Swiss Federal Supreme Court is bound by factual findings of lower courts | Practical Law

Swiss Federal Supreme Court is bound by factual findings of lower courts | Practical Law

PD Dr. Nathalie Voser (Partner) and Dr. Petra Rihar (Associate), Schellenberg Wittmer (Zurich)

Swiss Federal Supreme Court is bound by factual findings of lower courts

Practical Law UK Legal Update Case Report 1-503-2038 (Approx. 3 pages)

Swiss Federal Supreme Court is bound by factual findings of lower courts

by Practical Law
Published on 13 Aug 2010Switzerland
PD Dr. Nathalie Voser (Partner) and Dr. Petra Rihar (Associate), Schellenberg Wittmer (Zurich)
The Swiss Federal Supreme Court is bound by factual findings of the court of lower instance. Only in exceptional circumstances can the Supreme Court deviate from this rule, namely, if a party, which requests that the factual findings of the court of lower instance be amended, can prove by way of documentary evidence that the same factual allegations were rightfully brought before that court, but remained unconsidered.

Facts

On 15 September 2004, Y filed a request for arbitration to the Zurich Chamber of Commerce requesting that X be obligated to pay to Y 10% of the fees paid to X by Z amounting to at least CHF 5,400,000. The claim was based, among other things, on the consultancy agreement entered into between X and Y on 12 February 1997. X requested that Y's claim be dismissed because the consultancy agreement had either not been validly concluded or was void for a number of reasons, among others because it contained an inadmissible promise to pay bribery money. In an interim award on the merits of 23 February 2007, the sole arbitrator ruled that the consultancy agreement was valid and binding upon the parties.
Subsequently, X discovered archived documents. With these documents it believed that it would be able to prove that, as a matter of fact, a promise to pay bribery money had been made. X filed an application for revision of the interim award with the Federal Supreme Court. On 14 March 2008, the Federal Supreme Court dismissed X's application for revision, holding that X's disclosure of the newly discovered documents was untimely and the sole arbitrator's decision not to consider these documents was correct (4A_42/2009). On 19 December 2008, the sole arbitrator rendered the final award ordering X to pay to Y CHF 14,168,385.30 plus interest of 5% in instalments with different maturities.
On 2 February 2009, X appealed against the final award before the Federal Supreme Court. X again argued that the consultancy agreement contained an inadmissible promise to pay bribery money and that the award, which considered the consultancy agreement to be valid and binding upon the parties, was incompatible with Swiss public policy. X thereby relied on the newly discovered documents.

Decision

The Federal Supreme Court held that it is bound by the factual findings of the court of lower instance, in casu the sole arbitrator. Only in exceptional circumstances can the Supreme Court deviate from this rule, namely, if a party requesting that the factual findings of the lower instance be amended, can prove by way of documentary evidence that the same factual allegations have already been brought before the court of lower instance, but have wrongly remained unconsidered. Additionally, the Supreme Court held that new allegations can only be brought before it under the requirements of Article 99 of the Federal Supreme Court Act (FSCA). Under Article 99 FSCA, new factual allegations and new evidence can be brought before the Federal Supreme Court only where the decision of the court of lower instance itself gives reason for such new factual allegations and evidence.
The Federal Supreme Court concluded that:
  • The nullity of the consultancy agreement had been an issue before the sole arbitrator.
  • The arbitrator found that no promise to pay bribery money had been made and that the consultancy agreement was thus valid and binding upon the parties.
  • The arbitrator rightly decided not to consider the subsequently disclosed documents.
  • Therefore no evidence for the existence of the promise to pay bribery money existed in the factual findings of the arbitrator.
The Federal Supreme Court considered itself bound by the factual findings of the sole arbitrator and held that the award did not violate Swiss public policy. Consequently, X's appeal was dismissed.