In 2006, two ICC arbitrations were initiated. They had the same factual background, but were based on different (but related) agreements. In the first arbitration (dealt with in decision 4A_256/2009), AY, a company incorporated under the laws of the Czech Republic, commenced arbitration against X, a Czech citizen. In the second arbitration (dealt with in decision 4A_258/2009), X (the respondent in the first arbitration) commenced arbitration against Y, a Czech citizen, sole owner of AY (the claimant in the first arbitration).

In both arbitrations, the arbitral tribunal was composed of Q (nominated by X), P (nominated by AY in the first arbitration and by Y in the second) and O (Chairman, nominated by the co-arbitrators). X challenged P's nomination in both arbitrations for lack of independence pursuant to Article 11 of the ICC Rules. However, the ICC Court dismissed X's challenge, without stating its reasons (as is its usual practice), and confirmed P's nomination.

After the tribunal had rendered its awards, X appealed both of them before the Federal Supreme Court. In both proceedings, X argued that P and O were biased and that, therefore, there was no guarantee that the arbitral tribunal was impartial and independent of the parties.

With regard to P, X argued that at the end of May 2007, the Czech media reported that he had been nominated as an arbitrator by Y (or by persons connected with Y) in approximately ten different arbitration proceedings and had become Y's "in-house arbitrator" (Hausschiedsrichter). X personally knew of two of those nominations, as he was aware of the proceedings. X also argued that P had been nominated, but not confirmed, in another ICC arbitration involving AY.

With regard to O, X asserted that at the end of October 2008 he had learned of several relationships between O and companies and individuals connected with Y. In particular, X argued that O was a member of the board of directors of a company which was being instructed by Y (or a company controlled by Y) in relation to one of the largest claims in the Czech Republic. X submitted emails to substantiate his allegations.

The Federal Supreme Court rejected X's appeals.

With regard to the allegation that P lacked independence, the Court held that X's appeal was insufficiently substantiated and that X had failed to demonstrate circumstances giving rise to justifiable doubts as to the independence of P. X's assertions regarding multiple nominations of P by Y (or persons connected with Y) were based solely on a newspaper article which was too vague to serve as evidence. X should have named the different arbitration proceedings by specifying the dates, the parties involved, which party had appointed P and the relationship of that party to Y (or to persons connected to Y). Further, the fact that P's nomination had not been confirmed in the other arbitration did not lead to any conclusions as to P's independence.

Similarly, the Federal Supreme Court held that X's arguments were insufficient to show O's lack of independence. In particular, X had not shown to what extent the connection of the company C to Y was supposed to influence O's impartiality and independence in these proceedings. Rather, the Federal Supreme Court held that the cooperation described by X did not go beyond an "ordinary business relationship".

Switzerland's reputation as an arbitration-friendly jurisdiction is partly due to the fact that the Federal Supreme Court rarely interferes with the work of arbitral tribunals. However, in these two cases, it is difficult to escape the impression that the Supreme Court circumvented the actual problem by stating that the complainant did not sufficiently substantiate his allegations. It seems rather unsatisfactory to require such strict proof regarding the number and the time frame of previous appointments of an arbitrator by the same party or an affiliate of it. The complainant is unlikely to be able to provide such proof. For this reason, at least if it refers to past appointments, the exact fact should be established during the course of the ICC confirmation procedure.

It should also be kept in mind that, to the knowledge of the authors, situations of "in-house arbitrators" do arise and this is sometimes used as an argument against arbitration as a method of dispute resolution.

Cases 4A_256/2009 and 4A_258/2009