Article 183(1) of the Swiss Federal Statute on Private International Law (PILA) provides that "unless the parties have otherwise agreed, the Arbitral Tribunal may, on motion of one party, order provisional or conservatory measures".

Article 190(2) of the PILA permits a (final or partial) arbitral award to be set aside for a limited number of reasons listed in Article 190(2)(a) to (e). In addition, Article 190(3) of the PILA provides for the setting aside of "preliminary" awards on the grounds listed in Article 190(2)(a) and (b) of the PILA.

In January 2008, X, a Swiss company, and Y, a company incorporated in The Netherlands, entered into a licence agreement under which X was granted an exclusive right to sell clothing of the brand A (the contract). X sold the clothing in boutiques named "A". Article 14 of the contract set out grounds for immediate termination of the contract, including gross breach of contract. Article 16 set out the process to be followed in case of such immediate termination, which included an undertaking by the licensee to sell off its remaining stock of A-brand clothing as quickly as possible. The contract also provided for arbitration under the Expedited Arbitration Rules of the World Intellectual Property Organization (WIPO). The seat of the arbitration was to be Geneva.

By letter dated 26 January 2009, Y terminated the contract with immediate effect. Following the termination, a dispute arose regarding the sale of outstanding stock in X's possession. Y offered to repurchase it for EUR 1,080,005.45. However, X rejected the offer. X also renamed the "A" boutiques, but continued to sell its remaining A-brand merchandise in them.

X commenced arbitration against Y, claiming, among other things, damages for unlawful termination of the contract. It also filed a request for interim measures from the arbitration tribunal, seeking to restrain Y from taking any steps that would prevent X from selling off its remaining stock of A-brand merchandise, and requesting permission to sell off such stock by any means it deemed appropriate.

Y also filed a request for interim measures, seeking various relief, including orders requiring X to:

On 7 October 2009, the sole arbitrator rendered a decision entitled "sentence préliminaire" (preliminary award) in respect of the interim measures sought by the parties. He ordered X to transfer its remaining stock of A-brand merchandise to Y, make an inventory of that stock and transfer the registration for the websites in dispute to Y. The arbitrator ordered Y to pay X an the interim amount of EUR 1,080,005.45, being the amount offered by Y for the stock back in July 2009. The arbitrator denied all the other requests.

X filed a petition to set aside the preliminary award under Article 190(2) of the PILA, arguing that the sole arbitrator had ruled extra petita, had violated its right to be heard and had rendered a decision in violation of the ordre public. The main issue before the Federal Tribunal, however, was whether a petition to set aside the arbitrator's preliminary award in respect of the interim measures ordered by the sole arbitrator in the present case by means of a preliminary award was admissible.

The tribunal held that a petition to set aside pursuant to Article 190 of the PILA is only admissible in respect of an award. This conclusion is in line with the prevailing view in legal doctrine. The award can either be a final award or a partial award. Under Swiss law, a partial award means an award dealing with a quantitatively limited part of the issue at stake or with some but not all of the prayers for relief submitted by the parties. In limited circumstances, an appeal is also admissible against interim or preliminary awards dealing with one or more substantive or procedural issues but without determining the whole arbitration. However, the Federal Tribunal held that an appeal is inadmissible against simple procedural orders by the arbitral tribunal that can be modified or overturned by the tribunal during the course of the arbitration.

The Federal Tribunal noted that this was the first time that it had ruled on tribunal-ordered interim measures pursuant to Article 183 of the PILA. The tribunal observed that it was unanimously accepted in legal doctrine that such measures were neither final nor partial, nor interim nor preliminary awards and that, therefore, they were not open to appeal pursuant to Article 190 of the PILA.

The tribunal then considered whether the arbitrator's orders in this case constituted interim measures. It defined interim measures as "measures which a party may request for the interim protection of its rights for the duration of the proceedings on the merits, in some instances even before such proceedings on the merits have been initiated". The tribunal held that interim measures generally fall into three categories:

The Federal Tribunal observed that measures ordering interim performance of contractual obligations were often necessary to maintain the status quo, particularly in the case of long-term contracts. Such measures could include interim performance of an obligation in kind and interim payments.

The Federal Tribunal then considered whether X's Article 190 appeal against the arbitrator's preliminary award was admissible. The admissibility of an appeal was a question of the substance or nature of the arbitrator's decision, rather than its form. In other words, the title given to the decision by the sole arbitrator is irrelevant. Following an in-depth examination of the measures ordered by the sole arbitrator, the tribunal concluded that they did constitute interim measures. Apart from the nature of the relief ordered, the Federal Tribunal relied on the arbitrator's own statements as to his jurisdiction based on Article 183(1) of the PILA, the interim character of his decision and the fact that he was not prejudging the merits of the case.

Having concluded that the measures ordered by the sole arbitrator in his preliminary award were interim measures in terms of Article 183 of the PILA, the Federal Tribunal followed the prevailing view in legal doctrine and held that a petition to set aside the decision pursuant to Article 190(2) of the PILA was inadmissible. Therefore, it did not examine the grounds for annulment put forth by X.

This decision is noteworthy particularly because it is the Federal Tribunal's first decision dealing with tribunal-ordered interim measures pursuant to Article 183 of the PILA. In particular, the tribunal confirmed a number of issues which have, until now, only been considered in legal commentary:

It is also interesting to note that the Federal Tribunal, without any obvious need to do so, elaborated rather extensively on the sole arbitrator's decision granting interim relief. In particular, the tribunal observed that the sole arbitrator had let himself be guided by the principle of "balance of prejudices" or "balance of interests" in determining whether to grant the relief sought. Whilst not explicitly taking any position on the question of prerequisites for granting interim relief in international commercial arbitration, this may well prove an indication that the Federal Tribunal endorses the tendency in international arbitration to a more business-oriented approach to interim relief, which is based on a balance-of-interests test and proportionality rather than on the strict and somewhat inflexible prerequisites for granting interim relief that are regularly applied by state courts.