Grand-Rue 23 / 1204 Genève / Tél. 022 839 81 50 / Fax 022 839 81 51

Swiss Federal Supreme Court: Validity of a waiver to challenge an arbitral award

October 22, 2014

 

news1

 

Under Swiss Private International Law, an arbitral award is in principle “final” upon communication (art. 190 para. 1 LDIP). However, a challenge can be filed with the Swiss Federal Supreme Court on a limited number of grounds, i.e. violations of procedure or public order (article 190 para. 2 LDIP). Cases of successive challenges of awards for alleged breaches of principles of public order are very rare.

 

Parties not domiciled in Switzerland are however allowed to waive some or all challenges of the award based on the grounds provided by article 190 para. 2 LDIP (art. 192 para. 1 LDIP).

 

In light of the above, the Swiss Supreme Court recently (4A_460/2013 dated 4 February 2014) had to interpret an ICC arbitral clause stating that “all disputes … shall be finally settled under the rules of arbitration of the International Chamber of Commerce”.

 

This is the standard wording of an ICC arbitration clause and the ICC rules (article 28.6 1998 Rules and 34.6 2012 Rules) specify that the award is final.

 

Confirming its previous case law, the Swiss Supreme Court has considered that the use of the words “finally settled” cannot be interpreted as the intent of the parties to waive all grounds for challenge of the award but only an ordinary review by the courts. The consequence is that, notwithstanding such wording, the normal limited grounds for challenging an award rendered in Switzerland under article 190 para. 2 LDIP are still available to the parties.

 

In cases where parties to a commercial contract intend to have an absolutely final award under Swiss law, they are well advised to expressly and clearly state their intent, using an unambiguous wording. We recommend to expressly quote the provision of the law allowing the parties to waive any challenge: “the award is final and the parties waive any possibility of challenge of the award, for any of the grounds mentioned in art. 190 para. 2 LDIP, in application of art. 192 para. 1 LDIP”.

 

However, in our arbitration practice experience, parties rarely accept to make an arbitral award absolutely final (i.e. renounce any and all challenges) in their arbitration clause or agreement.

 

For the full decision (unpublished, in German), search by decision number (4A_460/2013) on: http://www.bger.ch/fr/index/juridiction/jurisdiction-inherit-template/jurisdiction-recht/jurisdiction-recht-urteile2000.htm .

 

Categorised in: