Company X. v. Y. Ministry [The Missiles Case] No. 4A_464/2009 - Swiss International Arbitration Law Reports (SIALR) - 2010 Vol. 4 Nos. 1 & 2

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Swiss International Arbitration Law Reports 2010 Vol. 4 Nos. 1 and 2

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No. 10

Company X. v. Y. Ministry

[The Missiles Case]

No. 4A_464/2009

Headnote

■ An exclusion agreement must clearly and unambiguously set out

the parties’ mutual intentions to waive future setting aside

proceedings against the arbitral award (confirmation of previous

decisions).

■ An arbitration clause providing that an arbitral award “shall be

final and binding” does not amount to a valid exclusion agreement

precluding setting aside proceedings.

■ An award containing reasons which are inherently inconsistent is

not per se contrary to public policy (obiter; departure from previous

decisions).

Summary of the Decision

Company X. undertook to provide the Y. Ministry with military

equipment in consideration of advance payment of 55% of the purchase

price, which the Ministry paid. A bank guarantee issued for the benefit

of Y. guaranteed the reimbursement of the advance payment in case X.

breached the contract. Y. terminated the agreement and claimed inter

alia the reimbursement of the excess payment received by Company X.

The tribunal made an award for the Ministry.

Company X. challenged the award before the Federal Supreme Court

contending (i) that the tribunal had made a decision ultra petita, (ii) that

its right to present its case had been breached and (iii) that the award was

contrary to public policy.

The application was denied.

The Court confirmed that it would follow a restrictive approach when

called upon to enforce exclusion agreements. It would suffice that the

agreement set out the parties’ mutual intentions to waive a challenge of

the award in a clear and unambiguous manner. In the present case, the

Court considered that a clause simply stating that an award should be

“final and binding” did not amount to a valid waiver.

The Court confirmed that an arbitrator did not rule ultra petita where

he applied legal principles to the facts of the case other than those

invoked by the petitioner. However, an arbitrator was bound by the