The Swiss Arbitration Centre is innovative with the issuance of new principles committed to Swiss corporate regulation disputes, which may possibly be submitted to arbitration as a end 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 providers who determine to arbitrate their company regulation disputes in an productive fashion.
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 organizations to stipulate in their content of associations an arbitration clause. Swiss Organizations Confined by Shares (sociétés anonymes) will be able to determine, below Article 697n of the Swiss Code of Obligations, to settle their disputes by an arbitral tribunal seated in Switzerland. Unless the articles or blog posts of affiliation supply if not, the statutory arbitration clause shall bind not only the business but also the company’s governing bodies, their customers and the shareholders:
“The articles of association could offer that disputes arising below corporation law are to be made a decision by an arbitration tribunal in Switzerland. Except if if not offered in the content of affiliation, the organization, its organs, the customers of the organs and the shareholders are sure by the arbitration clause.”1
The chance to arbitrate corporate law disputes is prolonged to Swiss Partnerships Restricted by Shares (sociétés en commandite par actions)2 and Swiss Restricted Liability Firms (sociétés à responsabilité limitée).3
Corporate law disputes may well include: (1) difficulties in opposition to resolutions of the normal meeting (2) declaratory steps pertaining to the nullity of resolutions of the typical assembly or of the board of directors (3) legal responsibility actions versus users of the governing bodies of the company (4) actions for the return of advantages unduly dispersed to shareholders, associates of the board of administrators and people included in the administration of the enterprise (5) actions for inappropriate compensation payment adhering to a restructuring or (6) steps for the dissolution of the business.
Swiss organizations may refer to institutional principles to organise in much more element the arbitration proceedings (Art. 697n (3) CO). Two specific circumstances shall implement to the arbitration of Swiss company regulation disputes, as set out in Article 697n (2 and 3) CO:
- Each and every particular person anxious by the articles of affiliation and who may perhaps straight be afflicted by the lawful results of the arbitral award (“Affected People“) must be educated about the commencement and the termination of the proceedings and ought to be supplied the possibility to participate in the arbitration proceedings4 and
- The arbitration will have to be seated in Switzerland and ought to be ruled by the domestic arbitration chapter of the Swiss Code of Civil Method. Chapter 12 of the Swiss Private Global Law Act that regulates worldwide arbitration proceedings is expressly excluded.5 By the way, the events cannot exclude all appeals versus arbitral awards, which is normally doable underneath Chapter 12 of the PILA when none of the parties have their domicile, habitual home or seat in Switzerland.
Supplemental Swiss Guidelines for Company Legislation Disputes
In response to the revised corporation law in Switzerland, and in purchase to administer effectively future corporate regulation disputes submitted to arbitration proceedings, the Swiss Arbitration Centre issued its “Supplemental Swiss Rules for Corporate Law Disputes” (“Supplemental Principles“).
The Supplemental Guidelines will apply to any arbitration initiated immediately after 1 January 2023 pursuant to a statutory arbitration clause contained in the content articles of association of a Swiss company entity (Swiss Companies restricted by Shares, Swiss Partnerships Constrained by Shares and Swiss Restricted Legal responsibility Businesses).6
The Supplemental Policies are extra regulations to the Swiss Arbitration Centre’s arbitration principles and do not require specific reference to utilize as extensive as the arbitration clause refers to the “Swiss Rules of International Arbitration”.7
The Explanatory Take note of the Swiss Arbitration Centre (the “Explanatory Notice“) provides that the Supplemental Rules may well also apply to other entities. Associations or Cooperatives may choose to expressly point out in their statutory arbitration clause that the Supplemental Swiss Rules will utilize in situation of disputes.8 This shows the intention of the Swiss Arbitration Centre to encompass disputes from Swiss company entities independently of their incorporation.
The new Supplemental Guidelines established out 6 articles:
- Write-up 1 fixes the scope of application of the principles
- Write-up 2 delivers a process for notifications of the graduation and termination of the arbitration in compliance with Posting 697n of the Swiss Code of Obligations
- Article 3 enables prima facie Impacted Individuals to remark on the appointment of the arbitral tribunal
- Post 4 addresses the participation and intervention of 3rd folks all through the arbitration proceedings
- Post 5 demands the Secretariat to communicate upon ask for to prima facie Influenced People the names of the users of the arbitral tribunal and necessitates that the arbitral tribunal advise upon request the Afflicted People of the system of the arbitration proceedings, and, in its discretion, grant access to elements of the file and eventually,
- Posting 6 foresees the possibility for the arbitral tribunal to permit a judicial authority determine on interim and unexpected emergency reliefs ought to the arbitral tribunal think about it to be far more effective and appropriate in the occasion of a parallel request pending just before this judicial authority or even if the ask for in advance of the judicial authority is manufactured following.
Model Statutory Arbitration Clause
The Supplemental Principles also implies a design statutory arbitration clause, which displays the specificities of Swiss law and notably the prerequisite of new Article 697n CO to advise Affected 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 article content of affiliation, Swiss corporations will be certain that their arbitration clause is absolutely suitable with the new amendments of Swiss law. The arbitration clause would begin as follows:
Any company legislation dispute, excluding issues issue to summary proceedings pursuant to Posting 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 fixed by arbitration in accordance with the Swiss Procedures of Intercontinental Arbitration of the Swiss Arbitration Centre in pressure on the day on which the Discover 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 conducted in [insert desired language).
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.
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, Modification of 19 June 2020 of the Swiss Code of Obligations, Short article 697n (3) (unofficial translation).
5 RO 2020-4005, Amendment of 19 June 2020 of the Swiss Code of Obligations, Post 697n (2) (unofficial translation).
6 Swiss Arbitration Centre, Supplemental Swiss Policies for Company Law Disputes, Report 1.
7 Swiss Arbitration Centre, Supplemental Swiss Regulations for Company Legislation Disputes, Report 1.
8 Swiss Arbitration Centre, Explanatory Take note of the Supplemental Swiss Principles for Company Regulation Disputes, p. 6.
9 Swiss Arbitration Centre, Explanatory Take note of the Supplemental Swiss Principles for Company Regulation Disputes, p. 7.
10 New Post 697n (3) CO.
11 Swiss Arbitration Centre, Explanatory Be aware of the Supplemental Swiss Guidelines for Company Regulation Disputes, p. 7.
12 Swiss Arbitration Centre, Supplemental Swiss Policies for Company Legislation Disputes, Post 2.3.
13 New Article 697n (3) CO.
14 Swiss Arbitration Centre, Explanatory Be aware of the Supplemental Swiss Principles for Corporate Law Disputes, p. 11.