BGE 4A_40/2018 of 26 September 2018, in French.
Arbitration Newsletter Switzerland – Helpful Clarification for the Timing of an Action for Annulment
On 10 October 2018 the Swiss Federal Supreme Court (the „Supreme Court„) published on its website a new decision in the field of international arbitration (the „Decision„)1, clarifying the deadline for filing an action for annulment pursuant to Article 190(2) Swiss Private International Law Act („PILA„) against awards rendered under the ICC Rules of Arbitration („ICC Rules„).
On 2 November 2015, Z Limited, an Australian mining company, initiated arbitration proceedings under the ICC Rules against X Sàrl, a Tunisian mining company and A, a further Tunisian company owned jointly by Z (51%) and X (49%). Geneva was determined as the seat of the arbitration and a sole arbitrator was nominated. On 13 October 2016 the arbitrator issued a partial award, accepting jurisdiction in the dispute between X and Z, but rejecting jurisdiction against A.
The final award was rendered on 29 November 2017 and was sent by email in PDF format on the same day as courtesy copy to the parties by the ICC Secretariat. The original copy of the final award was sent by the ICC Secretariat via DHL courier and reached X on 4 December 2017. On 19 January 2018 X then filed an action for annulment of this final award, pursuant to Article 190(2) PILA. Z objected, inter alia arguing that such filing was out of time. In its view the 30-day period for actions for annulment provided for in Article 100(1) of the Supreme Court Act had already started in casu on 30 November 2017, the day after the PDF file of the final award was sent by email to the parties, and accordingly the deadline for filing an action for annulment had already expired on 15 January 2018, taking into account the recess of the Supreme Court from 18 December 2017 to 2 January 2018. Consequently, the filing on 19 January 2018 was, in Z’s view of, out of time.
Z was basing its arguments primarily on Articles 3(2) and (3) of the ICC Rules2. Z concluded from these provisions that notifications – and therefore also awards – can validly be served by the ICC Secretariat by email. The Supreme Court, however, rejected this argument by emphasizing that according to Article 34(1) ICC Rules 20123 the Secretariat had to notify to the parties „the text signed by the arbitral tribunal„. In the opinion of the Supreme Court, this language requires that the parties be served with the original of the award. In this respect Article 34(1) of the ICC Rules 2012 stands as lex specialis to the general rules of service, as provided for in Article 3(2) of said rules.
The Supreme Court considered that its opinion was corroborated by Articles 128/129 and Articles 141 of the „Note to the Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration“4. In particular, Article 141 of such notes states:
„A courtesy copy of the PDF signed original of the awards, addenda and decisions will be sent to the parties by email. The sending of a courtesy copy by email does not trigger any of the time limits under the ICC Rules of Arbitration.“5
The Supreme Court then recalled its long standing jurisprudence that the notification of awards by telefax does not itself cause the starting of the time limit for the filing of an action for annulment6 and concluded that its argument developed there also stands, mutatis mutandis, in case the award is sent to the parties by electronic means. The Supreme Court, however, made a reservation for cases in which the applicable regulations do not require the original of the award to be sent to the parties.
In accordance with the foregoing the Supreme Court ruled that X’s time started to run only on 5 December 2012, the day after it received the original award and, consequently, the filing of the action for annulment occurred in a timely manner, again, considering the recess of the Supreme Court, on 19 January 2018. The Supreme Court then entered into the merits of the case, which was an alleged violation of X’s right to be heard; but this is not addressed in this article.
The starting point is Article 100(1) of the Supreme Court Act which sets the deadline for filing an action for annulment at 30 days after communication of the complete and executed copy.7 However, in order to find out what is to be understood under such a provision, the party filing an action for annulment must revert to the rules governing the arbitration proceedings. Neither the Supreme Court Act itself nor the provisions in Chapter 12 of PILA contain any reference as to how the award is to be served in order to trigger the 30 days deadline.
In the ICC Rules, applicable in the present case, the answer is clear, as shown above and the Supreme Court had already had opportunities to analyze further institutional rules in this respect, namely under the WIPO Rules for expedited proceedings8 and under CAS proceedings9: in both cases the service of the original of the award was required. However, other means of communication may become relevant as well, as revealed in a further Supreme Court decision10 where in proceedings at the Union Cycliste International (UCI) the award was required to be signed only by the president of the tribunal and was then required to be sent to the secretariat of the federation, with the parties receiving only copies. Notification had occurred in this case only via email applying the rules of proceedings at UCI, so the 30 days had been triggered by sending such email to the parties. Therefore, caution must be exercised when using the present new case: it is not a one size fits all case! However, the clarification made by the Supreme Court in the Decision is certainly helpful.
