THE AUTHOR:<\/strong> The Swiss Federal Tribunal (\u201cSFT<\/b>\u201d) has the exclusive jurisdiction to hear applications to set aside international awards rendered by arbitral tribunals seated in Switzerland<\/a>. In 2022, the SFT handled \u2013 once again \u2013 a high volume of arbitration-related cases, particularly sports-related matters, issuing no less than 51 decisions on applications to set aside or revise international arbitration awards. Despite this large number of cases, the SFT remained true to its practice of a low success rate with this year\u2019s zero application being successful.<\/p>\n\n\n\n This report provides an overview of a selection of significant decisions issued by the SFT over the past year sorted by the grounds a party can raise in accordance with Article 190(2) Swiss Private International Law Act<\/a> (\u201cPILA<\/b>\u201d).<\/p>\n\n\n\n In a landmark decision <\/span>4A_520\/2021 of 4 March 2022<\/span><\/a> related to the \u201cFIFA-Gate\u201d case, the SFT addressed the issue of the independence and impartiality of the <\/span>Court of Arbitration for Sport (\u201c<\/span>CAS<\/span><\/b>\u201d)<\/span><\/a> arbitrators. The SFT first considered the <\/span>IBA Guidelines on Conflict of Interest (\u201c<\/span>IBA Guidelines<\/span><\/b>\u201d)<\/span><\/a> as a key tool of soft law to harmonize the standards in international arbitration. According to <\/span>Article 3.1.3<\/span><\/a> of the IBA Guidelines, the fact that an arbitrator has been appointed twice or more by the same party in the last three years falls within the waivable \u201cOrange list\u201d. In this case, the Claimant argued that the Chairman did not disclose that he was involved in more than 26 cases involving FIFA in the last three years. The SFT clarified that only cases where the arbitrator was directly appointed by FIFA should be counted as multiple appointments, and that consolidated procedures should only be counted as one appointment. <\/span>The SFT acknowledged that in the end the Chairman\u2019s three direct appointments made by FIFA in the last three years could potentially be seen as problematic under the IBA Guidelines.<\/span> However, the SFT argued that multiple appointments are common in CAS proceedings, especially for FIFA, which has to appoint many arbitrators every year. In this context, the SFT concluded that the Chairman\u2019s failure to disclose any appointments in his initial declaration of independence or to regularly update it during the proceedings is not sufficient to challenge him, unless there are other incriminating elements.<\/span> <\/span><\/p>\n\n\n\n In a previous decision <\/span>4A_462\/2021 of 7 February 2022<\/span><\/a>, the SFT examined whether the Chairwoman of an arbitral tribunal complied with the new <\/span>Article 179(6) PILA<\/span><\/a>, which requires arbitrators to disclose, throughout the entire proceedings, circumstances that could give rise to justified doubts as to their independence or impartiality. The Chairwoman informed the parties on 1 September 2021 that she became partner in a new law firm. Claimant however claimed that Respondent is a key client of the litigation and arbitration practice of that law firm. In its consideration, the SFT first noted that an impression of bias is sufficient to establish a lack of impartiality. However, the SFT found that in this matter there was no appearance of a lack of independence because the deliberations on the case ended on 5 February 2021<\/span> i.e., <\/span><\/i>before the Chairwoman began negotiations with her new law firm. The SFT also stated that while the process of drafting an award could potentially affect the outcome of the award, this was not the case here. The SFT considered that even if there is a temporal gap between the end of the deliberations and the notification of the final award with reasons, the only decisive factor is whether an influence on the outcome of the award was still possible.\u00a0<\/span><\/p>\n\n\n\n In two connected decisions <\/span>4A_344\/2021<\/span><\/a> and <\/span>4A_346\/2021<\/span><\/a>,<\/span> both of 13 January 2022, the SFT dealt with two applications in which the Claimant \u2013 a football association \u2013 did not directly challenge the jurisdiction of the CAS under <\/span>Article 190(2)(b) PILA<\/span><\/a>, but rather the jurisdiction of the FIFA Tribunal. T<\/span>he SFT first clarified that internal <\/span>decision-making bodies within associations are not arbitral tribunals, their decisions are therefore only mere expressions of the will of the association. Such decisions can then be challenged based on <\/span>Article 75 of the Swiss Civil Code<\/span><\/a> (\u201c<\/span>SCC<\/span><\/b>\u201d) before an arbitral tribunal if a valid arbitration agreement exists. However, the SFT held that the only challenge that can be raised under <\/span>Article\u202f190(2)(b)\u202fPILA<\/span><\/a> is the claim that the arbitral tribunal \u2013 in this case, the CAS \u2013 wrongly declared itself competent, rather than challenging the competence of the previous instance. The CAS\u2019 decision, including its reasoning on FIFA\u2019s jurisdiction, could be challenged, but only under the limited control of violation of public policy (<\/span>Article 190(2)(e) PILA<\/span><\/a>).