www.swissarbitration.org
Workshop II
Multi-party and Multi-contract Scenarios under
the Swiss Rules
Dr. Vladimir Djeric, MIKIJELJ JANKOVIC & BOGDANOVIC
Dr. Philipp Habegger LL.M., LALIVE SA, President of the Arbitration Court
Belgrade, 9 December 2015
Multi-party and Multi-contract disputes
- more and more frequent (ICC statistics for
2012: almost one third of all cases)
- issues:
- Equal treatment of parties in the constitution of
the arbitral tribunal
- Can all claims be heard in a single arbitration
(principle of privity of contracts)?
Gatekeeper Function of the Court
3(12) Swiss Rules
If the Respondent does not
submit an Answer to the
Notice of Arbitration, or if the
Respondent raises an
objection to the arbitration
being administered under
these Rules, the Court shall
administer the case, unless
there is manifestly no
agreement to arbitrate
referring to these Rules.
6(3) ICC Rules
If any party against which a claim has
been made does not submit an answer,
or raises one or more pleas concerning
the existence, validity or scope of the
arbitration agreement or concerning
whether all of the claims made in the
arbitration may be determined together
in a single arbitration, the arbitration
shall proceed and any question of
jurisdiction or of whether the claims may
be determined together in that
arbitration shall be decided directly by
the arbitral tribunal, unless the Secretary
General refers the matter to the Court
for its decision pursuant to Article 6(4).
Gatekeeper Function of the Court
3(12) Swiss Rules
6(4) ICC Rules
In all cases referred to the Court under
Article 6(3), the Court shall decide
whether and to what extent the
arbitration shall proceed. The arbitration
shall proceed if and to the extent that
the Court is prima facie satisfied that an
arbitration agreement under the Rules
may exist. In particular:
(i) where there are more than two
parties to the arbitration, the arbitration
shall proceed between those of the
parties, including any additional parties
joined pursuant to Article 7, with respect
to which the Court is prima facie satisfied
that an arbitration agreement under the
Rules that binds them all may exist; and
Gatekeeper Function of the Court
3(12) Swiss Rules
Decision of Court to administer
the case is without prejudice to
authority of arbitral tribunal to
decide whether it has jurisdiction
to hear the claims and if so
whether in a single arbitration!
6(4) ICC Rules cont’d
(ii) where claims pursuant to Article 9 are
made under more than one arbitration
agreement, the arbitration shall proceed
as to those claims with respect to which
the Court is prima facie satisfied (a) that
the arbitration agreements under which
those claims are made may be
compatible, and (b) that all parties to the
arbitration may have agreed that those
claims can be determined together in a
single arbitration.
The Court’s decision pursuant to Article
6(4) is without prejudice to the
admissibility or merits of any party’s plea
or pleas.
Gatekeeper Function of the Court
C
Contract A
R1
R2
R3
Art. 3(12) Swiss Rules
>< Art. 6(4)(i) ICC («arbitration agreement that binds them all»)
Gatekeeper Function of the Court
R1
C
R2
Art. 3(12) Swiss Rules
>< Art. 6(4)(ii) + 9 ICC («prima facie test (i) whether
arbitration agreements are compatible and (ii) whether parties may have
agreed that claims can be determined in single arbitration»)
Gatekeeper Function of the Court
C1
C2
Contract A
Contract B
Art. 3(12) Swiss Rules >< Art. 6(4)(ii) + 9 ICC
R1
R2
Appointment of arbitrators in multiparty proceedings
- traditionally: each group of parties (several
claimants or several respondents) to agree on
an arbitrator – otherwise: default appointent
by institution (or state court in ad-hoc
arbitration)
- Dutco decision of Cour de Cassation (France):
interests of two respondents were not aligned
Appointment of arbitrators in multiparty proceedings
Westland (Court of Justice Geneva, 26 Nov 1982;
Swiss Federal Supreme Court 16 May 1983)
– 1 claimant, 6 respondents; ICC appointed one
arbitrator for all respondents
– 1 respondent claimed unequal influence by the
parties on the appointment of the tribunal
– Swiss Supreme Court: not against ordre public; no
unequal influence as long as arbitrator appointed
by Claimant is independent and impartial  less
rigid than French Court of Cassation
Appointment of arbitrators in multiparty proceedings
Cantonal Court of Neuchâtel (17 June 1994) and Swiss Federal
Supreme Court (4 Jan 1995)
– Dissolution of a partnership: 7 claiming partners against
multiple responding partners. According to arbitration clause in
partnership agreement each group must jointly appoint an
arbitrator
– Group of claimants refer to Partner A as one of the respondents
in their preliminary claim, although he substantially shares the
claimants’ point of view
– the respondents refuse the joint appointment of an arbitrator
with A and appoint joint arbitrator without the involvement of A
– A goes to court and demands judicial appointment of an
arbitrator for all defendants  court rejects
Appointment of arbitrators in multiparty proceedings
High Court Zurich (11 September 2001)
– Simple partnership with three members X, Y und Z.
