On 11 January 2017, the Swiss government released for public consultation its draft bill on the revision of Chapter 12 of the Swiss Private International Law Act (PILA), which governs international arbitration proceedings in Switzerland. The consultation period ended on 31 May 2017.
The Swiss Department of Justice recently posted the observations filed by interested stakeholders on the draft bill. Organisations such as the Swiss Arbitration Association (ASA), the Swiss Supreme Court, universities, academics, International Chamber of Commerce (ICC) Switzerland, and Economiesuisse have filed observations.
As explained in my post of 20 February 2017, amongst the proposed amendments that are likely to spark debate is the amendment concerning the language of setting aside proceedings against an arbitral award made by an arbitral tribunal with its seat in Switzerland. That is because the draft bill authorises the parties to file memorials in English, including the setting aside application. For its part, the Swiss Supreme Court’s decision(s) and correspondence will still be issued in one of Switzerland’s official languages (those being German, French, Italian or Rumantsch).
The consultation process has revealed that this amendment is already creating heated controversies and concerns in the Swiss arbitration community. For that reason, I have decided to present (briefly) below the position of ASA, the Swiss Supreme Court and some other interested stakeholders.
ASA approved the amendment (although not without some inner resistance)
In its position paper, ASA acknowledged that the suggestion that setting aside applications could be drafted in English “provoked mixed reactions in the course of the internal ASA consultations”. It emerges from ASA’s position paper that those in favour of the amendment recognised that English is the dominant language today in international arbitration; therefore, allowing English submissions would make it easier for the many users of arbitration who are based abroad to access the Swiss Supreme Court. This would reinforce Switzerland’s attractiveness as a place for international arbitration. ASA also acknowledged that introducing English would lead to a reduction in translation work, which, would constitute a significant improvement in light of the short time limit for filing an action for setting aside (only 30 days).
Conversely, those opposed to the suggested reform expressed their concern that allowing submissions in English could lead to setting aside motions being increasingly drafted by foreign law firms, while Swiss lawyers would end up playing a subsidiary role (if any). A further objection was that allowing English submissions could lead to an undesirable increase in actions for annulment, entailing a risk in terms of quality, in particular since the legal remedies for challenging arbitral awards tend to be technical matters for which, in some cases, there is no suitable vocabulary in English.
Overall, however, the internal ASA surveys indicated that the majority viewed the suggestion to introduce English at the setting aside stage positively, which explains why ASA ultimately approved the amendment.
The Swiss Supreme Court opposes the amendment
For its part, the Swiss Supreme Court has voiced strong concerns and opposition to the proposed amendments. Set out below are some of the main arguments put forward by the Swiss Supreme Court:
- First, introducing English in the context of setting aside proceedings is likely to lead to the use of English before the Swiss Supreme Court in every dispute with an international dimension.
- Second, there is a risk (although limited) that the law clerks processing the (setting aside) case, and who are usually the main port of call for the parties’ counsel, do not have the necessary English language capabilities.
- Third, allowing parties to file submissions in English will increase the likelihood of setting aside motions against arbitral awards rendered in Switzerland.
- Fourth, there is the risk of increased competition with foreign counsel, while Swiss lawyers may end up playing a subsidiary role.
The Swiss Supreme Court was joined in its opposition by the Association of Swiss Judges and some university professors.
Swiss law firms, the Universities of Geneva, St. Gallen and Lucerne as well as EconomieSuisse and ICC Switzerland approved the amendment
The vast majority of the (few) Swiss law firms that filed observations, as well as the Universities of Geneva, St.Gallen and Lucerne, EconomieSuisse and ICC Switzerland, approved the amendment.
It is no surprise that the main argument in favour of the use of English, put forward by the Swiss law firms, is the reinforcement of Switzerland’s attractiveness as a place for international arbitration. EconomieSuisse and ICC Switzerland arrived at a similar conclusion.
The University of Lucerne supported the amendment, while acknowledging that the suggested amendment:
- Raises the question of which national language the Swiss Supreme Court should use for conducting its proceedings and reaching its decision.
- Is likely to create some additional workload for the Swiss Supreme Court.
- Entails the risk that parties use in their submissions words and legal terminology with no equivalent in the Swiss legal system.
The Universities of Geneva and St-Gallen followed suit. Providing parties with the possibility of submitting memorials in English, which is the dominant language in international arbitration, would, in their views, allow Switzerland to remain at the forefront of international arbitration. Further, as noted by the University of Geneva, other countries (such as Sweden) are currently (also) contemplating the possibility of conducting setting aside proceedings in English, if a party so requests.
An amendment in peril?
Although there appears to be a clear majority emerging from the consultation process in favour of the possibility of introducing English as a language in setting aside proceedings, the fact that the Swiss Supreme Court, which is directly affected by that amendment, strongly opposes that amendment makes its fate highly uncertain. Prediction is very difficult, especially when it concerns the fate of an amendment set out in a draft bill. This has never been so true. One thing is certain though: there will be a third blog post on this issue in the near future.
