Article 192 of the Swiss Private International Law Act (PILA) allows parties not domiciled in Switzerland to

Article 6 of the European Convention on Human Rights (ECHR) provides that:

Z is a company registered in France and well established in Tunisia. In order to avoid customs duties on imported goods, Z decided to collaborate with a Tunisian firm producing goods similar to its own. The Tunisian firm was controlled by X, a Tunisian businessman domiciled in Tunisia. A complex set of agreements had to be concluded as a result of a rule under Tunisian law prohibiting foreign companies from holding the majority of shares in a Tunisian retailing company. Four agreements were entered into: a Shareholders' Agreement, an Option Agreement and two Sale Purchase Agreements, pursuant to which X and his three sons on the one side and Z on the other respectively held 49 % of the retailing company B.

All the agreements contained arbitration clauses which, in almost identical terms, provided as follows:

Relying on the Shareholders' Agreement, X initiated arbitration proceedings against Z on the ground that Z had induced B to terminate a manufacturing contract it had entered into with a company controlled by X. X filed a petition with the Swiss Supreme Court to set aside the award rendered by the arbitral tribunal rejecting his claim. The Swiss Supreme Court declared the petition inadmissible on the basis that the parties had validly waived setting-aside proceedings in the relevant arbitration clause (see Legal update, Supreme Court finds that stringent standard is met for valid waiver of recourse against arbitral award).

X later refused to comply with Z's request to transfer all shares held by X and his three sons in conformity with the Option Agreement. Z therefore initiated ICC arbitration proceedings against X and his three sons. An arbitral tribunal seated in Geneva rendered an award ordering the transfer of the shares. X filed a petition with the Swiss Supreme Court seeking to set aside this award.

Referring to its well established practice, the Swiss Supreme Court ruled that the waiver contained in the arbitration clause was valid as neither party was domiciled in Switzerland, the waiver was explicit and the parties' intent was abundantly clear. Even though its previous decision in the same case (dealing with the Shareholders' Agreement and not the Option Agreement) was not binding, the Swiss Supreme Court considered that the fact that the waiver clauses contained in the four agreements entered into by the parties on the same day were almost identical demanded a uniform interpretation.

X contended that under New York, Tunisian and French law, the word "appeal" only referred to an ordinary appeal providing for a full review in fact and in law, and that by using the word "appeal" the parties had thus not intended to exclude the more limited setting-aside proceedings. The Swiss Supreme Court noted that the parties had used the word "appeal" as a verb rather than as a noun ("right to appeal" rather than "right of appeal"), so that they could not have intended to refer exclusively to ordinary appeals, but rather referred to all available means of challenging the award. In addition, the word "appeal" was usually used in the context of appeals against decisions on the merits rendered by (civil) state courts, while the present issue was whether or not there was a remedy against an award rendered by an arbitral tribunal. Although "appeals" with full review in fact and law existed under the laws mentioned by X, under none of them was such an appeal possible against arbitral awards. For these reasons, the Swiss Supreme Court rejected X's argument that the word "appeal" could have such a restrictive meaning in the clause at stake.

Moreover, having noted that the interpretation of a waiver clause was a question of substantive validity leading to the application of Article 178(2) PILA, the Swiss Supreme Court questioned whether the principle in favorem validatis expressed in that provision should really be taken into account, or whether it would not be more advisable to exclusively apply Swiss law, as the waiver only affected the Swiss legal system. The Swiss Supreme Court observed that the recourse to the principle in favorem (in)validatis would be incompatible with the principle of procedural economy in the present case as investigation of the situation under various jurisdictions would be disproportionate.

The Swiss Supreme Court also rejected X's argument that Article 192(1) PILA did not comply with Article 6 of the ECHR in that it deprived the parties of their right to a fair trial.

The Swiss Supreme Court first noted that it was entitled to examine the compatibility of Article 192(1) PILA with the ECHR and to disregard the Swiss provision in case of conflict. A breach of the ECHR by the arbitrators was not, as such, a ground on which arbitral awards could be set aside, although principles deriving from the ECHR could be relied upon in interpreting the setting-aside grounds exhaustively listed in Article 190(2) PILA. However, the Swiss Supreme Court considered that the question was not whether the award could be set aside for one of the grounds listed in Article 190(2) PILA, but whether Article 192(1) PILA was compatible with Article 6 ECHR. The Swiss Supreme Court underlined that it had never ruled on that question.

The Swiss Supreme Court held that Article 6 ECHR did not prevent the parties from voluntarily renouncing a right, provided the waiver was not ambiguous and provided that it was not inconsistent with an important public interest. The Swiss Supreme Court ruled that Article 192(1) PILA precisely met these requirements as it required that the waiver be express and be agreed upon between the parties. Moreover as arbitration is a contractual type of dispute resolution, there were no important public interests at stake.

The petition was therefore rejected.

This decision confirms the Swiss Supreme Court's consistent practice with respect to waivers under Article 192(1) PILA and makes clear, should confirmation be needed, that Article 192(1) PILA fully complies with Article 6 ECHR.