Revised Swiss Rules of International Arbitration: Boon or Bane?

Revised Swiss Rules

Revised Swiss Rules of International Arbitration: Boon or Bane?

The Swiss Chambers’ Arbitration Institution (SCAI) has recently been renamed the Swiss Arbitration Centre, which will handle cases under the amended Swiss Rules of International Arbitration. This article summarises the most significant aspects of this reform, which aims to further establish Switzerland as a desirable location for arbitration.

Introduction

Swiss Rules of International Arbitration were amended in 2012 to include an emergency arbitrator process and to improve the efficiency of arbitration procedures. In 2021, a Swiss Arbitration Centre was established as the successor to the Swiss Chambers’ Arbitration Institution, at the suggestion of the Swiss Arbitration Association (ASA) and the Swiss Chambers of Commerce (SCAI). This reorganisation also necessitated a thorough examination of the Swiss Rules in light of recent international developments and practical experience. A thorough dialogue with practitioners and users was conducted throughout the modification process. The new Swiss Rules will enter into effect on 1 June 2021, concurrent with the commencement of operations of the Swiss Arbitration Centre.

Among other things, the Swiss Rules have been amended to reflect the corporate changes connected with SCAI’s transition into a Swiss corporation, as well as the institution’s increased role in overseeing the proceedings. Significant revisions include revised rules on multi-party and multi-contract procedures, as well as numerous adjustments designed to simplify the process by allowing for paperless filings and enabling remote hearings when necessary. Additionally, many modifications were made to the Rules’ terminology, structure, and consistency to simplify their usage and increase their predictability. The 2021 Swiss Rules’ main characteristics are summarised here.

Changes in the institution’s name & Corporate structure

SCAI becomes the Swiss Arbitration Centre on an institutional level. From a business standpoint, the Centre is a Swiss corporation whose current owners are ASA and the Swiss Chambers of Commerce that participate in SCAI. Complete continuity is ensured: arbitration provisions referencing SCAI remain legal and enforceable, and the Swiss Arbitration Centre will recognise and apply them, with Notices of Arbitration to be submitted at the Secretariat’s locations in Geneva, Zurich, or Lugano. The standard arbitration provision is appropriately modified. All users and their counsel are encouraged to include the “Swiss Rules of International Arbitration of the Swiss Arbitration Centre” into any contract entered after 1 June 2021.

Role of Institutions

The new Rules reinforce the institution’s function and the Court’s and Secretariat’s participation. The institution’s gatekeeping role in determining whether a case may continue is clarified via the use of a refined test in multi-contract scenarios. Along with the standard prima facie examination of whether there is manifestly no arbitration agreement referencing the Swiss Rules, the new Article 5 (“Administration of Claims”) requires the Court to determine whether the arbitration agreements are “manifestly incompatible” if multiple contracts are invoked. When the Court chooses to administer the case, the arbitral tribunal or single arbitrator maintains the authority to rule on any jurisdictional question, including an argument that claims filed under separate arbitration agreements should not be resolved concurrently (Article 23(1)).

All communications shall be sent electronically to the Secretariat as per Article 16(2). It will inform the Parties of awards as per Article 34(5); under the former Rules, the arbitral tribunal was responsible for this duty. The Secretariat will hold cost deposits rather than the arbitral tribunal (Appendix B, Section 4.1). To reflect the Secretariat’s increased workload, the revised Schedule of Costs in Appendix B includes slightly higher administrative costs (charged on amounts in dispute exceeding CHF 300,000 and capped at CHF 75,000 for amounts in dispute exceeding CHF 250 million), which are offset by a scale providing for slightly reduced arbitrator fees. In general, and notwithstanding other innovations in Appendix B addressing expenses, the costs of arbitration under the 2021 Swiss Rules are expected to be cheaper than under the previous rules, which will be welcomed by users.

