In November 2010, the Swiss Supreme Court resolved two related questions that were previously open under Swiss law:

Answering the first question, the Supreme Court held that, nothwithstanding the language of Article 180(1)(c) PILA, an arbitral tribunal had to fulfill sufficient guarantees of both independence and impartiality. In this context, the Court referred in particular to Article 30(1) of the Swiss Constitution as a "norm of higher rank." Answering the second question, the Supreme Court held that the same standards must apply to party-appointed arbitrators as to the chairperson of the arbitral tribunal.

The Court pointed out that its position was in line with both the IBA Guidelines on Conflicts of Interest in International Arbitration, and with the new Swiss Code of Civil Procedure in effect as of 2011 (see New Rules on domestic arbitration below), which explicitly requires arbitrators in domestic arbitrations to be "impartial" and "independent". The Court qualified its finding by stating that the particularities of international arbitration must be taken into consideration when applying the standard of impartiality. The Supreme Court also reaffirmed that the parties were subject to a duty of curiosity, requiring them to conduct conflict checks on the parties and to investigate links between parties and arbitrators immediately after nomination.

This case is a notable addition to the Swiss case law on impartiality in arbitration. The Supreme Court adopted a strict approach, favouring the credibility of arbitral tribunals over pragmatic considerations, and explicitly rejected "a system where arbitrators act as advocates for their respective appointing parties." However, as this case demonstrates, this strict approach will be applied with reason in practice.

Prior to the November decision, in June 2010, the Swiss Supreme Court rendered another noteworthy decision on the subject of impartiality (see Legal update, Swiss Federal Tribunal rejects arbitrator challenges). The case involved Swiss arbitrator, Dirk-Reiner Martens, who had served as chairman of a CAS arbitral tribunal between soccer player, A. Mutu, and his English club, Chelsea, in an employment arbitration, and was subsequently nominated by Chelsea as party-appointed co-arbitrator in another CAS arbitration between Chelsea and Mutu arising out of the same underlying facts.

The Supreme Court rejected Mutu's petition to set aside the award resulting from the second CAS arbitration. It focused on the fact that:

The Federal Supreme Court went far in this case, which would probably have come out differently had the Court adopted and applied the ICC's "equality of information" approach to the challenge of arbitrators.

In May 2010, the Swiss Supreme Court for the first time rendered a decision on interim measures ordered by an arbitral tribunal with its seat in Switzerland (see Legal update, Swiss Federal Tribunal rules on tribunal-ordered interim measures for the first time).

In October 2009, a sole arbitrator rendered a decision entitled "sentence preliminaire" (preliminary award) in respect of the interim measures sought by the parties to a license agreement (X and Y). X filed a petition to set aside the preliminary award under Article 190(2) PILA. The main issue before the Supreme Court was whether a petition to set aside the arbitrator's preliminary award in respect of the interim measures was admissible.

In its decision, the Supreme Court confirmed a number of issues that had previously only been discussed in legal commentary:

In dicta, the Supreme Court noted approvingly that the sole arbitrator was guided by the principle of "balance of prejudices" or "balance of interests" in determining whether relief should be granted. This may suggest that the Swiss Supreme Court endorses the tendency in international arbitration towards a more business-oriented approach to interim relief based on a balance-of-interest and proportionality assessment, rather than on the strict and somewhat inflexible prerequisites for granting interim relief that are regularly applied by state courts.

In July 2010, the Swiss Supreme Court for the first time ever set aside an arbitral award for violation of public policy (see Legal update, Swiss Federal Tribunal sets aside CAS award for violation of procedural public policy). The case arose from a 2009 CAS award, which had awarded European soccer club, B, monies under 1997 FIFA Rules even though in 2004, in a proceeding between FIFA and one of the parties to the CAS arbitration, the Zurich Commercial Court had declared these rules void as violating European and Swiss anti-trust law. The Supreme Court set aside the CAS award. It held that the proceedings before the Zurich Commercial Court under Article 75 of the Swiss Civil Code bound not only the parties to the proceedings but erga omnes (that is, all) members of the association (here, FIFA). For that reason, B's claim before the CAS was barred as res judicata even though B was not a party to the 2004 judgment. Relying on previous case law, the Supreme Court confirmed that res judicata is a part of Swiss procedural public policy. It thus held that the CAS tribunal violated procedural public policy by granting B's claim despite the 2004 judgment.

