The new Swiss Rules of International Arbitration (“2021 Swiss Rules”) entered into force on 1 June 2021. These refer to the institutional rules of the newly created Swiss Arbitration Centre and replace the 2012 Swiss Rules of the (then) Swiss Chambers’ Arbitration Institution (“SCAI”). This rule modification, at the institutional level, follows another recent modification, at the legislative level, of Chapter 12 of the Swiss Private International Law Act (which took effect on 1 January 2021).
As with the former 2012 Swiss Rules, the 2021 Swiss Rules too apply to both international and domestic arbitrations. German, Italian, French and English versions of the rules are available on the newly created website of the Swiss Arbitration Centre. The 2021 Swiss Rules have already formed the subject of detailed newsletters, press reports, and webinars. Three aspects are of potential relevance for funders.
First, the 2021 Swiss Rules contain no specific provision on litigation funding, or disclosure of litigation funders. Profile Investment was informed that third-party funding was discussed during the drafting process, particularly in the context of arbitrator disclosures. However, it was concluded that Article 12 of the new Swiss Rules (“Independence, Impartiality and Disclosures of Arbitrators”) was sufficient. This contrasts markedly with, for a recent
example, Article 11(7) of the ICC Rules 2021 which effectively requires each party to inform the institution, arbitral tribunal and the other parties of the existence and identity of any funder(s) involved in an arbitration under the ICC Rules. While funders will continue to pay attention to the existence or absence of any specific disclosure obligations before investing into a case, this is unlikely to be a determinative factor in most cases.
Second, Appendix B to the Swiss Rules reduces the scales of the arbitrators’ fees; and as before, no institutional costs are charged for cases where the amount in dispute is lower than CHF 300,000.00. This is an unusual, if not unique, cost-related provision in institutional arbitration practice. The reassuring presence of a reputed arbitral institution without any administrative costs could appeal to (and benefit) funders too, not so much for cases in which they provide funding, and which will invariably exceed the said threshold, but rather for lower-value potential disagreements and disputes in which they may be involved as a party.
Third, the 2021 Swiss Rules reinforce the powers of the institution. Under the 2012 Swiss Rules, the arbitral tribunal could hold the parties’ deposits and the arbitral tribunal would issue the final award (Article 4.1 of Appendix B and Article 32(6) respectively). Under the 2021 Swiss Rules, both functions now devolve upon the Secretariat of the Arbitration Court (new Article 4.1 of Appendix B and Article 34(5)).
The lack of any new express provision regarding third-party funding – legislative or institutional – indicates that Switzerland remains a stable, safe and liberal seat for funders.
Author Régis Bonnan is a member of Profile Investment’s Enforcement team.
If you have any questions, please do not hesitate to get in touch with Régis via email: firstname.lastname@example.org.