X. SA v. Company Y. [The Iron Bars Case] No. 4A_488/2009 - Swiss International Arbitration Law Reports (SIALR) - 2010 Vol. 4 Nos. 1 & 2

Page Count:

14 pages

Media Description:

1 PDF Download

Published:

November, 2013

Practice Areas:

Court Decisions

PDF648.81 KB

$40.00

Description:

Originally from:

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

Preview Page

No. 7

X. SA v. Company Y.

[The Iron Bars Case]

No. 4A_488/2009

Headnote

■ The principle pacta sunt servanda, which is part of substantive

public policy, is breached only where an arbitrator refuses to enforce

a contract term while finding that such term is binding on the parties

or, conversely, where an arbitrator orders the parties to comply with

a contract term while finding that such term is not binding on them

(confirmation of previous decisions). Such principle is not breached

where the sole arbitrator has made an award consistent with his

interpretation and construction of the relevant contract terms.

■ The parties’ right to present their case includes the right of each

party to present allegations of fact and submissions of law in relation

to the dispute, put the evidence required before the tribunal, attend

the hearings and be represented or assisted before the arbitrators

(confirmation of previous decisions).

Summary of the Decision

Company Y. and X. SA concluded an agreement for the sale of iron

bars. According to the agreement X. SA had a duty to pay the purchase

price by an irrevocable letter of credit to be issued within a certain time

limit. The time limit was not complied with and Company Y. terminated

the contract. Company Y. filed a request for arbitration with the Geneva

Chamber of Commerce and Industry against X. SA. The sole arbitrator

made an award for Company Y.

X. SA filed an application to set aside the sole arbitrator’s award with

the Federal Supreme Court.

The application was denied.

The Court recalled that an award would run counter to public policy

only when it disregarded essential and generally accepted values

underlying any and all systems of law according to the prevailing

conceptions in Switzerland. An award conflicted with substantive public

policy when it was made in disregard of fundamental principles of

substantive law to such a point as to be inconsistent with the legal system

and the accepted system of values. The Court also recalled that the

principle pacta sunt servanda, which was part of public policy, was