Arbitrations involving Multi Parties & contracts

Along with the above-mentioned Article 5 on multi-contract disputes, a major aspect of the 2021 amendment is the insertion of specific rules addressing multi-party circumstances. Article 4(2), a very unique provision, was previously included in the 2004 Swiss Rules and has proved effective over the years owing to its adaptability. However, it concentrated on the arbitral tribunal’s powers and lacked a discussion of the institution’s function. Article 4(2) has been repealed in favour of a new Article 6 on “CrossClaim, Joinder, and Intervention,” which addresses situations in which a respondent asserts claims against another co-respondent (cross-claim) or an additional party (joinder), or in which an additional party seeks to intervene in the proceedings by asserting claims against an existing party (intervention).

Article 6(1) requires the targeted party to submit a separate notice of claim, with Article 3 regarding the filing of a Notice of Arbitration applicable mutatis mutandis. Such notice of claim must be given to the Secretariat prior to the arbitral tribunal’s formation (Article 6(2)), which will then conduct a prima facie review in line with Article 5 (as stated above) if the party seeking to be joined objects within 15 days. The arbitral tribunal retains jurisdiction to determine the admissibility of a request made after its establishment (Article 6(3)). Additionally, Article 6(4) envisions the potential of a third party intervening in the proceedings “in a role other than that of an extra party”, enabling tribunals to “decide whether to authorise such participation and its terms.” The provision is intended to add flexibility, particularly when a third party seeks to intervene in favour of one of the parties or when one of the parties seeks to extend the effect of an arbitral award to a third party.

The regime of Article 6 is designed to facilitate the organisation of the proceedings and the establishment of the arbitral tribunal at the beginning of the case. It has no effect on the arbitral tribunal’s jurisdiction, which remains a matter for the arbitral panel to determine. Without any substantial modifications, the new Article 7 on consolidation replaces the old Article 4(1) of the 2012 edition. Consolidation decisions are still made entirely by the Court.

Involving the role of Technology and Other developments

Numerous changes have been made to suit technology advancements and contemporary norms. Particularly, if a claimant is satisfied with notifying the respondent by e-mail (Article 3(1)), and this paperless filing option is equally accessible to the respondent mutatis mutandis (Article 4(1)). Article 27(2) authorises the arbitral tribunal to conduct sessions “remotely by video conference or other suitable methods” after discussing with the parties. This should provide for complete discretion in deciding between an in-person hearing and a remote hearing (where a hearing is needed) in each instance. When considering procedural regulations, data protection and cybersecurity concerns must be addressed “to the degree necessary to guarantee an acceptable level of compliance and security” (Article 19(2)).

Several other amendments take into account lessons learned over the last decade, such as strengthened requirements for arbitrators’ independence/impartiality and related disclosures (Article 12), the appointment of a tribunal’s secretary (with the consent of the parties, Article 16(3)), and the possibility for an arbitral tribunal to object to the appointment of an arbitrator (Article 40).

In addition to the already existing possibility for the arbitral tribunal to take steps to facilitate settlement (Article 19(5)), a new provision expressly states that the parties may agree to resolve the dispute through mediation, such as under the Swiss Rules of Mediation, or through any other form of alternative dispute resolution at any time during the proceedings (Article 19(6)).

Customizing time constraints to suit the requirements of users

The Swiss Rules have been fine-tuned to guarantee the efficiency of some procedural stages while also increasing flexibility to suit the parties’ unique requirements on an individual basis. For example, in multi-party actions in which the parties have not agreed on a process for establishing the arbitral tribunal, the claimant(s) and respondent(s) will no longer have 30 days to nominate an arbitrator for each group of parties totalling 60 days. Rather than that, the Court will determine a time limit in its discretion, taking into consideration the parties’ current requirements (Article 11(4)).

Conclusion

The Swiss Rules 2021 modification is a refinement of current rules with few substantive changes, sending a message of continuity for a system that has proved very acceptable over many years of experience. This would enable the new Swiss Arbitration Centre to benefit from SCAI’s expertise and efficient work processes, while also enhancing the institution’s supervision role.

 

Author(s) Name: Shivendra Nath Mishra

He is a Law student at Chanakya National Law University with a keen interest in International Arbitration Law and Intellectual property Law.