This is not the first time that the Supreme Court has held that the principle of res judicata is part of Swiss procedural public policy. It previously decided this issue in the famous 2001 Fomento decision (DF 127 III 279). In Fomento, the Supreme Court held that the lis pendens provisions of Article 9 PILA applied to international arbitrations in Switzerland, requiring an arbitral tribunal to stay arbitration proceedings while an action filed earlier in a foreign court was pending. The decision caused concern that parties could now race to initiate state court litigation elsewhere, thereby forcing the stay of arbitral proceedings in Switzerland. Fomento triggered an amendment contained in Article 186(1)bis PILA.

The decision in the present case appears to weaken the principle embodied in the new Article 186(1)bis PILA. It appears to revive the spectre of a "race", this time by the arbitral tribunal, to decide a matter earlier than a state court before which the same matter is pending, in order to avoid exposing the arbitral award to setting aside challenges on the basis of a violation of procedural public policy.

A closer look at the decision reveals that such concerns are not justified: under Swiss law, res judicata requires an identity of the parties in the previous and the subsequent proceedings. This is a well established principle in other legal orders. Here, the 2004 judgment and the CAS arbitration were between different parties, but still had res judicata effect only because of the particularities of Swiss Association Law. Therefore, the decision should not be interpreted to open the door to the doctrine of "issue estoppel" known in the United States, under which, in certain circumstances, third parties may be precluded from re-litigating issues of fact and law that have been actually determined in the prior litigation. Rather, it is the consequence of a singular situation.

One might question whether the Supreme Court sufficiently appreciated that there was a singular issue of the erga omnes effect of a previous court decision rather an issue of res judicata and whether there might not have been a way to come to the same result by relying on the former principle only. As the case now stands, the principle of res judicata has been given a broader meaning than it has under Swiss law, more particularly, by extending to other parties. Also, the holding's implicit contradiction of Article 186(1)bis PILA, which intentionally accepted the risk and result of contradicting results in order to protect the smooth functioning of arbitrations with their seat in Switzerland, was not commented on by the Supreme Court but is nevertheless questionable.

As previously reported in Legal update, Switzerland: anticipated developments of 2010, on 1 January 2011, the new domestic arbitration regime for Switzerland entered into force. It is now codified in Chapter 3 of the Swiss Code of Civil Procedure. The new law contains numerous novelties that are also relevant from the perspective of international arbitration, and it will be interesting to follow how domestic arbitral tribunals and state courts apply the revised rules on domestic arbitration.

In 2004, seven Chambers of Commerce and Industry in Switzerland harmonised their rules of arbitration for the resolution of international commercial disputes. The resulting Swiss Rules of International Arbitration (Swiss Rules) have been a marked success, featuring a steady growth in caseload, adoption by non-Swiss users, and influence on institutional rules as well as on the revised UNCITRAL Arbitration Rules, which entered into force on 15 August 2010. While based on the UNCITRAL Arbitration Rules, the Swiss Rules were adapted to institutional arbitration and to reflect modern practice and comparative law in the field of international arbitration. For example, among other things, the Swiss Rules include very progressive provisions on consolidation and joinder. A working group has been formed to consider revisions to the Swiss Rules, and it is expected that a set of revised rules will be provided by the second half of 2011. The revision was triggered by the revised 2010 UNCITRAL Arbitration Rules, which are expected to influence the revised Swiss Rules.

While not particular to Switzerland, Swiss arbitration will be affected by the entry into force of the revised ICC Rules of Arbitration (see Article, France: round up 2010/2011). According to the ICC's statistical report for 2009 (contained in ICC Bulletin Volume 21, No. 1, 2010), Switzerland is the most frequently chosen seat for ICC arbitrations (119), ahead of Paris and London. If adopted by the ICC Arbitration Commission, the revised ICC Arbitration Rules should be finalised after the next meeting of the ICC Arbitration Commission, which will take place on 7 and 8 March 2011 in Paris. They are expected to enter in to force in July 2011.