A.C. SE, A.D. Ltd., A.E. Ltd., J. Ltd. v. K. SAS [The Arbitration Agreement Surviving a Management Buy-Out, I] No. 4A_244/2007 - Swiss International Arbitration Law Reports (SIALR) - 2008 Volume 2 No. 1
A.C. SE, A.D. Ltd., A.E. Ltd., J. Ltd. v. K. SAS [The Arbitration Agreement Surviving a Management Buy-Out, I] No. 4A_244/2007 Headnote Where a parent company and one of its affiliates are in terms both contracting parties and the affiliate leaves the corporate group as a result of a management buy-out, such affiliate is still entitled to rely on the arbitration agreement to enforce the contract terms against the other party. An arbitrator so holding does not wrongly assume jurisdiction. Where an arbitrator fails to dismiss expressly a request by a party to strike off the record a submission filed by the other with a delay of one day, that does not amount to a breach of the parties’ right to present their case, where the award gives reasons, albeit implicitly. Such a refusal does not amount to a breach of the arbitrator’s duty to grant the parties equal treatment, where the terms of reference or the specific procedural rules set by the arbitrator do not require such sanction to be levied. Summary of the Decision F.G. Corp. and its subsidiaries (one of which was K. SAS, “K.”) on the one hand, and A.B. Corp. and its subsidiaries on the other hand (inter alia A.C. SE, A.D. Ltd., A.E. Ltd. and J. Ltd.), entered into a “Product Development Agreement” (PDA). This agreement contained an arbitration clause providing for ICC arbitration in Zurich. Due to a management buy-out, K. left the F.G. Corp Group. An “Assumption and Assignment Agreement” was signed in the course of the management buy-out. Through this agreement the rights arising under the PDA were transferred to K. About six months later K. brought arbitration proceedings against A.C., A.D., A.E. and J. The arbitral tribunal took into consideration K.’s statement of claim as well as its answer to the counterclaim despite the fact that K. had filed these submissions belatedly, by one day. By a partial award of 27 May 2007, the arbitrators assumed jurisdiction over the claim and the counterclaim and upheld in part both the claim and the counterclaim. The tribunal reserved its decision on K.’s claim for loss of opportunity to invest and damage to K.’s reputation. According to the arbitral tribunal, K. had not lost its capacity as a contracting party to the PDA as a consequence of the management buy-out.