Introduction
On August 29, 2006, for the first time the Swiss Supreme Court granted revision of an international arbitral award. The Court’s acceptance of an action for revision results in the annulment of the award and a direction to the arbitral tribunal to issue a new award taking into account newly discovered facts or evidence identified by the Supreme Court as being susceptible of changing the result of the original award. The Swiss international arbitration statute, the PIL Act, makes no provision as to revision; this remedy was created by the Supreme Court in a 11 March 1992 decision (ATF/BGE 118 II 199, note by P.-Y. Tschanz in (1993) Rev. arb. 115).
Facts
The facts concerned a call option agreement in respect ultimately of 25.1% of the shares of one of Russia’s principal mobile phone operators. The agreement provided for ICC arbitration in Geneva.
The purchaser exercised the call option but the seller had already transferred the shares to third parties. The purchaser then initiated an arbitration under the agreement seeking the shares, and damages in lieu. The seller’s defense was that the call option agreement was void, as contrary to public policy. Of interest in this case, the seller alleged that the purchase of the shares was part of a money laundering scheme. In particular, the seller alleged that the economic beneficiary behind the purchaser company was a former Russian government minister suspected of having abused his power to enrich himself and was "laundering" these funds by purchasing telecoms interests.
The evidence which the seller presented to the arbitral tribunal to demonstrate the presence of money laundering was the following: a written statement from a former employee of the purchaser, and the elaborate corporate structure behind the purchaser. The evidence against comprised statements of a Danish lawyer alleging that he was the economic beneficiary of the purchaser (and not the former Russian minister), and due diligence reports from a number of law firms.
The arbitral tribunal found the evidence of money laundering not to be sufficient, and that the Danish lawyer was the actual economic beneficiary of the purchaser.
The seller first brought an action for the annulment of the award before the Supreme Court, arguing inter alia a violation of public policy. By decision of December 14, 2004 (4P.208/2004 (http://jumpcgi.bger.ch/cgi-bin/JumpCGI?id=14.12.2004_4P.208/2004)), the Supreme Court dismissed this challenge, holding that the arbitral tribunal had considered and denied the allegations of money laundering.
On April 12, 2006, almost two years after the award, the seller brought an action for revision before the Supreme Court. The seller relied on an affidavit from a representative ("Organ") of the purchaser, dated January 13, 2006, which had been submitted in legal proceedings before the Privy Council in London and in particular attested, in reference to three documents, that the highest executive body ("Executivorgan") of the purchaser no longer maintained that the Danish lawyer was the sole economic beneficiary. The three documents in question, which all pre-dated the award, had not been seen by the applicant but only by its lawyers in connection with a related ad hoc Zurich arbitration. The applicant could thus only submit the affidavit, and not the three documents referenced therein.
Legal Principles and their Application in this Case
The PIL Act, which sets out the remedies against international arbitral awards, does not contain any express provision on the revision of arbitral awards. The Supreme Court has, however, recognized the existence of such an action, upon an analogy to Art. 137 of the Swiss Judicial Organization Act, which deals with actions for revision of judgments of the Swiss Supreme Court. As from January 1, 2007, this statute has been replaced by a new one, the Supreme Court Act. With respect to revision of Supreme Court judgments, the general rules have remained the same and thus the rules on the revision of arbitral awards are unaffected by this new statute.
Actions for revision must be introduced with the Supreme Court within 90 days of the applicant’s having learned of the ground for the action. If the Supreme Court accepts the application, it annuls the arbitral award and remits the matter to the same arbitral tribunal, or, if that is impossible, to a newly constituted one, for a new decision.
The grounds for revision of an arbitral award are:
- Where the applicant subsequently learns of new, important facts or discovers cogent evidence that it was not able to submit in the arbitration proceedings.
- Where, in criminal proceedings or some other credit-worthy proceedings, it has been established that the arbitral award was influenced, to the detriment of the applicant, by a crime or misdemeanor, even if no conviction results.
It was the first ground of revision that was invoked in this case. The Court reaffirmed its well-established practice in regard to this ground:
- First, the new facts and evidence must be new, i.e. could not have been submitted by the applicant in the arbitration proceeding, despite its having taken sufficient care to identify the relevant facts and adduce the evidence.
- Second, the new facts and evidence must be material, that is, they must be such as to change the factual basis of the contested award with the result that, upon "an appropriate legal assessment", they would possibly or probably lead to an award with a different result. The judgment maintains an ambiguity in regard to whether a different award must be possible, or probable.
In the case at hand, the Supreme Court found that the new affidavit and the documents referenced therein were "new", as the applicant could with reasonable diligence only have become aware of them, as it had, subsequent to the arbitral proceedings. The Supreme Court also held that this new evidence was capable of establishing facts that the applicant had alleged in the arbitration proceedings but was unable to prove, that is, that the economic beneficiary of the purchaser was not the Danish lawyer, and that therefore the allegations of money laundering were rendered more plausible.
Source: Decision of the Swiss Supreme Court of August 29, 2006, 4P.102/2006/ruo, currently available in German from the website of the Swiss Supreme Court, www.bger.ch (direct link to full text on http://www.bger.ch/fr/index/juridiction/jurisdiction-inherit-template/jurisdiction-recht/jurisdiction-recht-urteile2000.htm - search term "4P.102/2006/ruo").
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
