The Swiss Arbitration Centre is innovative with the issuance of new regulations focused to Swiss company legislation disputes, which may be submitted to arbitration as a final result of a revision of the Swiss Code of Obligations, which will enter into force on 1 January 2023. The Supplemental Swiss Principles will accompany Swiss corporations who make your mind up to arbitrate their corporate law disputes in an economical manner.
Revised Swiss Code of Obligations
New amendments to the Swiss Code of Obligations (“CO”) will enter into power on 1 January 2023, introducing inter alia the probability for Swiss businesses to stipulate in their posts of associations an arbitration clause. Swiss Providers Restricted by Shares (sociétés anonymes) will be capable to choose, under Short article 697n of the Swiss Code of Obligations, to settle their disputes by an arbitral tribunal seated in Switzerland. Until the article content of affiliation deliver otherwise, the statutory arbitration clause shall bind not only the enterprise but also the company’s governing bodies, their members and the shareholders:
“The content articles of affiliation could provide that disputes arising beneath company regulation are to be made a decision by an arbitration tribunal in Switzerland. Except normally offered in the content of association, the enterprise, its organs, the associates of the organs and the shareholders are bound by the arbitration clause.”1
The chance to arbitrate company legislation disputes is prolonged to Swiss Partnerships Restricted by Shares (sociétés en commandite par actions)2 and Swiss Confined Legal responsibility Corporations (sociétés à responsabilité limitée).3
Corporate regulation disputes may incorporate: (1) worries towards resolutions of the standard conference (2) declaratory actions regarding the nullity of resolutions of the basic assembly or of the board of directors (3) liability steps from members of the governing bodies of the enterprise (4) steps for the return of added benefits unduly distributed to shareholders, customers of the board of administrators and individuals included in the administration of the business (5) actions for inappropriate compensation payment adhering to a restructuring or (6) steps for the dissolution of the business.
Swiss firms might refer to institutional guidelines to organise in much more element the arbitration proceedings (Art. 697n (3) CO). Two specific problems shall apply to the arbitration of Swiss corporate legislation disputes, as established out in Post 697n (2 and 3) CO:
- Every man or woman anxious by the articles of affiliation and who may right be affected by the lawful outcomes of the arbitral award (“Afflicted People“) really should be informed about the commencement and the termination of the proceedings and should really be presented the risk to take part in the arbitration proceedings4 and
- The arbitration ought to be seated in Switzerland and must be ruled by the domestic arbitration chapter of the Swiss Code of Civil Technique. Chapter 12 of the Swiss Non-public Worldwide Regulation Act that regulates intercontinental arbitration proceedings is expressly excluded.5 Incidentally, the parties simply cannot exclude all appeals from arbitral awards, which is normally attainable less than Chapter 12 of the PILA when none of the parties have their domicile, recurring home or seat in Switzerland.
Supplemental Swiss Procedures for Corporate Law Disputes
In reaction to the revised enterprise law in Switzerland, and in order to administer efficiently upcoming corporate legislation disputes submitted to arbitration proceedings, the Swiss Arbitration Centre issued its “Supplemental Swiss Regulations for Company Regulation Disputes” (“Supplemental Principles“).
The Supplemental Procedures will implement to any arbitration initiated following 1 January 2023 pursuant to a statutory arbitration clause contained in the article content of association of a Swiss company entity (Swiss Companies minimal by Shares, Swiss Partnerships Limited by Shares and Swiss Restricted Legal responsibility Corporations).6
The Supplemental Principles are more rules to the Swiss Arbitration Centre’s arbitration guidelines and do not will need specific reference to implement as prolonged as the arbitration clause refers to the “Swiss Rules of International Arbitration”.7
The Explanatory Take note of the Swiss Arbitration Centre (the “Explanatory Note“) adds that the Supplemental Guidelines may also utilize to other entities. Associations or Cooperatives might select to expressly point out in their statutory arbitration clause that the Supplemental Swiss Procedures will utilize in case of disputes.8 This shows the intention of the Swiss Arbitration Centre to encompass disputes from Swiss corporate entities independently of their incorporation.
The Regulations
The new Supplemental Policies established out six posts:
- Short article 1 fixes the scope of application of the procedures
- Post 2 offers a treatment for notifications of the commencement and termination of the arbitration in compliance with Report 697n of the Swiss Code of Obligations
- Write-up 3 will allow prima facie Impacted Individuals to comment on the appointment of the arbitral tribunal
- Post 4 addresses the participation and intervention of 3rd individuals for the duration of the arbitration proceedings
- Report 5 requires the Secretariat to communicate on request to prima facie Impacted Folks the names of the users of the arbitral tribunal and calls for that the arbitral tribunal advise on request the Affected Persons of the training course of the arbitration proceedings, and, in its discretion, grant accessibility to sections of the file and ultimately,
- Article 6 foresees the risk for the arbitral tribunal to permit a judicial authority decide on interim and emergency reliefs must the arbitral tribunal think about it to be a lot more successful and proper in the occasion of a parallel ask for pending ahead of this judicial authority or even if the ask for right before the judicial authority is built immediately after.
Design Statutory Arbitration Clause
The Supplemental Procedures also implies a design statutory arbitration clause, which reflects the specificities of Swiss legislation and notably the prerequisite of new Post 697n CO to notify Impacted People about the graduation of the arbitration and the issuance of the award, and make it possible for interveners in the proceedings.
