Enforcement in Switzerland - Chapter 13 - Enforcement of Arbitral Awards Against Sovereigns
Michael E. Schneider, Partner, Lalive Avocats
Joachim Knoll, Partner, Brown & Page LLP
Originally from Enforcement of Arbitral Awards Against Sovereigns
Arbitration specialists frequently explain that international arbitral awards in most cases are performed voluntarily. This is also the case with awards against States. As Böckstiegel pointed out in his seminal work on State contracts, extra-legal constraints often produce compliance with arbitral awards. Such constraints are effective in many business environments and they also apply to States, although sometimes in a different manner. In some cases compliance may take its time, as for instance the awards in the LIAMCO or the Turiff case have shown.
However, there are some cases where it is only through legal enforcement proceedings and the seizure of assets that the award creditor can obtain satisfaction. A striking recent case is that of the Sedelmayer award or the proceedings by the Noga company to which reference will be made later in this report. Indeed, it would seem quite likely that the existence of effective enforcement proceedings is a major factor in determining award debtors to comply voluntarily with an award.
Switzerland has been among the first countries which, in commercial matters, admitted enforcement measures against foreign States. Since the early 20th century it applied the restrictive theory of sovereign immunity, permitting both legal proceedings and enforcement action against foreign States, just as the Swiss Federal Government is subject to enforcement action domestically.