The Swiss Private International Law Act (“PILA”), codified in the Federal Act on Private International Law of 18 December 1987, is likely the most complete codification of private international law in the world. Initially introduced in Swiss legislation to strengthen Switzerland’s position in the field of international law, the PILA was recently revamped to accommodate the rising needs of international business. The revised version of the text entered into force on 1 January 2021 (the “Revised Act” or the “Revised PILA”). Its Chapter 12, dedicated to international arbitration, incorporated new provisions that modernise and clarify the existing provisions, keeping the key features of the initial version largely intact. Recognised as one of the world’s leading international arbitration seats, the Revised PILA will only help Switzerland maintain this status.
The Revised PILA had four main objectives: (1) to codify the case law developed by the Swiss Supreme Court in the field of international arbitration, (2) to provide clarity on matters not explicitly covered by the law, (3) to strengthen party autonomy and (4) to maintain and increase Switzerland’s attractiveness as a seat of international arbitration.
This note aims to (1) provide an overview of the key points introduced by the Revised Act, (2) identify the elements of Chapter 12 that remain unchanged, and (3) highlight certain distinct aspects of the initial text that were not modified by the reform, despite their growing prominence.
Overview of the Revised PILA
The Revised Act expanded the PILA from 19 to 24 provisions, although retaining its conciseness and maintaining its key features. The objective behind the revision is to make the Swiss legislation on international arbitration more user-friendly.
Clarification of the Scope of Application of Chapter 12
Article 176(1) of the PILA initially provided that the provisions of Chapter 12 dedicated to international arbitration apply if at least one of the parties to the dispute had its seat, domicile, or habitual residence outside of Switzerland. For a long time, it remained unclear whether the time of the conclusion of the arbitration agreement or the time of the initiation of the arbitral proceedings should be considered to determine the parties’ seat, domicile, or habitual residence. It is now clear that the time of conclusion of the arbitration agreement is the decisive factor in determining if Chapter 12 is applicable.
The Written Form of the Arbitration Agreement
As a result of the entry into force of the Revised Act, Article 178(1) now provides that the arbitration agreement should be made in writing “or any other means of communication allowing it to be evidenced by text.” This provision now clarifies that emails and other forms of modern communication can serve as valid means to prove the existence of an arbitration agreement.
Article 178(4) also states that the provisions of Chapter 12 apply to arbitration agreements included in “a unilateral transaction or in articles of association”, such as wills, bylaws, or trust deeds. This provision is of particular interest as it lays the foundation for the settlement of disputes arising from unilateral legal acts. It allows disputes to be submitted to a Swiss arbitration tribunal by means of a unilateral arbitration clause included in the act.
The Appointment of Arbitrators
The newly revised Article 179(1) codifies the procedure for appointing arbitrators. According to this provision, unless agreed otherwise, the arbitral tribunal should be composed of three members, with the parties each appointing one member. The presiding arbitrator should then be designated by the two co-arbitrators. In case the parties or the arbitrators fail to comply with these duties regarding the appointment of the arbitral tribunal within thirty days, paragraph 4 provides that the competent state court “shall at the request of a party take the measures required to constitute the arbitral tribunal”. In this case, the state court may appoint at its discretion all members of the arbitral tribunal or only those that were to be appointed by the defaulting party or arbitrator.
In cases where the parties failed to specify in their arbitration agreement the procedure to appoint the arbitrators or “if the members of the arbitral tribunal cannot be appointed or replaced for other reasons”, the Swiss state court at the seat of the arbitration is competent to appoint the arbitrators. To “save” incomplete arbitration agreements, Article 179(2) states that “[i]f the parties have not agreed on a seat or only agreed that the seat of the arbitral tribunal be in Switzerland”, the Swiss state court seized first has the authority to decide on the appointment of the arbitrators.
The Enforcement of Foreign Interim and Provisional Measures
The enforcement of interim and provisional measures can be very challenging if foreign arbitral tribunals order said measures. Whereas under the initial version of the PILA, only arbitral tribunals seated in Switzerland could seek direct court assistance, Article 185a(1) now provides that foreign arbitral tribunals and foreign parties can also request the assistance of the state court at the place where an interim or conservatory measure is to be enforced.
