The Swiss Law Provision Allowing Foreign Parties To Waive Their Right To Seek The Annulment Of International Arbitration Awards Is Compatible With The Fair Trial Guarantees
Article 192 of the Private International Law Act (the "PIL Act") allows the parties to waive all or part of the legal grounds for challenges against international awards issued in Switzerland, as long as the parties are not domiciled, seated, and have no business establishment in Switzerland.
In a recent decision, the Swiss Supreme Court held that PIL Act Article 192 is not inconsistent with Article 6 of the European Convention on Human Rights (the "ECHR").
Mr. X, a Tunisian business man, and his three sons concluded four contracts, including an option agreement (the "Agreement") with a French firm Z. Under the Agreement, Z had a call option on all the shares in the Company A held by Mr. X and his three sons (the "Shares").
The Agreement included an arbitration clause which provided the following waiver: "Neither Z. nor the Grantors [i.e. Mr. X and his three sons] shall be entitled to commence or maintain any action in a court of law upon any matter in dispute arising from or concerning this Agreement or a breach thereof except for the enforcement of any award rendered pursuant to arbitration under this Agreement. The decision of the arbitration shall be final and binding and neither party shall have any right to appeal such decision to any court of law."
On June 2007, Z exercised its option but Mr. X and his sons refused to comply. On August 2008, Z started an ICC arbitration against Mr. X and his three sons. The place of arbitration was Geneva. The arbitral tribunal uphold Z's claims and ordered the immediate transfer of the Shares as per Z's option. Mr. X sought the annulment of the award before the Swiss Supreme Court mostly on jurisdictional and public order grounds. Z objected to the admissibility of the challenge relying on the conventional waiver.
The Swiss Supreme Court reaffirmed the validity of a conventional waiver under Swiss law, subject to a clear and unequivocal joint declaration by the parties to exclude all ordinary and extraordinary judicial challenges against the award.
In the case at hand, the Swiss Supreme Court considered that the waiver met the minimum requirements of Article 192. In particular, the Court found no sympathy in Mr. X's argument that the parties had merely intended to exclude ordinary means of...