Originally from International Arbitration Court Decisions - 3rd Edition

JUDGMENT OF THE SWISS SUPREME COURT RENDERED IN 2003 IN CASE 4P.137/2002

Subject matters:
(1) Swiss courts’ powers to review foreign law.
(2) French law on representation of companies.
(3) Security for costs before Swiss courts.

Findings:
(1) The Swiss courts should apply foreign law in accordance with judgments rendered by the highest foreign courts.
(2) A French Sàrl is not bound by a contract signed by a non-officer having apparent authority (mandat apparent).
(3) Swiss courts may order a claimant challenging an arbitral award to put up security for costs where the claimant comes from a country with which Switzerland has not concluded a convention. This is the case with tax haven countries, in the present matter Turks and Caicos.

Parties:
Claimant: KK Ltd (Turks and Caicos Islands)
Respondent: FF (Paris, France)

Place of court proceedings:
Switzerland

Applicable laws:
Swiss Federal Statute on Private International Law of 1987
French company law, article L 223-18 C.com.

Summary
The dispute arose out of a consultancy agreement and the issue was whether the Arbitral Tribunal had jurisdiction.

The consultancy agreement was entered into between KK, an offshore affiliate from a Kuwait company, and FF, a French Sàrl (Société à responsabilité limitée). FF was bidding to sell armaments in Kuwait and KK was to assist FF towards getting the contract, against a substantial commission in the event the sale would proceed.1 The consultancy agreement was governed by Swiss law and contained a standard arbitration clause, providing for ICC arbitration in Geneva.