The Introduction of Statutory Provisions on Correction, Interpretation or Amendment of an Award in the Revised PILA
Whereas the initial version of the PILA only provided grounds to set aside an award, the Revised Act introduced provisions regarding the parties’ right to the correction, interpretation, and amendment of a decision.
According to Article 189a, parties can request the arbitral tribunal within 30 days of the communication of the award to “correct typographical and accounting errors in the award, explain specific parts of the award or issue a supplementary award in relation to claims made in the arbitration proceedings that were not considered in the award.” Arbitral tribunals are, therefore, not authorised to modify the substance of the award. Moreover, it is widely recognised that correction, interpretation, and amendment applications do not suspend the time limit to file any setting-aside application.
The Review of Arbitral Awards in the Revised PILA
The Revised Act codified established Swiss case law that recognises grounds for the review of arbitral awards. Article 190a provides for three different grounds for the review of arbitral awards:
- If criminal proceedings have shown that the award was influenced by a criminal act;
- If the party requesting the review of the award discovers new significant evidence that existed before the award was rendered and that it could not have produced in the earlier proceedings despite exercising due diligence;
- If an arbitrator’s lack of impartiality or independence is discovered after the award is issued, despite the party exercising due diligence.
A request for review must be filed within 90 days of the grounds for review coming to light.
The Parties’ Obligation to Express Procedural Objections in the Revised PILA
Article 182(4) now codifies longstanding Swiss jurisprudence according to which parties have a duty to object to any procedural irregularities immediately after they occur. The failure to comply with this obligation results in a waiver of the defaulting party’s right to object to the procedural error in the future. It also prevents the defaulting party from exercising its right to annulment or setting aside the award on the same grounds.
The Use of English for Submissions to the Swiss Federal Tribunal
One of the most significant changes introduced by the Revised Act is the faculty recognised to the parties to submit arbitration-related submissions to the Swiss Federal Tribunal in English. Initially, all submissions, including annulment and set-aside petitions, had to be in one of Switzerland’s official languages (French, German, Italian or Romansh). This shift is expected to boost Switzerland’s attractiveness as an arbitral seat. Since the applicable time limit for annulment and set-aside proceedings is thirty days, the possibility of making submissions in English will allow parties to save time and costs. The Swiss Federal Tribunal will continue to render awards in one of the four official languages of Switzerland, however.
Provisions Remaining Unchanged by the Revised PILA
It is important to highlight that certain distinct aspects of the initial version of the PILA remain unchanged in the Revised Act:
- First, the Swiss Federal Tribunal remains the sole immediate authority to handle set-aside procedures. Allowing a single authority to administer these proceedings has demonstrated both its effectiveness and reliability, partly due to the Swiss Federal Tribunal judges’ extensive experience and understanding of international arbitration. Over the years, the Swiss Federal Tribunal developed a substantive jurisprudence widely incorporated into the Revised Act.
- Second, the PILA continues to be applicable in different types of arbitration proceedings, including investor treaty arbitration, ad hoc and institutional arbitrations, and commercial arbitrations. The Swiss Parliament chose not to create separate and specialised legal regimes for each type of international arbitration proceeding.
- Third, party autonomy is still considered a fundamental principle in the Revised Act. The text aims to regulate only as much as is necessary (and as little as possible).
Matters Not Covered by the Revised PILA
Despite the increasing prominence of certain developments observed in arbitration laws across other jurisdictions, the Swiss Parliament did not address all of them.
An important issue that the Revised Act did not tackle is the confidentiality of arbitration proceedings. Swiss arbitration law, just like many national arbitration laws, is silent on confidentiality.
Parties that designate Switzerland as a seat of arbitration and choose the Swiss Chambers’ Arbitration Institution to administer the arbitration benefit from the confidentiality protections under Article 44 of the Swiss Rules of International Arbitration (the “Swiss Rules”) unless otherwise agreed.
