REUTERS | Yiannis Kourtoglou

For a few Swiss francs more: enforcing arbitral awards in Switzerland (Chapter 1)

Parties and practitioners know too well that even a favourable arbitral award is of little value until the award debtor complies with it. In cases where the award is not carried out voluntarily, the award creditor will have to take steps to recover its claim(s).

According to the latest figures published by SwissBanking (the Swiss Bankers Association), the banks in Switzerland managed total assets of CHF 7,291.8 billion at the end of 2017. As things stand, Switzerland remains the global market leader for cross-border private banking, with 27.5% of global cross-border assets being managed in Switzerland. It therefore comes as no surprise that Switzerland is not only one of the most popular seats of arbitration worldwide, but also a very significant jurisdiction for the enforcement of arbitral awards (regardless of where they have been rendered).

The main statutory provisions that govern the recognition and enforcement of arbitral awards in Switzerland are those of:

  • The New York Convention.
  • The Swiss Private International Law Act (PILA).
  • The Swiss Code of Civil Procedure (CPC).
  • The Swiss Debt Enforcement and Bankruptcy Act (DEBA).

Switzerland has also entered into bilateral treaties with other contracting states to the New York Convention.

Pursuant to its Article I(1), the New York Convention applies to the recognition and enforcement of foreign arbitral awards, that is, arbitral awards that have been rendered by an arbitral tribunal in a country other than Switzerland (regardless of whether that country is a signatory to the New York Convention).

Arbitrations seated in Switzerland are governed either by Chapter 12 of the PILA (in the case of international arbitration proceedings) or Part 3 of the CPC (in the case of domestic arbitration proceedings). However, the parties are free to opt out of the PILA and agree that the CPC should apply (and vice-versa).

Article 176 of the PILA determines when an arbitration seated in Switzerland is to be deemed international. According to this provision, an arbitration is to be characterised as international if, at the time of the conclusion of the arbitration agreement, at least one of the parties had neither its domicile nor its habitual residence in Switzerland. Conversely, an arbitration seated in Switzerland is deemed domestic (for the purpose of the CPC) if, at the time of the conclusion of the arbitration agreement, both parties have either their domicile or their habitual residence in Switzerland.

In short, Swiss law makes a distinction between:

  • Foreign arbitral awards.
  • Swiss international awards.
  • Swiss domestic awards.

In order to be enforced, foreign arbitral awards require a declaration of recognition (or exequatur) by a Swiss court. The court can rule on this issue either as a principal or as a preliminary matter (in enforcement proceedings). Pursuant to Article IV(1) of the New York Convention, the party applying for recognition or enforcement must provide the court with the duly authenticated original award or a duly certified copy thereof and the original arbitration agreement or a duly certified copy thereof. If the award is not in one of Switzerland’s official languages (German, French and Italian), a translation into one of these languages must be provided (preferably, but not necessarily, the one of the court where enforcement is sought).

Generally speaking, Swiss courts do not apply the formal requirements set out in Article IV of the New York Convention very strictly. In particular, in some cases, the court might dispense with a translation of the award if it has been rendered in English. Furthermore, when the award debtor does not challenge the authenticity of the award or of the arbitration agreement, it is not necessary to provide certified copies.

For their part, Swiss (international and domestic) awards are automatically enforceable as a matter of law. Article 387 of the CPC provides that, upon notification, a Swiss domestic award has the effect of a final and enforceable court judgment. Article 190(1) of the PILA states that, for its part, “the award is final from its notification.” It is acknowledged that this (much shorter) provision has the same meaning and effect as Article 387 of the CPC.

The applicable rules governing the enforcement proceedings differ depending on the relief sought by the award creditor. More specifically, the provisions of the DEBA govern the enforcement of arbitral awards granting monetary relief, while Articles 335 et seq. of the CPC apply to the enforcement of non-monetary relief. A further post will be dedicated specifically to theses issues.

Whether the award creditor is seeking monetary or non-monetary relief, the court will decide on the matter in so-called summary proceedings, pursuant to Articles 251(a) and 339(2) of the CPC. Such proceedings are more expedient and less expensive than ordinary court proceedings.

In conclusion, Swiss law provides a clear legal framework that is (generally speaking) favourable to the enforcement of arbitral awards. Swiss courts are also known to take a pro-enforcement stance. As such, the Swiss legal system affords many advantages to an award creditor who seeks to enforce its claims against a reluctant debtor.

As the reader will (rightly) anticipate, there are many other (interesting) questions that surround the enforcement of arbitral awards in Switzerland. Following this short presentation of the applicable legal framework, the authors will examine, in further contributions:

  • How an enforcement procedure unfolds in Switzerland.
  • On what grounds Swiss courts will refuse to enforce an award.
  • How the award creditor can obtain securities for its claim.
  • What the legal specificities of enforcement proceedings directed against a state are.

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