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Chapter 12 of the Private International Law Act of 18 December 1987 („PILA”), which is applicable to international arbitration proceedings seated in Switzerland, is currently subject to a review process. The preliminary draft amending PILA aims at implementation of the most important concepts created by the Swiss Federal Tribunal in arbitration cases as well as strengthening the position of Switzerland as an arbitration-friendly forum.

The Swiss Federal Council prepared a report on the preliminary draft, which describes and justifies proposed changes. Below four of the changes are analyzed.

First, the preliminary draft provides for clarifying the PILA’s scope of application. At present, according to Article 176 (1), PILA is applicable to arbitration seated in Switzerland if, at the time of the conclusion of the arbitration agreement, at least one of the parties had either its domicile or its habitual residence in Switzerland. It has been established in the Swiss case law that later change of domicile or habitual residence by that party has no impact on the application of PILA. This concept is literally expressed in the preliminary draft.

Second, there is a proposal to liberalize the standards on the form of arbitration agreement. According to the project, it is sufficient that only one party’s statement of will is evidenced in writing. For example, if a party sends an offer to arbitrate by e-mail, this offer may be accepted by the other party in a telephone conversation or by any other mean, which is not acceptable under the current version of PILA. The preliminary draft also provides for a possibility to conclude an arbitration agreement by unilateral acts such as last wills or tender offers.

Third, the preliminary draft provides the state court with a competence to appoint arbitrators in multi-party proceedings, if the parties have not decided themselves on the rules of appointment. This is to ensure greater effectiveness of arbitration in such cases.  

Fourth, the preliminary draft also changes the Federal Tribunal Act in order to i.a. enable the parties to submit briefs in the setting aside proceedings before the Federal Tribunal in English. However, the Tribunal’s judgments will be rendered in one of the official languages.

The review of PILA is subject to vigorous debate in Swiss arbitration community, which is evidenced by the Swiss Arbitration Association’s paper assessing the preliminary draft and providing some recommendations for the legislator.

Swiss Federal Council Report (in German): https://www.bj.admin.ch/dam/data/bj/aktuell/news/2017/2017-01-11/vn-ber-d.pdf

ASA’s paper (in German and English): http://www.arbitration-ch.org/en/publications/asa-position-papers/index.html

Prepared by: Aleksandra Orzeł-Jakubowska, associate, Łaszczuk & Partners

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