However, in all other cases, including ad hoc arbitrations with a seat of arbitration in Switzerland that are not governed by Swiss Rules, the parties must include an express provision in their arbitration agreement to ensure confidentiality.
Moreover, as arbitration agreements are independent contracts, it is the contracting parties who are solely considered bound by them. Consequently, third parties are neither obligated by nor can they invoke the arbitration agreement for their benefit. It is important to note, however, that both Swiss case law and legal doctrine have developed certain exceptions to this legal principle, including for successions, third-party beneficiary contracts, valid representation, assignments or other forms of transfer, etc.
The recent modifications introduced by the Revised Act have increased Switzerland’s already considerable attractiveness as a seat for international arbitration. The Revised Act manifested and recognised the need to clarify certain issues without burdening or complicating the PILA excessively. It seems to have successfully maintained the principle of party autonomy and the flexibility of Swiss legislation on international arbitration, pillars of the initial act.
For more information on arbitration procedures and rules in Switzerland, see Arbitration in Switzerland.
 Revised PILA, Art. 176(1) (“The provisions of this Chapter apply to arbitral tribunals that have their seat in Switzerland if, at the time that the arbitration agreement was concluded, at least one of the parties thereto did not have its domicile, its habitual residence or its seat in Switzerland.”).
 Revised PILA, Art. 178(1) (“The arbitration agreement must be made in writing or any other means of communication allowing it to be evidenced by text.”).
 Revised PILA, Art. 178(4) (“The provisions of this Chapter apply by analogy to an arbitration clause in a unilateral transaction or in articles of association.”).
 Revised PILA, Art. 179(1) (“The members of the arbitral tribunal shall be appointed or replaced in accordance with the agreement between the parties. Unless the parties agree otherwise, the arbitral tribunal shall comprise three members, with the parties each appointing one member; the members shall appoint a chairperson by unanimous decision.”).
 Revised PILA, Art. 179(4) (“The state court shall at the request of a party take the measures required to constitute the arbitral tribunal in the event that the parties or members of the arbitral tribunal do not fulfil their obligations within 30 days of being requested to do so.”).
 Revised PILA, Art. 179(2) (“In the absence of an agreement or if the members of the arbitral tribunal cannot be appointed or replaced for other reasons, the state court where the arbitral tribunal has its seat may be seized. If the parties have not agreed on a seat or only agreed that the seat of the arbitral tribunal be in Switzerland, the first state court seized has jurisdiction.”).
 Revised PILA, Art. 185a(1) (“An arbitral tribunal with seat abroad or a party to foreign arbitration proceedings may request the state court at the place where the interim or conservatory measure is to be executed to participate. Article 183 paragraphs 2 and 3 apply by analogy.”).
 Revised PILA, Art. 189a(1) (“Unless the parties have agreed otherwise, either party may apply to the arbitral tribunal within 30 days of the award being communicated to correct typographical and accounting errors in the award, explain specific parts of the award or issue a supplementary award in relation to claims made in the arbitration proceedings that were not considered in the award. The arbitral tribunal may itself make corrections, explanations or additions within the same deadline.”).
 Revised PILA, Art. 190a (“A party may request a review of an award if: (a) it has subsequently become aware of significant facts or uncovered decisive evidence which it could not have produced in the earlier proceedings despite exercising due diligence; the foregoing does not apply to facts or evidence that came into existence after the award was issued; (b) criminal proceedings have established that the arbitral award was influenced to the detriment of the party concerned by a felony or misdemeanour, even if no one is convicted by a criminal court; if criminal proceedings are not possible, proof may be provided in some other manner; (c) a ground for a challenge under Article 180 paragraph 1 letter c only came to light after conclusion of the arbitration proceedings despite exercising due diligence and no other legal remedy is available.”).
 Revised PILA, Art. 182(4) (“A party that continues with the arbitration proceedings without objecting immediately to a breach of the rules of procedure of which it is aware or which it would have been aware had it exercised due diligence may not invoke this breach at a later point in the proceedings.”).
 Swiss Rules, Art. 44.