<\/span> <\/span><\/p>\n\n\n\n One of the key issues addressed by the SFT in the decision <\/span>4A_398\/2021 of 20 May 2022<\/span><\/a> related to the <\/span>Clorox v. Venezuela<\/span><\/i> case, was the question of when treaty shopping should be considered abusive. The SFT first acknowledged that it is always difficult to distinguish between legitimate nationality planning and abusive treaty shopping. The SFT then stated that simply (re)structuring investments to benefit from the protection of an investment treaty is not in itself abusive. However, the SFT also indicated that the temporal aspect is decisive in determining whether treaty shopping is abusive. If an investor restructures its investments to benefit from the protection of an investment treaty at a time when a dispute is foreseeable, the protection of the treaty should be denied. However, the SFT added that the criterion of foreseeability must be interpreted restrictively since abuse of rights can only be presumed in exceptional cases. Therefore, the SFT held that the question to be asked is whether a reasonable investor who was in the same situation as the concerned investor at the time of the investment could have reasonably foreseen a particular legal dispute. In the present case, the SFT considered that the restructuring was not abusive because the dispute was not foreseeable at that time.\u00a0<\/span><\/p>\n\n\n\n In decision <\/span>4A_542\/2021 of 28 February 2022<\/span><\/a>, the SFT upheld a lifetime ban for all-football activities imposed on Ricardo Teixeira, former president of the Brazilian Football Confederation. Teixeira argued that the disciplinary sanction would be incompatible with public policy as the sanction would be disproportionate and would violate his personal rights. The SFT noted that in matters of disciplinary sanctions in the field of sport, it will only interfere if the sanction leads to a manifestly unjust result or a shocking inequity. In this case, the SFT held that Teixeira has not sufficiently established that this sanction would jeopardise his economic existence.<\/span> <\/span><\/p>\n\n\n\n In a decision <\/span>4A_242\/2022 of 8 September 2022<\/span><\/a>, the SFT held that the principle of \u201csocial justice\u201d is not part of public policy under <\/span>Article 190(2)(e) PILA<\/span><\/a>. Moreover, the SFT noted that the fact that a norm is part of Swiss mandatory law does not necessarily imply that its violation by the arbitral tribunal would contravene public policy.\u00a0<\/span><\/p>\n\n\n\n In a decision <\/span>4A_100\/2022 of 24 August 2022<\/span><\/a>, the SFT addressed a request for revision of an award under the newly adopted <\/span>Art. 190a PILA<\/span><\/a>. The Claimant argued that one of the arbitrators had a conflict of interest because he previously represented Respondent in proceedings in England. As in its recent decision <\/span>4A_318\/2020<\/span><\/a> in the <\/span>Sun Yang v. WADA<\/span><\/i> case, the SFT confirmed that, despite the existence of a declaration of independence, parties must investigate an arbitrator\u2019s independence, but not to an excessive extent. However, in this instance, the SFT stated that public databases on English court decisions should be consulted when dealing with an English arbitrator. Based on this, the SFT concluded that the previous representation relationship would have been apparent during the proceedings if due attention had been paid. Accordingly, the SFT ruled that it is not acceptable to raise these claims only after several years in the context of revision proceedings.\u00a0<\/span><\/p>\n\n\n\n Despite the increasing number of set aside applications in international arbitration cases brought before the SFT, the chances of success remain low. This year the SFT has consistently confirmed awards rendered by arbitral tribunals and demonstrated a commitment to upholding the principles of international arbitration. SFT\u2019s efficiency and consistency are surely a factor making <\/span>Switzerland<\/span><\/a> a leading venue for international arbitration. <\/span> <\/span><\/p>\n\n\n\n As from 1 January 2023, a new amendment to the <\/span>Swiss Code of Obligations<\/span><\/a> (\u201c<\/span>SCO<\/span><\/b>\u201d) will allow Swiss companies to include arbitration clauses in their articles of associations (Article 697n SCO). This will apply not only to the company itself, but also to its governing bodies, members and shareholders, unless the articles of association specify otherwise. This will surely lead to an increase in the number of arbitration-related cases brought before the SFT.<\/span> <\/span><\/p>\n\n\n\n Overall, it is expected that Swiss international and national arbitration will continue to grow and develop in 2023 and beyond.\u00a0<\/span><\/p>\n\n\n\n ABOUT<\/strong> THE AUTHOR:<\/strong><\/p>\n\n\n\n Patrick Pithon<\/span><\/span><\/strong> is a Swiss-qualified attorney and associate at Bonnard Lawson<\/strong><\/a> in Geneva, Switzerland. His practice focuses on international commercial and sports arbitration, as well as domestic and cross-border litigation. You can reach<\/span> him at <\/span><\/span>patrick.pithon(at)bonnard-lawson(dot)com<\/span><\/span><\/a>\u00a0<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" In 2022, the Swiss Federal Tribunal has consistently confirmed awards rendered by arbitral tribunals and demonstrated once more its commitment to upholding the principles of international arbitration. 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Patrick Pithon<\/span><\/span><\/strong>, <\/span><\/span>Swiss-qualified attorney and associate at Bonnard Lawson<\/strong><\/a><\/span><\/span><\/p>\n\n\n\n
\n\n\n\nImproper Constitution of the Arbitral Tribunal (<\/span><\/strong><\/b>Art. 190(2)(a) PILA<\/span><\/b><\/strong><\/a>)<\/span><\/strong><\/b>\u00a0<\/strong><\/span><\/h2>\n\n\n\n
Incorrect Decision on Jurisdiction (<\/strong><\/span><\/b>Art. 190(2)(b) PILA<\/span><\/strong><\/b><\/a>)<\/span><\/b>\u00a0<\/span><\/h2>\n\n\n\n
Violation of Swiss Public Policy (<\/span><\/strong><\/b>Art. 190(2)(e) PILA<\/span><\/b><\/strong><\/a>)<\/span><\/strong><\/b>\u00a0<\/strong><\/span><\/h2>\n\n\n\n
Request for a Revision Against an Arbitral Award (<\/strong><\/span><\/b>Art. 190a PILA<\/span><\/strong><\/b><\/a>)<\/span><\/b>\u00a0<\/span><\/h2>\n\n\n\n
Outlook for 2023<\/span><\/strong><\/b>\u00a0<\/strong><\/span><\/h2>\n\n\n\n
\n\n\n\n