- Rafael Albrecht
Recognition and Enforcement of Arbitral Awards in Switzerland: an Overview
In Switzerland, the recognition and enforcement of foreign arbitration awards, i.e. any award rendered by an arbitral tribunal with seat outside of Switzerland, is governed by the New York Convention, regardless of reciprocity. Switzerland has been a party to the New York Convention since 1965, and article 194 of the Swiss Private International Law Act (PILA) extends the scope of the New York Convention to any foreign award, whether or not the place of arbitration was in a state party to the New York Convention.
Pursuant to Article III NYC, Switzerland recognises arbitral awards as binding and enforces them in accordance with the rules of procedure of its territory, and under the conditions laid down in the NYC. Additional requirements for enforcement are not imposed.
As per the NYC, the requirements will typically be directly examined by the Swiss Courts in the course of the enforcement proceedings as a preliminary question. It is also possible to, alternatively, conduct separate proceedings that are confined to the mere recognition of the award. In practice, the rule is having the award declared enforceable (preliminary matter) within the framework of debt collection proceedings or, if the debtor has known specific assets within the attachment proceedings. Thus, the creditor could benefit from a surprise effect on the debtor, and there is no risk of (negative) res judicata in case not all conditions for recognition and enforcement are met.
Hence final awards (whether complete or partial) are enforceable in Switzerland. However, by their very nature, declaratory awards (i.e. the arbitral tribunal declares the rights and obligations of the parties or interprets a contract or a treaty, but does not award damages or issue an injunction) are not enforceable, subject to the existence of a legitimate interest of the applicant. They can, nevertheless, be incidentally recognised by Swiss courts as binding the parties.
As for interim measures issued by foreign arbitral tribunals, these are not directly enforceable and, in the absence of voluntary compliance, must be issued by an ordinary court, i.e. the court shall apply its own law (Article 183(2), PILA). The Swiss judge has jurisdiction to order interim measures on the basis of Article 10 of the PILA. Swiss law must be applied, namely Article 261ff of the CCP.
Furthermore, under Article IV NYC, the party applying for recognition and enforcement of the award is required to comply with a limited number of formal requirements. Notably, the applicant must establish the authenticity and contents of the award as well as the existence of an arbitration agreement on which the award is based.
For this purpose, the original award duly authenticated or a duly certified copy thereof, and the original arbitration agreement or a duly certified copy thereof must be submitted.
As for the language, although according to the Article IV(2) of the New York Convention Swiss courts may dispense with the requirement of submitting the award and the arbitration agreement in an official Swiss language (German, French or Italian), an official certified translation must be submitted. However, the Swiss Federal Supreme Court confirmed that in the case of English awards, a translation of the relevant sections, i.e. namely the operative part of the award, is sufficient and a full translation is not needed ([BGer] Jul. 2, 2012, 138 [BGE] III 520).
The competent court is generally the cantonal enforcement court, once the organisation of the cantonal courts is subject to cantonal law, the actual title of the competent court may vary from canton to canton. Enforcement can generally be sought in the canton in which the debtor is domiciled or has its seat, as well as in the canton where enforcement measures are to be taken, e.g. where the assets to be frozen are located.
For the purpose of objecting to any recognition of enforcement action in Switzerland, as per article V NYC, the debtor would have to raise and provide evidence for the existence of grounds for refusal of the recognition and enforcement of the arbitral award.
The list of grounds for refusal as provided for by article V(1) NYC is exhaustive, and basically provides for the following: invalidity of the arbitration agreement; violation of due process; the arbitral award is dealing with a difference not contemplated by or not falling within the scope of the arbitration agreement; the arbitral tribunal was not properly constituted or the arbitral procedure was not held in accordance with the arbitration agreement; and the arbitral award is not yet binding, set aside or suspended.
The burden of proof for these grounds for refusal lie with the debtor, as the debtor will, as a rule, not be precluded from raising these objections, if he or she failed to initiate actions to challenge or annul the award in the jurisdiction where the award was rendered. However, the principle of acting in good faith and abuse of right still requires a party to raise any formal objections or challenge in the arbitration proceeding itself, otherwise, according to the Swiss Federal Supreme Court, these formal objections or challenges have been forfeited.
Under Swiss law, as already mentioned above, there are basically two alternatives to declare a foreign judgement enforceable. There is the ordinary route, which is defined by the Lugano convention, meaning the request of a separate declaration of enforceability (Articles 41 and 42). And a judgement (awarding a monetary claim) can be declared enforceable within the framework of ordinary debt collection proceeding, usually the enforcement process for money claim, which is different to the enforcement of other claims.
In conclusion, after potential challenging and objection, and depending on the status of the debtor, the enforcement process is continued by the opening of bankruptcy proceedings or by the seizure of particular assets and the income of the debtor, whilst the request to declare the judgment enforceable can be combined with the request to freeze certain assets in Switzerland.
For other claims, apart from monetary, the court to declare the foreign judgement enforceable will usually also determine how these claims are to be enforce.
At swisslitigator.com , a service by Advokatur GTK GmbH, we provide advise on Swiss jurisdiction matters and represent clients vis-a-vis all courts in the German speaking regions of Switzerland.