business partner is not willing to agree to litigation in Switzerland. Arbitration can be invoked as neutral alternative to agreeing to the jurisdiction of foreign courts. Not only can the risk of a biased court be avoided but also proceedings with a very long duration. Even in jurisdiction with a court system known to be efficient, the possibility of several instances of appeal renders arbitration with its very limited opportunities to appeal the award more attractive. Other advantages of arbitration are that arbitrators with specific expertise and experience in banking law and/or with finance disputes may be chosen and that the proceedings can be conducted in English. Are the usual concerns still justified? The availability of interim relief is still perceived as argument in favor of litigation (and against arbitration). This perception is, however, unjustified and outdated considering that the rules of the major arbitration institutions today provide the possibility to request interim relief from an emergency arbitrator. As a consequence, interim relief against a contractual party can also be obtained swiftly before the constitution of the arbitral tribunal. Likewise, if arbitral proceedings have already been initiated and the arbitral tribunal constituted, interim relief can be obtained from the arbitral tribunal. While in case of non-compliance, state courts need to be involved to enforce the interim relief granted, parties have an incentive to comply voluntarily in order not to displease the arbitral tribunal. Alternatively, interim relief can be requested directly from a state court. The arbitration clause does not bar the parties to do so. Further concerns raised include the proper application of Swiss law. These concerns stem from the fact that the arbitrators may not be Swiss qualified lawyers and that awards cannot be challenged based on the improper application or wrong interpretation of Swiss law before the Swiss Federal Court. These concerns can be addressed by including an arbitration clause requiring all or the presiding arbitrator to have certain qualifications in Swiss law. In addition, arbitral tribunals tend to consider the relevant literature and case law much like state court judges. Conclusion In conclusion, it seems that the financial industry's strong preference of state court litigation is no longer justified. For certain contractual relationships financial institutions regularly are parties to, arbitration offers significant advantages compared to state court litigation in Switzerland.
ABOUT THE AUTHOR
Barbara Badertscher Senior Associate
Barbara Badertscher is an attorney in the Dispute Resolution Team. She advises and represents clients before state courts and arbitral tribunals. Furthermore, she advises clients on general commercial and corporate law matters as well as on contract law.