How to set aside Arbitral Awards in Switzerland

In Switzerland, one must distinguish between international and domestic arbitral awards:

• For international awards, i.e. in cases where at least one party has its seat or domicile outside of Switzerland, Articles 190 – 192 of the International Private Law Act (“PILA”) apply to the setting-aside or appeal proceedings as well as for the revision proceedings (the latter applying to cases where new relevant facts or evidence appear that might have changed the outcome of the proceedings if they were previously known).
• For domestic awards, Articles 389 – 395 of the Civil Procedure Code (“CPC”) apply to setting aside/appeal proceedings and Articles 396 – 399 CPC apply to revision proceedings.

The proceedings are governed by the Federal Supreme Court act (“FSCA”), especially Article 77 FSCA.

For international arbitration, the Swiss Federal Supreme Court is the only appeal authority (Art. 191 PILA).

For domestic arbitration, the principle appeal authority is also the Swiss Federal Supreme Court (Art. 389 CPC). However, the parties may expressly agree in the arbitration clause or agreement at any point in time that the award may instead be appealed before the competent cantonal court (Art. 390 CPC). Such competence is defined in the various cantonal rules on the organization of courts and, thus, it varies from Canton to Canton.

For international awards, Article 190(2) PILA provides five exclusive grounds for appeal, which are:

1. Improper appointment of the sole arbitrator or improper constitution of the tribunal;
2. wrongful acceptance or denial of jurisdiction;
3. decision ultra or infra petita;
4. violation of equal treatment or the right to be heard (due process);
5. incompatibility with public policy (ordre public).

For domestic awards, Article 393 CPC contains similar grounds, but additionally allows challenge where

• the award is arbitrary in its result, because it was based on obviously wrong factual findings or on an obvious breach of law or equity, or, lastly,
• where the tribunal’s costs or compensation were obviously set excessively.

The grounds are exclusive and interpreted strictly. Except for the mentioned specific grounds to challenge a domestic award for obvious factual and legal mistakes, the Swiss Federal Supreme Court does not review arbitral awards on the merits of the dispute.

For international arbitration, the Court has held that “the substantive review by the Federal Supreme Court is limited to whether the award withstands the public policy test”. In that context, it has also held that even clear legal errors or obviously wrong factual findings are not, by themselves, enough to establish a public-policy violation.

A setting-aside application for both international and domestic arbitral awards must be submitted within 30 days from the notification/receipt of the award.

Revision proceedings must be filed within 90 days from the discovery of the grounds for review, subject to a ten-year long-stop period except in criminal-influence cases.

No. A setting-aside application does not automatically suspend enforcement. Under the FSCA (Art. 103), appeals generally have no suspensive effect and Article 77 FSCA even excludes for appeals against arbitral awards the automatic suspensive-effect rule that would otherwise apply to certain kinds of civil judgments.

A party may, however, request the granting of suspensive effect from the Federal Supreme Court together with the appeal application.

Yes, but mainly in international arbitration. If none of the parties has its domicile, habitual residence or seat in Switzerland, the parties may, by declaration in the arbitration agreement or later agreement, exclude all or part of the grounds to challenge the award (Art. 192 PILA).

The waiver cannot exclude the right to seek revision where the award was influenced by a felony or misdemeanour under Article 190a(1)(b) PILA.

For domestic arbitration, there is no equivalent broad statutory waiver rule, but the parties may agree in the arbitration agreement on an previous internal appeal mechanism, which must be exhausted before an appeal to the Federal Supreme Court is admissible (Art. 391 CPC). Alternatively, the parties may agree to challenge the award before a cantonal court instead of the Federal Supreme Court (Art. 390 CPC). In the latter case an appeal decision of the cantonal court will also be binding and final and not subject to a further challenge.

The key formal and procedural requirements are as follows:

• Filing deadline: 30 days.
• Form: written submission with requests for relief, reasoning, references to evidence and signature.
• Reasoned grounds: the Federal Supreme Court examines only those grounds and grievances that are explicitly raised and well-reasoned in the complaint. There is a tendency to deny or not even allow appeals due to insufficient and unclear reasoning in support of a particular ground for appeal.
• Documents: the challenged award and relied-upon documents should be attached.
• Language: Federal Supreme Court proceedings are generally conducted in an official Swiss language, usually the language of the challenged decision. However and since rather recently, in arbitration appeals submissions may also be filed in English.
• Costs/security: the party requesting an annulment of the award must normally pay an advance on court fees.

Setting-aside proceedings may result in the court to:

• dismiss the application, leaving the award valid and enforceable;
• declare the application inadmissible;
• set aside the award in its entirety;
• set aside the award in part, where possible; or
• remit the matter to the arbitral tribunal for a new decision.

In both domestic and international arbitration, the Federal Supreme Court may not decide on the merits or the appeal itself and would, thus, remit it to the arbitral tribunal; Article 77 FSCA explicitly restricts the power to decide the appeal on the merits.

In addition, for domestic arbitration, Article 395 CPC expressly provides that the setting aside may be limited to certain parts of the award and that, in case of a remittal, the arbitral tribunal must issue a new award consistent with the appellate court’s reasoning. Moreover, the appellate court may also remit the award to the tribunal for rectification or amendment prior to setting it aside.

Yes. In Federal Supreme Court proceedings, the losing party is generally ordered to pay court costs and to compensate the prevailing party for necessary costs according to the Federal Supreme Court tariff. 

This is a matter of procedural cost allocation and does not depend on whether the underlying contract allowed recovery of court and attorneys’ fees.

The Federal Supreme Court is known for a pro-arbitration and non-interventionist approach. The statutory grounds are narrow, and the Federal Supreme Court does not conduct an appeal on the merits.

There is a huge amount of case law. However, the following points appears noteworthy:

• Public policy is interpreted very narrowly: the award must be incompatible with fundamental legal principles, and it is the result, not merely the reasoning, that matters.
• No disguised merits review: attempts to reargue substantive law for example under the label of public policy or as a breach of equal treatment are inadmissible; the Court regularly rejects attempts to provoke an examination of the application of substantive law under the disguise of other arguments.
• English language submissions: since the 2021 PILA and corresponding FSCA reform, submissions in arbitration-related setting aside proceedings may be filed in English.
• Efficiency of the Federal Supreme Court: setting-aside proceedings last in average only 6 months.
• Likelihood of success: setting-aside applications are generally considered difficult to win. The available legal framework and case law induces a low success rate because review is limited to the exhaustive statutory grounds and excludes merits review. In addition, the Federal Supreme Court takes a strict approach in considering whether a ground for appeal was sufficiently addressed and reasoned. It is rare that an appeal succeeds. Certain statistics indicate that the success rate is below 10 %.