The Swiss Parliament Removes Lis Pendens as an Obstacle to International Arbitrations in Switzerland - WAMR 2006 Vol. 17, No. 12

Author(s): 

Charles H. Poncet

Page Count: 

4 pages

Media Description: 

PDF from World Arbitration and Mediation Report (WAMR) 2006 Vol. 17, No. 12

Published: 

December, 2006

Jurisdictions: 

Switzerland

Practice Areas: 

Authority of the Arbitral Tribunal,

Right to Decide on Jurisdiction,

International Character of Dispute,

International and Transnational Law,

Arbitral Decisions

Author Detail: 

Dr. Charles Poncet is WAMR correspondent in Switzerland and practices law in Geneva.

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Description: 

Originally from World Arbitration and Mediation Review

 

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Perspectives

The Swiss Parliament Removes Lis Pendens as an Obstacle to International Arbitrations

in Switzerland

by Dr. Charles Poncet1

The decision of the Swiss Supreme Court (“Federal Tribunal”) in the Fomento case2

led a small group of arbitration practitioners to lobby for a change in the Swiss Statute on

Private International Law and Arbitration (“PILA”). The Swiss Parliament went along and

amended PILA accordingly, thus enhancing Switzerland’s traditional appeal as a venue for

international arbitrations.

At issue in the Fomento case was lis pendens and more precisely whether or not

international arbitrators sitting in Switzerland must stay an arbitration when a state court

abroad was seized of the matter before the arbitration started. Fomento3, a Spanish company,

had been retained as a contractor by a Panamian company, Colon Container Terminals

(“CCT”), to work on the construction of a port terminal. A dispute arose. Fomento filed a

claim against CCT in Panama. Subsequently, CCT initiated an ICC arbitration in Switzerland

pursuant to the contract. The state court refused to dismiss the case on the basis of the

arbitration clause but this was reversed by the Panama Court of Appeals. The Supreme Court

of Panama reversed again in January 2001, effectively upholding the lower court and allowing

the litigation to proceed on the merits in the state courts of Panama notwithstanding the

arbitration clause. The Panamanian High Court did not refuse to uphold the arbitration

clause. It held that Fomento had failed to invoke it in a timely manner.

In the meantime, the arbitrators were asked to decline jurisdiction and to stay the

proceedings on the basis of Article 9 PILA, a provision embodying the classical rule whereby

when two (state) courts are seized of the same dispute between the same parties, priority must

be given to the court first seized under certain conditions. Specifically, Article 9 PILA4

requires (i) that the foreign court should be seized first, i.e. before the Swiss court and (ii) that

the foreign court is likely to decide the matter within a reasonable time by issuing a judgment,

which (iii) will be recognized in Switzerland.