Arbitration clause: each member appoints an
arbitrator und they appoint by majority vote a
chairman amongst themselves
– X sues Y and Z. X requires that the latter jointly
designate an arbitrator. Y and Z refuse. X goes to court
for substitute appointment for Y and Z jointly
– Court granted the request: Respondents’ side would
otherwise be "over-represented" in the arbitration or
would be outbalanced in the appointment of the
Chairman  equal treatment!
Appointment of arbitrators in multiparty proceedings
Swiss Federal Supreme Court (4 August 2006)
– Claimant group appointed its arbitrator. CAS
appointed arbitrator for the two defendants X and
Judicial Committee of the International Equestrian
Federation (decision of the Judicial Committee was
challenged before the CAS arbitral tribunal)
– X challenged award with argument he alone should
have been allowed to make an appointment or all
arbitrators should have been appointed by CAS
– Challenge dismissed because of (i) forfeiture and (ii)
aligned interests between X and Judicial Committee
Appointment of arbitrators in multiparty proceedings
₋ Equal treatment less stringent than under
Dutco (new French arbitration law?)
₋ But: "indivisible claims" or necessary joinder
of parties in accordance with the applicable
substantive law ("Necessary consority" or
"compulsory joinder")
₋ Previous waiver of right of appointment in
arbitration clause valid (directly or indirectly
by reference to arbitration rules)?
Appointment of arbitrators in multiparty proceedings
Art. 8 (3-5) Swiss Rules
3.
4.
5.
In multi-party proceedings, the arbitral tribunal shall be constituted in
accordance with the parties’ agreement.
If the parties have not agreed upon a procedure for the constitution of
the arbitral tribunal in multi-party proceedings, the Court shall set an
initial thirty-day time-limit for the Claimant of group of Claimants to
designate an arbitrator, and set a subsequent thirty-day time-limit for
the Respondent or group of Respondents to designate an arbitrator. If
the party or group(s) of parties have each designated an arbitrator,
Article 8(2) shall apply to the designation of the presiding arbitrator.
Where a party or group of parties fails to designate an arbitrator in
multi-party proceedings, the Court may appoint all of the arbitrators,
and shall specify the presiding arbitrator.
Appointment of arbitrators in multiparty proceedings
Situations that may lead to Article 8(5):
• the group of claimants cannot agree (rare)
• the group of respondents cannot agree
• the respondents fail to participate in the proceedings (600331,
600334)
Note: the Court is free to (nevertheless) appoint an arbitrator
designated by a party or group of parties (600334)
Appointment of arbitrators in multiparty proceedings
Art. 5 (3) Swiss Rules
3. In the event of any failure in the constitution of
the arbitral tribunal under these Rules, the
Court shall have all powers to address such
failure and may, in particular, revoke any
appointment made, appoint or reappoint any of
the arbitrators and designate one of them as the
presiding arbitrator.
Appointment of arbitrators in multiparty proceedings
Party autonomy prevails (Art. 8(3))  options:
– Appointment of all arbitrators jointly by all parties, if failed
appointment of entire arbitral tribunal by the institution?
– Each party has right to appoint its own arbitrator, regardless of number of parties? May lead to more than three
arbitrators. At most, "padding/filling" on the side with
fewer parties?
– Exclusion of multi-party proceedings? (reservation of
applicable substantive law)
– But: Party autonomy (Art. 8(3)) does not require that Court
implement party agreement which is invalid under
applicable arbitration law (Art. 1(5), Art. 5(3)).
Consolidation
Art. 4(1) Swiss Rules
Where the Notice of Arbitration is
submitted between parties already
involved in other arbitral proceedings
pending under these Rules, the Court
may decide, after consulting with the
parties and any confirmed arbitrator in
all proceedings, that the new case shall
be consolidated with the pending arbitral
proceedings. The Court may proceed in
the same way where a Notice of
Arbitration is submitted between parties
that are not identical to the parties in the
pending arbitral proceedings.
Art. 10 ICC Rules
Consolidation of Arbitrations
The Court may, at the request of a party,
consolidate two or more arbitrations
pending under the Rules into a single
arbitration, where:
a) the parties have agreed to
consolidation; or
b) all of the claims in the arbitrations are
made under the same arbitration
agreement; or
c) where the claims in the arbitrations are
made under more than one arbitration
agreement, the arbitrations are
between the same parties, the disputes
in the arbitrations arise in connection
with the same legal relationship, and
the Court finds the arbitration
agreements to be compatible.