By incorporating this product statutory arbitration clause in their content of affiliation, Swiss corporations will assure that their arbitration clause is thoroughly appropriate with the new amendments of Swiss legislation. The arbitration clause would start out as follows:
Any company regulation dispute, excluding matters subject matter to summary proceedings pursuant to Post 250(c) of the Swiss Civil Treatment Code [and excluding actions for cancellation of outstanding equity shares according to the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading], shall be solved by arbitration in accordance with the Swiss Principles of Global Arbitration of the Swiss Arbitration Centre in pressure on the day on which the Recognize of Arbitration is submitted in accordance with those people Principles.
The seat of the arbitration shall be [insert name of the company seat/other city in Switzerland].
The arbitration proceedings shall be performed in [insert desired language).
Affected Persons
Notification towards persons who may be directly affected by the legal effects of the arbitral award (Affected Persons), or notification to the Company itself when it is not party to arbitration, is fundamental in corporate law disputes arbitration. Whereas arbitral awards do not have, as a matter of principle, legal effect towards others than Claimant and Respondent, corporate law disputes awards may directly affect third parties. This is the case for example if the arbitration procedure deals with the question of the existence of the company or its dissolution, if the arbitral tribunal needs to determine the legality and validity of resolutions taken by governing bodies, or if the arbitral tribunal orders compensation payment following a restructuring.9
Swiss law requires that the articles of association (or the arbitration rules to which they refer) shall ensure that the Affected Persons are informed of the commencement of the arbitration proceedings, enabling them to participate if they wish.10 The Supplemental Rules provide key provisions to ensure this.
Under Article 2 of the Supplemental Rules, the company must notify within five days of the commencement of an arbitration all the shareholders or other Affected Persons of the existence of the proceedings. This is assuming that the company is party to the arbitration. If the company is not party to the arbitration, it will have to notify the Affected Persons quickly after it becomes aware of its existence11 (noting that the Swiss Arbitration Centre’s Secretariat has an obligation to notify the request for arbitration to the company).12 Claimant may also alleviate this company’s obligation by naming the Affected Persons directly in the request for arbitration.
Article 2.6 of the Supplemental Rules also requires notification of the termination of the arbitration proceedings, whether this is to summarise an arbitral award or to inform the Affected Persons of a settlement agreement.
The admission of Affected Persons as additional parties is governed by Article 6(1) of the Swiss Rules (respectively Article 7(1) in case of a consolidation of parallel arbitration proceedings).
Finally, Affected Persons have the possibility, at any time, to request to the arbitral tribunal their participation to the proceedings as non-party interveners—not as an additional party.13 As non-party interveners, they generally do not have procedural rights but may comment, upon request of the tribunal, on certain acts of the procedure. The Explanatory Note suggests that in order to maintain an efficient and expeditious conduct of the proceedings, the arbitral tribunal may ask the interveners, in cases they are numerous, to form groups and appoint a common representative.14
Appointment of the Arbitral Tribunal
The involvement of Affected Persons in the arbitral proceedings may complicate the process of appointing arbitrators at the outset of the arbitration. If the parties are to designate the arbitrators composing the tribunal, the Affected Persons will have the right to comment and raise objections.
A simple and faster solution will be to provide for the appointment of the arbitral tribunal by the Swiss Arbitration Court. In that case, the Parties and the Affected Persons are simply not involved in the tribunal’s appointment. The Explanatory Note leaves a possibility for the Court to accept, in exceptional circumstances and at its discretion, comments from Affected Persons and the Parties.
Emergency Relief
Lastly, the Supplemental Rules provide a specific mechanism for interim and emergency relief given that the urgent reliefs sought may be different in the context of corporate law disputes. If the interim measure presumes enforcement measures from local authorities or if the measures target a third person not bound by the statutory arbitration clause (e.g. a commercial registry), it may be more efficient to seek relief to local courts directly.
Article 6 of the Supplemental Rules gives arbitrators broad discretion in dealing with requests for interim or emergency relief; they may defer the question or reject it when judicial authorities are seized with the same interim questions. The Supplemental Rules suggest that even when the request before judicial authorities is made after the request to the arbitral tribunal, the latter can decide to leave the question to a judge if it deems more appropriate.
1 R.O 2020-4005, Amendment of 19 June 2020 of the Swiss Code of Obligations, Article 697n (1) (unofficial translation).
2 Article 764 (2) CO: “Unless otherwise provided, the provisions governing companies limited by shares apply to partnerships limited by shares”.
3 New Article 797a CO: “The provisions of companies limited by shares regarding the arbitral tribunal shall apply mutatis mutandis [to limited liability companies]” (unofficial translation).
4 RO 2020-4005, Amendment of 19 June 2020 of the Swiss Code of Obligations, Posting 697n (3) (unofficial translation).
5 RO 2020-4005, Modification of 19 June 2020 of the Swiss Code of Obligations, Short article 697n (2) (unofficial translation).
6 Swiss Arbitration Centre, Supplemental Swiss Procedures for Company Legislation Disputes, Write-up 1.
7 Swiss Arbitration Centre, Supplemental Swiss Guidelines for Corporate Legislation Disputes, Write-up 1.
8 Swiss Arbitration Centre, Explanatory Observe of the Supplemental Swiss Principles for Company Law Disputes, p. 6.
9 Swiss Arbitration Centre, Explanatory Notice of the Supplemental Swiss Rules for Company Legislation Disputes, p. 7.
10 New Post 697n (3) CO.
11 Swiss Arbitration Centre, Explanatory Observe of the Supplemental Swiss Policies for Company Legislation Disputes, p. 7.
12 Swiss Arbitration Centre, Supplemental Swiss Policies for Company Law Disputes, Article 2.3.
13 New Short article 697n (3) CO.
14 Swiss Arbitration Centre, Explanatory Observe of the Supplemental Swiss Guidelines for Corporate Legislation Disputes, p. 11.
