Swiss arbitration law and practice have defined a fairly clear line as to what type of decisions issued by arbitral tribunals in Switzerland can be challenged before the Swiss Supreme Court, and on what grounds. In a nutshell:
- final awards and partial awards (i.e. awards disposing of whole or part of the parties' claims or counterclaims) must be challenged within 30 days upon their notification on all the (exhaustive) grounds listed in the law (Private International Law Act (PILA) Art. 190.2)1;
- interlocutory awards (that is any decision, whether substantive or procedural, which is one step towards disposing of a claim or counterclaim) can (and must) be challenged immediately only if and to the extent that they relate to jurisdiction or to the appointment of the arbitral tribunal (PILA 190.2(a) and (b)). For instance, interlocutory awards usually include decisions admitting liability but reserving the damage issue for a later stage of the proceeding. Otherwise, challenge against interlocutory awards can be filed only upon notification of the final award2;
- procedural orders issued by the arbitral tribunal3, and decisions of private organs such as arbitral institutions cannot be challenged4.
The Supreme Court had yet to decide on the possible challenge of interim measures issued by arbitral tribunals. It has now done so and excluded the immediate challenge.
Facts
A Dutch company Y, owning exclusive exploitation rights on clothing brand A, entered into a renewable one-year exclusive license agreement with a Swiss company X for the manufacture and distribution of A brand products in various European countries via a network of A boutiques. The license agreement provided that any dispute related thereto should be referred to accelerated arbitration before WIPO in Geneva, with Dutch law applying on the merits.
Few months into the contractual relationship, Y notified the immediate termination of the contract further to alleged serious material breaches, and offered to redeem all unsold supplies for about €1 mio. X disputed the immediate termination as unjustified, and thereafter continued to sell its remaining stock of A brand clothing via the same network of boutiques by then operating under the name B.
X filed for arbitration, seeking full compensation for the damages incurred as a result of the allegedly unjustified premature termination of the contract. Y filed counterclaim in the amount of the damage incurred as a result of the X's alleged material breach, and sought interim measures seeking to preclude X from any further misrepresentation and sales of A brand clothing pending arbitration.
Following an exchange of briefs and a hearing on the interim measures and other procedural issues, the arbitrator issued a so-called "preliminary award" enjoining X, inter alia to transfer the remaining stock of A brand clothing to Y, and Y to pay the "temporary figure" of €1 mio as a sale back price for the stock.
X challenged the "preliminary award" before the Supreme Court on the ground of excess of jurisdiction, infringement of the right to be heard and infringement of public order.
The Supreme Court declined to consider the challenge, stating that only awards can be challenged under Swiss law (Swiss Supreme Court Act Art. 77 and PILA Art. 190 to 192). In line with the overwhelming majority of Swiss scholars, the Court held that interim measures, including orders for provisional performance of the relief, are not constitutive of awards within the meaning of Swiss law, hence are not subject to immediate challenge before the Swiss Supreme Court. In the case at hand, the Court concluded that, regardless of the terminology used by the arbitrator, the "preliminary award" was in fact an interim order for provisional performance of the relief sought pending arbitration, which was immune from any judicial review at this stage of the proceeding.
Commentary
The clear-cut decision of the Court was largely anticipated by scholars, and stands in line with the general tendency of the Court to limit its interference with the arbitration process.
Decision 4A_582/2009 of April 13, 2010, in the matter X SA v Y BV. The full text of the decision, which will be published in the official reports of the Swiss Supreme Court's decisions, is available in its original (French) language at www.bger.ch/fr/index/juridiction/jurisdiction-inherit-template/jurisdiction- recht/jurisdiction-recht-urteile2000.htm
Footnotes
1. Decision 4P.117/2004 of October 6, 2004, in the matter A. B.V. v. B. et Tribunal arbitral CCI, à Genève, published in Swiss Supreme Court Report (ATF) volume 130 part III page 755 ground 1.2.1
2. Decision 4P.74/2003 of September 18, 2003, in the matter A v. B et ad hoc UNCITRAL Schiedsgericht Genf, published in ATF 130 III 76, ground 4
3. Unpublished decision 4A_600/2008 of February 20, 2009, in the matter X v. Y, ground 2.3
4. Unpublished decision 4P.226/2004 of March 9, 2005, ground 3.1
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