbitration between companies of the Vivendi group, the Deutsche Telekom group and a Polish entity named Elektrim Elektrim declared bankrupt Polish bankruptcy law: termination of pending arbitrations Arbitral tribunal terminated proceedings against Elektrim. Reason: Elektrim lost subjective capacity to be a party to arbitrations January 24, 2013 36
Arbitration and Bankruptcy II (2012) "If the foreign entity has legal capacity according to the law at its place of incorporation, it is also capable of standing as a party in an international arbitration seated in Switzerland. Limitations specifically referring to arbitral proceedings that are provided by the law at the domicile or place of incorporation and that leave the legal capacity of the foreign entity untouched are in principle irrelevant from the point of view of the capacity to be a party to an arbitration seated in Switzerland [ ]." (Working translation) January 24, 2013 37
Closing Remarks Switzerland gives a lot of credit to international arbitration in Switzerland. Long standing tradition, educated practitioners Courts value party autonomy Awards only reversed if the tribunal had no jurisdiction, or in case of gross flaws Otherwise, arbitration prevails! January 24, 2013 38
Q & A Discussion January 24, 2013 39
Cocktails! Dr. iur. Rudolf Rentsch, LL.M. rudolf.rentsch@rentsch.cz T +420 222 233 323 Prof. Dr. Felix Dasser, LL.M. lic. iur. Mariella Orelli, LL.M. Dr. iur. Georg Naegeli felix.dasser@homburger.ch mariella.orelli@homburger.ch georg.naegeli@homburger.ch T +41 43 222 10 00 T +41 43 222 10 00 T +41 43 222 10 00 Homburger AG Prime Tower Hardstrasse 201 CH-8005 Zurich P.O. Box 314 CH-8037 Zurich www.homburger.ch