For those readers not being fully familiar with the proceedings for an action for annulment of an international award rendered in Switzerland, a short glance beyond the Decision might be of interest. Yes, the 30 days period is stiff, particularly in view of the fact that the party seeking the annulment has to bring forward within this deadline all its arguments in one and – in principle11 – only written submission, with no chance for an extension or an amendment at a later stage. As a rule there is also no public hearing at the Supreme Court12. However, in this one stop shop presentation the arguments for an action for annulment at the Supreme Court, the limited scope of Article 190(2) PILA has to be considered as well. An action for annulment can be based only on four formal grounds13 and the review of the merits is possible only under the extremely narrow concept of violation of (international) public policy14. Counsel submitting an action for annulment of an arbitral award is therefore well-advised not to seek to impress the Supreme Court with a voluminous brief. First, there is no time for this and, second only a direct chest-hit and not numerous small shot charges will do the trick anyway.
Nevertheless, it is certainly helpful if the parties are served a few days in advance with a courtesy copy, thus gaining some additional time. In this respect the CAS is particularly user-friendly since it generally sends a courtesy copy with the signature of the chairman only and then it may take even a few weeks until the duly signed original of the award is served. Furthermore, the Supreme Court’s decision in the FC Sion case prompted CAS in 2016 to amend its rules in this respect by making it now abundantly clear that only the service of the original award triggers the 30 days deadline.15
Finally, there is no need to extend this rigid 30 days limit. The Supreme Court is highly efficient in that it delivers its decisions within approx. 175 days from receiving the action for annulment16. Therefore, the parties enjoying this efficiency should also contribute to this result.
It seems that this stiff deadline continues also to stand in the presently still ongoing endeavors to polish certain provisions of PILA and its related provisions, such as under the Supreme Court Act. Right so!
Article 3(2) ICC Rules „… Such notification or communication may be made by delivery against receipt, registered post, courier, email, or any other means of telecommunication that provides record of the sending thereof.“; Article 3(3) ICC Rules: „A notification or a communication shall be deemed to have been made on the day it was received by the party itself or by its representative, or would have been received, if made in accordance with Article 3(2)“.
Article 34(1) ICC Rules 2012: „Once an award has been made, the Secretariat shall notify to the parties the text signed by the arbitral tribunal, provided always that the costs of the arbitration have been fully paid to the ICC by the parties or by one of them.“; now Article 35(1) ICC Rules 2017, with the identical wording.
In its version of 30 October 2017.
A similar wording is also regularly to be found in the ICC Secretariat’s cover letter attached to the PDF file of the award.
In particular 4A_392/2010 consid. 2.3.2 in the matter of FC Sion Association v. FIFA and Al-Ahly Sporting Club.
„… 30 Tage nach Eröffnung der vollständigen Ausfertigung„, „… dans les 30 jour qui suive la notification de l’expédition complète„, „… entro 30 giorni dalla notificazione del testo integrale della decisione„.
BGE 4A_582/2009, consid. 2.1.2, referring to Article 55(f) of an older version of the WIPO Expedited Arbitration Rules: „… The Center shall formally communicate an original of the award to each party and the arbitrator.“ The same wording can be found in Article 57(f) of the current WIPO Expedited Arbitration Rules.
See fn. 6 above. In the FC Sion case, the communication of the award occurred first by telefax and the Supreme Court made it clear that only the receipt of the original of the award would trigger the 30 days deadline (consid. 2.3 of this decision) – which was respected in this case.
BGE 4A_609/2014, consid. 2.3.1.
While the party filing an action for annulment is allowed to file a reply to the answer of the opposing party, no new arguments or grounds for the annulment of the award can be presented in this reply.
Apparently there were since the enactment of PILA in 1989 so far only two public hearings, namely in 2012 in Electrim v. Vivendi (BGE 138 II 714) and, just a few days ago, in The Russian Federation v. PJSC Ukrnafta and Stabil LLC (4A_396/2017 and 4A_398/2017, yet to be published).
Undue composition, lack of jurisdiction, ultra or infra petita and due process.
Felix Dasser and Piotr Wójtowicz have established an overall success rate of 7,53% only, having analyzed 438 decisions of the Supreme Court in the period of 1989 up to 2017 where it accepted jurisdiction (Felix Dasser/Piotr Wójtowicz, Challenges of Swiss Arbitral Awards, Updated Statistical Data as of 2017, ASA Bullettin, Vol. 36, No. 2, 2018). Out of the 194 cases were a violation of international public policy was invoked only two cases (i.e. 1%) were successful.
Article R59(4): „The award, notified by the CAS Court Office, shall be final and binding upon the parties subject to recourse available in certain circumstances pursuant to Swiss law within 30 days from the notification of the original award. …“; see also Antonio Rigozzi/Erika Hasler, N13 et seq. to Article R59 CAS Code, in: Manuel Arroyo (ed.), Arbitration in Switzerland, The Practitioners Guide, 2nd ed., 2018.
Felix Dasser/Piotr Wójtowicz, op. cit., p. 282.
Arbitration-Newsletter-of-24-October-2018.pdf (pdf 321 kB)