In 2010, there are two particularly important developments in Switzerland to watch out for.

Article 7 of the Private International Law Act (PILA) provides that if the parties have entered into an arbitration agreement, the Swiss courts must decline jurisdiction unless, among other reasons, the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

At present, decisions of the Swiss Federal Supreme Court have established that, where the seat of arbitration is in Switzerland, Swiss courts must only carry out a prima facie review of the validity of an arbitration agreement when considering a plea of lack of jurisdiction, leaving it to the arbitral tribunal to consider the validity of the arbitration agreement in full (the negative effect of the "kompetenz-kompetenz principle"). By contrast, where the seat of arbitration is outside Switzerland, the Swiss courts carry out a full review of the arbitration agreement, under Article II(3) of the New York Convention. See, for example, Swiss Federal Supreme Court, 29 April 1996, ATF 122 III 139 at 142, reason 2b.

The Swiss Parliament is currently considering a proposal that will eliminate this distinction and extend the negative effect of the "competence-competence" principle to arbitrations with their seat outside Switzerland. It is proposed to amend Article 7 of the PILA to read:

After a positive vote from the first chamber of the Swiss Parliament, the initiative will now come before the second chamber. If it is implemented, it will limit the Swiss courts' powers of review in the case of arbitrations with a foreign seat and thus clarify the nature of the review to be carried out by the Swiss courts under Article II(3) of the New York Convention. As Article II(3) does not specify the scope of the courts' review of arbitration agreements, the standard applied varies considerably from country to country. The amended Article 7 of the PILA would at least clarify the position under Swiss law.

The parliamentary initiative is in line with a further recent change in Swiss legislation that reinforces the "competence-competence" of an arbitral tribunal in an arbitration with its seat in Switzerland. Since March 2007, an arbitral tribunal seated in Switzerland can, as a rule, commence or continue its proceedings and decide on its jurisdiction regardless of any proceedings pending before a state court or another arbitral tribunal.

As of 1 January 2011, a new regime for domestic arbitration will be in force in Switzerland which will also have an impact on Swiss arbitration law for international arbitration. Although it is a year before the new regime enters into force, parties can already make certain choices in their arbitration agreements.

From 1 January 2011, Swiss domestic arbitration proceedings will be governed by the new Swiss Code on Civil Procedure (CCP). The Concordat on Arbitration (Concordat), which currently governs domestic arbitration proceedings, will be replaced by Articles 353 et seq. of the CCP. However, the distinction between domestic arbitration and international arbitration will continue to exist, in that international arbitration proceedings will continue to be governed by Chapter 12 of the PILA (Chapter 12).

Under Swiss law, an arbitration is deemed "international" if:

Currently, parties to international arbitration proceedings can opt out of Chapter 12 and have their arbitration ruled by the Concordat. By contrast, parties to a domestic arbitration cannot opt for their arbitration to be governed by Chapter 12. However, under Article 353, paragraph 2 of the new CCP, parties to a domestic arbitration will be able to do so. This will give parties the choice between two procedural regimes for domestic arbitration. Although such opt-out clauses shall not become effective before 1 January 2011, they can already be included in arbitration agreements. In addition, parties can choose to opt out of the CCP at a later point in time.

It is questionable whether, in purely domestic cases, the ability to opt out of the new CCP is really necessary: the new domestic regime will be modern and will reflect current international best practice. Indeed, in some instances, it appears even more up-to-date than the international regime, which dates back to 1985.

However, it may be beneficial in cases of multi-party arbitration agreements involving Swiss and foreign parties. The requirement under Swiss law for the foreign party to be an actual party to the arbitration means that if there are multiple parties to an arbitration agreement, some domiciled outside Switzerland and some domiciled in Switzerland, an arbitration between the Swiss-domiciled parties only will be deemed to be "domestic". The arbitration will only be international if one of the parties domiciled outside Switzerland is a party to the proceedings.

If the parties in such a multi-party situation are able to opt to have their arbitration governed by Chapter 12, it would make sense for them to do so, so that they know at the time of entering into the arbitration agreement which regime will apply to any arbitration.

Compared to the current regulation of the domestic arbitration, Articles 353 et seq. of the CCP contain some quite substantial improvements, including for example detailed rules on: