In December 2005, a boxing association (X) and a sports equipment manufacturer (Y) entered into a licence agreement, according to which Y was entitled to produce and sell boxing equipment with X's approval label, in return for royalty payments.

The licence agreement contained the following arbitration clause:

Following the non-renewal of the licence agreement in 2007, Y filed a request for arbitration with the CAS on 19 January 2009. Y claimed, inter alia, payment of US$168,732 for boxing equipment which it had sold to X in 2005 and 2006.

In an award dated 5 January 2011, the CAS tribunal assumed jurisdiction over the dispute and awarded Y the requested amount. Based on the assumed real intention of the parties, which went beyond the wording they used, it interpreted the arbitration agreement to extend to "any dispute related to the Licensing Agreement". On the admissibility of the monetary claim, it held that X's request for payment was covered by the arbitration clause because it "relates to goods allegedly manufactured and supplied under the [licence] agreement".

On 4 February 2011, X challenged the CAS award before the Swiss Supreme Court, inter alia for lack of jurisdiction of the CAS tribunal to hear Y's monetary claim (Article 190(2)(b) of the Swiss Private International Law Act (PILA)).

Confirming existing case law, the Swiss Supreme Court reiterated the principle that consent to an arbitration agreement should not be readily assumed. However, where the parties' consent to an arbitration clause is established, the scope of such arbitration clause is to be interpreted broadly. The Supreme Court further confirmed that a general reference to "disputes related to" the agreement containing the arbitration clause also includes questions that are not directly linked to the dispute, such as, in particular, the issue of the existence or non-existence of a contractual relationship. This could also extend to claims arising out of ancillary or connected contracts, provided these contracts do not contain any diverging dispute resolution mechanism.

Turning to the case at hand, the Supreme Court noted that the wording of the arbitration clause seemed to restrict the scope of the arbitration agreement to claims stemming directly from the licence agreement. However, the Supreme Court considered this interpretation of the arbitration clause to be too restrictive in view of the specific circumstances of the case. The Supreme Court took into consideration that X behaved inconsistently, by disputing the jurisdiction of the CAS. This was because its own by-laws provide for arbitration before the CAS, which demonstrates X's intention to avoid state court jurisdiction wherever possible. Furthermore, the Supreme Court could not discern any reasons that would warrant in favour of state court jurisdiction for commercial disputes between X and its contracting partners because:

Finally, the Supreme Court referred to the CAS tribunal's findings that the licence agreement formed part of a network of contractual relations between the parties, of which the sale of boxing equipment formed one of the main elements. The Supreme Court considered these contracts to be closely inter-related because at its competitions and events, X only permitted the use of boxing equipment that was provided by its licensing partners, which it consequently had to buy from them.

Based on these grounds, the Supreme Court held that the monetary claim was covered by the arbitration clause and therefore dismissed the petition.

In the present case, the Supreme Court confirmed the decision of the arbitral tribunal to extend the scope of the arbitration agreement to the sales agreements, despite the fact that this was not entirely consistent with the wording of the arbitration clause. The Supreme Court emphasised the importance of taking into account all the circumstances of the specific case and considered the mere interpretation of the wording of the clause to be too restrictive an approach. This indicates that it may become more difficult for parties to connected contracts to object to arbitration proceedings under the arbitration agreement of one of the contracts (and provided the other contracts do not contain any diverging dispute resolution mechanism) if the circumstances of the case imply that they are doing so for purely tactical reasons.

This decision confirms a tendency in the case law of the Supreme Court toward a broader interpretation of the scope of arbitration clauses in multiple contracts (see Swiss Supreme Court decisions, DTF 116 Ia 56 and 4A_562/2009). This tendency is also reflected in the new International Chamber of Commerce Rules of Arbitration (ICC Rules) that come into force on 1 January 2012 (see Legal update, ICC Rules of Arbitration 2012 launched). Articles 6(4)(ii) and 9 of the ICC Rules aim to facilitate a single arbitration in cases of multiple contracts.

Although the result in this case seems rather far-reaching, the holding of the decision cannot, and should not, be read as meaning that the Supreme Court will, for cases falling under the PILA, go beyond the principles of the privity of the arbitration agreement. Its reasoning shows that it interprets the intention of the parties at the time before the dispute arose, taking into account all circumstances of the specific case.