22. January 2021

Arbitration Newsletter Switzerland: Extension of Arbitration Agreement to Non-Signatory based on Implied Consent – ICC Award set aside

In the recently published decision 4A_124/2020, the Swiss Federal Supreme Court (“Supreme Court”) had to assess whether the extension of an arbitration agreement to a non-signatory based on the implied consent doctrine by an ICC arbitral tribunal was justified.

The question was, whether the subcontractor’s behavior in an infrastructure project could be qualified as sufficient interference in the contract between the purchaser and the supplier so that the subcontractor could be deemed to have consented to the arbitration clause by implied action.

The Supreme Court came – contrary to the arbitral tribunal – to the conclusion that the subcontractor’s behavior would not allow for an extension of the arbitration agreement to the subcontractor. The subcontractor’s involvement in the performance of the contract was caused by its role as subcontractor of the supplier and had to be expected by the purchaser and the supplier. The subcontractor’s behavior could not be understood in good faith as a clear expression of the intention to agree to the arbitration clause in the contract between the purchaser and the supplier.