Consolidation
Art. 4(1) Swiss Rules cont’d
When rendering its decision, the Court
shall take into account all relevant
cicurmstances, including the links
between the cases and the progress
already made in the pending arbitral
proceedings. Where the Court decides to
consolidate the new case with the
pending arbitral proceedings, the parties
to all proceedings shall be deemed to
have waived their right to designate an
arbitrator, and the Court may revoke the
appointment and confirmation of
arbitrators and apply the provisions of
Section II (Composition of the Arbitral
Tribunal).
Art. 10 ICC Rules cont’d
In deciding whether to consolidate, the
Court may take into account any
circumstances it considers to be relevant,
including whether one of more
arbitrators have been confirmed or
appointed in more than one of the
arbitrations and, if so, whether the same
or different persons have been
confirmed or appointed.
When arbitrations are consolidated, they
shall be consolidated into the arbitration
that commenced first, unless otherwise
agreed by all parties.
Consolidation
- The Court may consolidate under the terms of Article 4(1) SR:
• two cases between the same parties
• two cases between parties that are not identical
- To be distinguished:
• “voluntary” consolidation (with the consent of all parties)
 concerned most cases of consolidation so far
• “forced” consolidation (against the will of a party)
 rarely applied thus far (e.g. 600237)
Consolidation
Example of “forced consolidation”:
600237
Contract 1
Party A
Claim for USD 1.1m
Contract 2
Party B
Counterclaim for USD 4.2m
600285
Party A
Contract 2
Claim for USD 4.2m
Party B
Consolidation
- If consolidation is ordered, the Court may revoke the
appointment and confirmation of arbitrators and re-apply
Arts. 5-8 (incl. Art. 8(5))
• Tool designed to ensure procedural fairness in (rare) cases
of “forced” consolidation, in particular when between
parties that are not identical.
• No case under Swiss Rules 2012 so far.
Consolidation
- Art. 4(1) Swiss Rules allows consolidation even if parties
in both/multiple arbitrations are not identical (><ICC)
(see Art. 15 VIAC: seems possible if the same arbitrators)
- Court has right to revoke earlier appointment(s) (cf.
already competence in Art. 5(3)) and can re-constitute
tribunal in the consolidated case (in accordance with Art.
8(3-5), i.e. Court may appoint all members in the
consolidated case, but does not have to (Art. 8(5) Swiss
Rules >< Art. 28.6 HKIAC Rules 2013)
Joinder
Article 4(2) Swiss Rules
Where one or more third persons
request to participate in arbitral
proceedings already pending under
these Rules or where a party to
pending arbitral proceedings under
these Rules requests that one or
more third persons participate in the
arbitration, the arbitral tribunal shall
decide on such request, after
consulting with all of the parties,
including the person or persons to be
joined, taking into account all
relevant circumstances.
Art. 7(1) ICC Rules
A party wishing to join an additional party to
the arbitration shall submit its request for
arbitration against the additional party (the
“Request for Joinder”) to the Secretariat. The
date on which the Request for Joinder is
received by the Secretariat shall, for all
purposes, be deemed to be the date of the
commencement of arbitration against the
additional party. Any such joinder shall be
subject to the provisions of Articles 6(3)-6(7)
and 9. No additional party may be joined after
the confirmation or appointment of any
arbitrator, unless all parties, including the
additional party, otherwise agree. The
Secretariat may fix a time limit for the
submission of a Request for Joinder.
Joinder
-
Swiss Rules
additional Claimant
yes
additional Respondent yes
side intervention
yes
amicus curiae
yes
Joinder after
yes, but
constitution?
Decision by:
arbitral tribunal
ICC Rules
no
yes
no
yes?
no, but
ICC Court
Joinder
• Problems («all relevant circumstances»):
– Implicit consent by agreeing to Swiss Rules? No, Art.
4(2) does not provide jurisdictional basis, but:
• Claim made under same arbitration agreement?
• Multiple related contracts containing the same or
compatible arbitration clauses?
– Specific cirumstances:
• Connection, common issues of fact/law
• Risk of conflicting results if third person is not joined
• Timing of request, progress made in procedure, other
efficiency considerations
• Compatibility of clauses, type of procedure etc.
• Confidentiality (Art. 44), privacy of arbitration
Joinder
• Problems («all relevant circumstances»):
– Joinder of third person after tribunal has been
constituted:
• In the context of intervention: third person to be
deemed to have accepted the constitution of the
arbitral tribunal?
• If third person requested to join at request of an initial
party:
– Third person accepts tribunal as constituted
– If no acceptance: joinder probably not possible (unequal
treatment in constitution of tribunal)  file new arbitration
and request consolidation?
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