Article 192 of the Private International Law Act (PILA) allows parties not domiciled in Switzerland to "by an express statement in the arbitration agreement or by a subsequent written agreement, waive fully the action for annulment."

C (grandfather) had an adoptive daughter A (mother) and a grandson S (grandson), who was married to E (daughter-in-law). On 11 February 2011, the grandson, acting in his capacity as agent for the grandfather, entered into a preliminary contract with his daughter-in-law. Under the main contract, the grandfather was to donate to the daughter-in-law certain real estate, in exchange for which he was to enjoy a lifetime right to use the property and she was to care for him. If no main contract was concluded, a break-up fee of €167,000 would become due. The preliminary contract contained an arbitration clause referring all disputes to a panel of the JSM Permanent Court of Arbitration in Zilina, Slovak Republic, with the seat of the arbitration in Zug, Switzerland. The contract contained a waiver under Article 192 PILA.

The grandfather died on 11 June 2011, and the mother became his successor-in-law. The mother claimed that she was not bound by the preliminary contract. The daughter-in-law then assigned her claim for the break-up fee to B, who requested the arbitral tribunal to order the mother to pay up. By an award dated 9 September 2011, the sole arbitrator affirmed jurisdiction and ordered the mother to pay the €167,000. On 13 October 2011, the mother filed a setting-aside petition to the Swiss Supreme Court. In response, B argued, among other things, that the Supreme Court should reject the petition based on Article 192 PILA.

The Supreme Court first held that the waiver could only be valid and binding on the mother if the subjective scope of the arbitration clause in the preliminary contract extended to her. These two inquiries – as to the subjective scope of the arbitration agreement and as to whether the waiver subjectively binds the successor – overlap. This would be different if the objective scope of the arbitration agreement were at issue. In this latter case, the analysis is not necessary or rather is excluded by the waiver.

Here, the key questions were whether the grandson was properly authorised to represent the grandfather in entering into the preliminary contract, and whether the mother was bound by the arbitration agreement. Regarding the former, the court found that the mother had failed to put forward valid objections to the arbitral tribunal's findings. In doing so, the court once again applied strictly the familiar "raise-it-or-waive-it" principle: the mother could not for the first time before the Swiss Supreme Court argue that the grandson's power of attorney appeared falsified where she had not raised that argument in the arbitration; similarly, the mother could not contend that her right to be heard was violated because she had not had the opportunity to review the original power of attorney where she had failed to demonstrate that she had sought such review from the arbitral tribunal. The mother's other arguments failed because they did not address the arbitral tribunal's relevant considerations.

As to whether the mother was the grandfather's successor-in-interest and thus bound by the arbitral agreement, the arbitral tribunal considered that the mother in her submission referred to herself as successor-in-interest, that other documents supported that finding, and that under the Slovak arbitration law, an arbitration agreement also binds a party's legal successor, if such effect was not excluded in the arbitration agreement.

The mother claimed that her right to be heard was violated because in the arbitration she had sought but been denied the opportunity to present documents regarding the value of the inheritance. She claimed that that value was important because under Slovak civil law, the heir is only liable for the deceased's liabilities up to the value of the inheritance. The Supreme Court rejected the mother's contention because:

Having affirmed that the arbitral tribunal had jurisdiction ratione personae over the mother, the court examined the waiver clause. It pointed out that its recent jurisprudence requires an express waiver which "makes unmistakably clear the common will of the parties to utilize the option within the meaning of Article 192 and to waive setting-aside petitions before the Supreme Court." Here, the parties had excluded an annulment of the arbitral award by the highest court of Switzerland "according to [or in the meaning of] Art. 192 of the Private International Law Act". That was sufficient, and as such, the petition was rejected.

This case makes clear that even where the parties have agreed on an Article 192 waiver, if the award is challenged on the basis of lack of jurisdiction ratione personae, the Swiss Supreme Court will preliminarily examine the subjective scope of the arbitration agreement (and, simultaneously, the subjective scope of the ancillary waiver agreement). In so holding, the Supreme Court clarified an issue left open in a 2005 decision (BGE 131 III 173), where it had omitted this examination. Several Swiss authors criticised this decision. In 2008, the Supreme Court acknowledged this criticism and distinguished between the necessary inquiry depending on whether the scope of the arbitration agreement ratione personae or ratione materiae was concerned (BGE 134 III 260). The present decision articulates that distinction explicitly.

With respect to the underlying substantive law question, under Swiss law, arbitration agreements are in principle inheritable and will bind the legal heir. The decision therefore should not have been different had Swiss, rather than Slovak, law been applicable.