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Supreme Court finds that stringent standard is met for valid waiver of recourse against arbitral award
Practical Law UK Legal Update Case Report 1-506-3176 (Approx. 3 pages)
Supreme Court finds that stringent standard is met for valid waiver of recourse against arbitral award
by Practical Law
| Published on 02 Jun 2011 • International, Switzerland |
PD Dr. Nathalie Voser (Partner) and Anya George (Associate), Schellenberg Wittmer (Zurich)
In a French-language decision of 21 March 2011, published on 19 April 2011, the Swiss Supreme Court refused to enter into the merits of a petition to have an arbitral award set aside, finding that the parties had validly excluded any right of recourse against the award in the arbitration agreement.
Background
Article 192(1) of the Swiss Private International Law Act (PILA) provides that:
"Where none of the parties have their domicile, habitual residence or business establishment in Switzerland, they may, by an express statement in the arbitration agreement or by a subsequent written agreement, fully waive the action for setting aside or they may limit it to one or several of the grounds listed in Article 190(2)".
Facts
On 1 March 2010, an arbitral tribunal constituted according to the ICC Arbitration Rules rendered an award in which it rejected the claim brought by X, a Tunisian national, against the French company, Y SA, and ordered the former to pay the latter about USD 1.2 million for costs and fees. X did not appeal against the final award.
On 15 March 2010, Y SA submitted a request for correction of the award pursuant to Article 29 of the ICC Arbitration Rules, pointing out that some of the dates indicated in the award were incorrect. X then claimed that Y SA was seeking to introduce a new fact into the final award.
On 28 June 2010, the arbitral tribunal issued an addendum to the final award, correcting the dates as requested by Y SA. X petitioned the Supreme Court to have the addendum set aside.
Decision
The Supreme Court dismissed the petition, finding that the arbitration clause in the agreement between the parties constituted a valid waiver of recourse.
The arbitration clause provided:
"Neither party 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."
The Supreme Court recalled its established case law, according to which a waiver of the action for setting aside an arbitral award within the meaning of Article 192(1) of PILA is only to be considered valid in very limited circumstances. It also recalled that an indirect waiver, that is, a clause which refers to arbitration rules containing a waiver, is insufficient. A direct waiver need not necessarily contain a reference to Articles 190 or 192 of PILA. Rather, it is sufficient that the common intention of the parties to waive all right of recourse against the award may be clearly inferred from the wording of their express statement.
The Supreme Court found that the clause included in the agreement between the parties in this case clearly constituted a valid waiver of recourse within the meaning of Article 192(1) of PILA. The fact that the parties used the term "appeal" rather than "action for setting aside" was irrelevant, as such term was to be given a generic meaning and not restricted to a specific type of recourse under Swiss law. The parties therefore validly waived the right to request that the final award be set aside. This applied also to the addendum of 28 June 2010, as the fate of this decision was inextricably linked to that of the final award of 1 March 2010.
Comment
There have until now been relatively few decisions in which the Supreme Court has had to examine a waiver of recourse pursuant to Article 192(1) of PILA, and fewer still in which such a waiver was considered valid. The wording of the clause in this case was, however, sufficiently unequivocal to fulfill the Supreme Court's stringent standard. The Supreme Court also stated in this decision that such waivers apply not only to final awards, but to all associated addenda, including decisions on correction of final awards.