BuildLaw Issue 27 March 2017 | Page 15

highly complex disputes. That purpose would not be served if the payment of damages was the only consequence for failing to comply with the pre-arbitral condition.
The court went on to assess whether an arbitral tribunal should dismiss the case outright for lack of temporal jurisdiction. However, the court found this solution to be problematic for two reasons. First, if the pre-arbitral step does not result in a settlement of the dispute, the parties would have to incur significant costs to initiate arbitration a second time. Second, the dismissal of the case could cause problems if the claims at issue are close to becoming time barred, as pre-arbitral ADR proceedings will not usually interrupt a limitation period.
The court therefore found that the preferable solution would be for an arbitral tribunal to suspend the arbitration to allow the parties to comply with the pre-arbitral condition. According to the court, it is for the arbitral tribunal to define the conditions and duration of the suspension in order to ensure in particular that a party cannot take advantage of it to unduly stall the arbitration.
A question of jurisdiction?
The court characterised the question of the consequence of non-compliance with a mandatory pre-arbitral condition as an issue of jurisdiction, which allowed it to review the matter in full in accordance with the Private International Law Act. However, the court was forthright about not being entirely convinced by its approach, conceding that it adopted it for lack of a better alternative. Indeed, the judges considered that there should be a consequence for failure to comply with a pre-arbitral requirement and acknowledged that addressing the issue as one of jurisdiction was the only way in which it could review the matter.
Comment
The decision provides welcome guidance on a question that often arises in construction disputes but that has long remained open. For arbitral tribunals, the decision imposes a practical solution over which tribunals can exercise some control in order to ensure that mandatory pre-arbitral conditions are not used by respondents to unduly delay arbitral proceedings. For would-be claimants, the decision emphasises the importance of complying with mandatory pre-arbitral conditions, but also makes clear that initiating arbitration prematurely (eg, in order to prevent claims from becoming time barred) will not entail drastic consequences.

THE AUTHORS

Matthias Scherer
Partner
Geneva

Samuel Moss
Associate
Geneva