Article 190(2)(d) and (e) of the Private International Law Act (PILA) provides that an award can be challenged if the arbitral tribunal has violated a party's right to be heard or the award is incompatible with public policy.

Article 190(3) PILA provides that interim awards can only be challenged on two grounds:

Articles 154(1) and 155(c) PILA provide that corporations shall be governed by the law of the state under which they are organised, in particular so far as the issue of legal capacity is concerned.

The dispute arose out of a contract between two companies, X and Z. The contract contained an ICC arbitration clause, providing for a panel of three arbitrators, Geneva as the seat of arbitration and Swiss law as the substantive law.

In a first interim award on jurisdiction dated 24 June 2011, the arbitral tribunal accepted jurisdiction and held that Z had legal capacity to act as a party. Two weeks later, having learned that Z was removed from the trade register on 25 February 2011, X asked the arbitral tribunal to reconsider its decision in a new award. Four days later, Z re-registered on the trade register.

X lodged an appeal against the first interim award before the Supreme Court on 29 August 2011, asking at the same time for the suspension of the appeal until the rendering of the second interim award. The Supreme Court granted this procedural request.

In a second interim award rendered on 6 June 2012, the arbitral tribunal held that, based on the new registration, Z regained its legal capacity with retroactive effect. Therefore, the intermediate period when Z was not registered had no bearing on its legal capacity or on the arbitral proceedings. In reaching this conclusion, the arbitral tribunal examined the law of the place of incorporation, pursuant to Articles 154(1) and 155(c) PILA.

On 9 July 2012, X filed a new challenge before the Supreme Court against the second interim award.

The Supreme Court rejected the appeal.

As a preliminary matter, the Supreme Court dismissed the two arguments brought in defence by the respondent. According to Z, by submitting to the ICC Arbitration Rules 1998 and more specifically to Article 28(6), X waived its right to appeal. The Supreme Court confirmed its case law, pursuant to which this provision does not qualify as a waiver under Article 192(1) PILA.

Z also asserted that the award did not address the issue of jurisdiction and that it could not, therefore, give rise to a challenge under Article 190(3) PILA. Referring to the recent decision 4A_50/2012 (see Legal update, Landmark decision of the Swiss Supreme Court on the effect of a foreign insolvency on arbitration proceedings in Switzerland), the Supreme Court affirmed that the question of the lack of subjective arbitrability (which includes the capacity to appear as a party in arbitral proceedings) belongs to the issue of jurisdiction.

The applicant's arguments were also found to be baseless. Relying on Article 190(2)(b) PILA, the applicant considered that, when the first interim award was rendered, Z was not registered and jurisdiction was, therefore, to be denied. In the applicant's view, from that moment on, the arbitrators had no reason to consider the effects of re-registration after the award. The applicant further submitted that procedural requirements such as legal capacity must be met at the time of the judgment. However, the Supreme Court pointed out that this requirement applies to final judgments on the merits, as opposed to interim decisions. Incidentally, the Supreme Court observed that, in view of the re-registration of Z, such requirement should in principle be satisfied at the time of the final award.

The second ground of the challenge was a breach of the right to be heard pursuant to Article 190(2)(d) PILA. According to X, the arbitral tribunal disregarded its arguments pertaining to Z's abuse of right. X had asserted that Z deliberately concealed the fact that it was not registered and only re-registered for the purpose of the arbitration. In the appellant's view, this abusive behaviour should not allow Z to benefit from the curative effect of the new registration.

Because the arbitrators did not address this issue in the award, the applicant argued that the factual basis of the award under appeal had to be completed. Prima facie, X's challenge was not admissible, insofar as it was made under Article 190(2)(d) PILA which, pursuant to Article 190(3) PILA, is not a valid ground to challenge interim awards. Therefore, the Supreme Court discussed the disputed question as to whether, and under which conditions, the challenge of interim decisions (governed by Article 190(3) PILA) can also be relied on the grounds for appeal, such as ultra/infra petita decisions (Article 190(2)(c)), violation of the principles of equal treatment and right to be heard (Article 190(2)(d)) or public policy (Article 190(2)(e)).

The Supreme Court acknowledged that some authors consider it appropriate to address the right to be heard in the context of a challenge based on the two admitted grounds (that is, jurisdiction or the constitution of the arbitral tribunal, when a party claims that important evidence pertaining to these grounds has been disregarded). However, the Supreme Court left this issue open, considering that it could examine the facts relating to the alleged abuse of right in the context of the challenge under Article 190(2)(b), without having to consider the right to be heard. In addition, the Supreme Court also found that the challenge under 190(2)(d) was not sufficiently motivated.

The following points are worth noting:

Finally, a practical note for counsel: all evidence that the parties wish to submit to the Supreme Court should be filed with the briefs produced before that court. In this case, the applicant was told that its argument was not sufficiently established because it referred to the evidence produced in the arbitration.