The Challenge of an Arbitral Award on the Basis of Para-regulatory Texts (Soft Law) - Chapter 07 - Sense and Non-sense of Guidelines, Rules and Other Para-regulatory Texts in International Arbitration - ASA Special Series No. 37

Author(s):

Balz Gross

Mladen Stojiljković

Page Count:

12 pages

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Published:

October, 2015

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Originally from Sense and Non-sense of Guidelines, Rules and Other Para-regulatory Texts in International Arbitration - ASA Special Series No. 37

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1. INTRODUCTION

The increase in the number of para-regulatory texts (“PRTs”) in

recent years has greatly influenced on the practice of international

arbitration. The influence shows in every challenge, or discussion on

whether a challenge should be made, of an arbitrator for lack of

independence or impartiality; such cases—almost inevitably—involve

the IBA Guidelines on the Conflict of Interests in International

Arbitration. Or there is hardly an arbitration, nowadays, that does not

refer to the IBA Rules on the Taking of Evidence in International

Arbitration.1 Given their widespread use, some PRTs indeed seem to

have acquired a “soft normativity.”2

But PRTs have not only influenced arbitral practice. Recent case

law from Switzerland and other jurisdictions shows that parties

increasingly try to challenge arbitral awards in court on the basis that

the arbitral tribunal violated a PRT—even where the application of the

PRT was not expressly agreed upon by the parties. While some courts

have rejected such arguments as inadmissible under the lex arbitri,

other courts have been willing to use well-established PRTs as

guidance.

In this chapter, we will discuss how PRTs might or even should

be used as a basis for a challenge of arbitral awards rendered by

arbitral tribunals in Switzerland.

2. PRTS AND GROUNDS FOR ANNULMENT

An award rendered by an international arbitral tribunal with seat

in Switzerland can be annulled only on the grounds set forth

exhaustively in Article 190(2) of the Swiss Private International Act

(“PILA”), which reads as follows:

The award can be set aside only:

a) if the sole arbitrator was not properly appointed or if the

arbitral tribunal was not properly constituted;

b) if the arbitral tribunal wrongly accepted or declined

jurisdiction;

c) if the arbitral tribunal’s decision went beyond the claims

submitted to it, or failed to decide one of the items of the

claim;

d) if the principle of equal treatment of the parties or the

right of the parties to be heard was violated;

e) if the award is incompatible with public policy.

The grounds for challenge that could have a reasonable

connection with PRTs are (a) irregular constitution of the arbitral

tribunal and (d) violation of the right to equal treatment and the right

to be heard, and (e) a violation of public policy. There is no direct

connection, however, between PRTs and jurisdictional challenges

under Article 190(2)(b) PILA because the arbitral tribunal’s jurisdiction

is derived from the arbitration agreement and not PRTs. Nor have

PRTs any particular connection with challenges on the basis that the

arbitral tribunal decided a case ultra petita (Article 190(2)(c) PILA).

Accordingly, we will focus on the influence of PRTs on challenges

based on Article 190(a), (d), and (e) PILA.

3. IRREGULAR COMPOSITION OF THE ARBITRAL

TRIBUNAL

3.1 General Remarks

Article 190(2)(a) PILA provides that an arbitral award may be

annulled “if the sole arbitrator was not properly appointed or if the

arbitral tribunal was not properly constituted.” This provision refers to

the parties’ right to an independent and impartial arbitral tribunal as

guaranteed by Article 30(1) of the Federal Constitution of the Swiss