In a decision of February 9, 2017, the Swiss Supreme Court ruled (amongst others) that parties in an international arbitration proceeding under Switzerland's International Private Law Act of 1987 cannot benefit from free legal aid available otherwise in regular state judicial and administrative legal proceedings. To this end, the Swiss Supreme Court referred an arbitration party to one of its earlier decision rendered in 1973, where it held that constitutionally guaranteed free legal aid is not available to parties which have voluntarily left the realm of state judicial or administrative legal proceedings in favor of private arbitration.
This legal precedent was incorporated into the law when the Swiss legislator enacted the Federal Civil Procedure Act in 2008, which explicitly provides that free legal aid be excluded in national arbitration, whilst the Swiss International Private Law Act of 1987 - dealing with international arbitration - did no address this topic twenty years ago. With reference to a decision of 2014, the Swiss Supreme Court held anew that free legal aid should be treated alike in both national and international arbitration proceeedings, what position was shared by most legal commentators in the past, as some arbitrational institutions such as CAS have their own funding scheme in terms of free legal aid.
The Swiss Federal Supreme Court did not extend the principle of non-availability of free legal aid to judicial proceedings where state tribunals deal with national and international arbitration matters as a "juge d'appui" assisting for instance in appointing or replacing one or more arbitrators or when dealing with preliminary injunction orders - or as the Swiss Supreme Court did in the present case by reviewing as to whether arbitral tribunals acted in line with the parties' fundamental procedural rights or violated the ordre public in substance. The court provided clearance to this topic which was not clear so far.
The Swiss Supreme Court did not address the topic as to whether a financially distressed party can bow out from an arbitration proceeding and go back to state judicial or administrative legal proceedings in order to benefit again from state free legal aid.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
