Valid clause waiving the appeal to the Federal Tribunal

Case information
March 21, 2011
4A_486/2010
Interest to foreign readers: 
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Interesting
Topics: 
Waiver of appeal to the Federal Tribunal
Original language: 
French
Chairman: 

Parties

Appellant: 
Respondent: 
Introductory note: 

The dispute arose between a Tunisian citizen and a French company and the Shareholders’ Agreement they had entered into on September 4, 2010. The Agreement contained an arbitration clause providing for ICC arbitration in Geneva. A three-member panel of arbitrators was constituted with Tim Portwood as Chairman, and Paul Friedland and Francesco Marena as Arbitrators. The arbitral tribunal issued an award on March 1, 2010, which the French company sought to rectify. The Arbitral tribunal accordingly issued an Addendum to the award on June 28, 2010. The Tunisian citizen subsequently appealed to the Federal Tribunal.

 

The case was not admitted on the basis of an “opt–out” clause contained in the Shareholders’ Agreement. As you will see (see section 2.2 of the opinion) the Parties had agreed that the award would be “final and binding” and that “neither Party shall have any right to appeal such decision to any Court of law.”

 

In accordance with its previous decisions on this issue, the Court held that whilst not specifically referring to Art. 190 or 192 PILA – which is not a requirement for a valid opt-out clause under Swiss law – the interpretation of the clause at hand manifestly showed that it had been the intent of the Parties to rule out any appeal.

Translation: 

4A_486/20101

 

Judgment of March 21, 2011

 

First Civil Law Court

 

Federal Judge KLETT (Mrs), Presiding

Federal Judge CORBOZ,

Federal Judge KISS (Mrs),

Clerk of the Court: CARRUZZO.

 

X.________,

Appellant,

 

 

v.

 

 

Y.________ SA,

Respondent,

Represented by Mr. Sébastien Besson and Mr. Pierre-Yves Gunter

 

 

Facts:

 

A.

In a final award of March 1, 2010, a three-member arbitral tribunal under the aegis of the International Chamber of Commerce (ICC) with its seat in Geneva, rejected the claim initiated on April 2, 2007, by X.________, a Tunisian citizen domiciled in Tunis (Tunisia) against Y.________ SA (hereafter: Y.________), a company organized under French law and incorporated in [name of the place omitted] (France). It ordered the Claimant to pay to the Respondent some USD 1.2 million as costs and expenses.

 

The aforesaid award was not appealed.

 

B.

On March 15, 2010, Y.________ submitted a request for rectification of an error contained in the final award to the ICC, based on Art. 29 of the ICC Rules. Whilst paragraph 83 of the award stated that the ICC Court had extended the time limit to render the final award until February 28, 2009, at its session of November 12, 2009, the Petitioner asked the arbitral tribunal to substitute the dates of February 11, 2010, and March 31, 2010, for these two dates respectively.

 

Asked to express his views on the request, X.________ argued that, in his view, Y.________ was not trying to rectify an error but instead trying to introduce a new fact into the final award as to the time limit given to the arbitrators to issue it.

 

On June 28, 2010, the arbitral tribunal issued an amendment to the award entitled Addendum to the final award. Granting Y.________’s request it substituted the text of paragraph 83 of the final award with a new version, worded as follows: “In its session of February 11, 2010, the ICC Court extended for the last time the time limit to render the final award until March 31, 2010.”

 

C.

On September 2, 2010 X.________ filed a civil law appeal to the Federal Tribunal. He submits that the amended award should be annulled and, as a preliminary matter, that a stay of enforcement should be granted.

 

In its observations of February 11, 2011, and its answer of February 16, 2011, the Respondent submitted that the request for a stay of enforcement should be rejected and that the matter is not capable of appeal, or that the appeal should be rejected.

 

In his briefs of February 16 and March 3, 2011 the Appellant submitted a reply to the arguments developed by the Respondent.

 

The Arbitral tribunal did not submit an answer.

 

By presidential decisions of December 6, 2010 and January 11, 2011 the Appellant was asked to pay an amount of CHF 9,000 as security for costs by January 26, 2011. He did so in a timely manner.

 

 

Reasons:

 

1.

According to Art. 54 (1) LTF2 the Federal Tribunal issues its decision in an official language3, as a rule in the language of the decision under appeal. When the decision is in another language (here English) the Federal Tribunal resorts to the official language chosen by the parties. Before the arbitral tribunal they used English. In the brief he submitted to the Federal Tribunal the Appellant used French. According to its practice the Federal Tribunal will adopt the language of the appeal and consequently issue its judgment in French.

 

2.

For a case to be capable of appeal it is required, among other things, that the parties have not ruled out the possibility of an appeal within the meaning of Art. 190 PILA.4

 

2.1 Art. 192 (1) PILA provides that if two parties have neither a domicile or their habitual residence or an establishment in Switzerland, they may opt out of any appeal against the award of an arbitral tribunal by a specific statement in the arbitration clause or in a subsequent written agreement; they may also opt out of one or several of the grounds of appeal listed at Art. 190 (2) PILA.

 

Federal case law progressively developed the principles following from that provision. In substance, case law has  interpreted agreements to opt-out restrictively and considers an indirect renunciation as insufficient. As to direct renunciation, it does not necessarily have to mention Art. 190 PILA and/or Art. 192 PILA. It is sufficient that the specific statement of the parties show clearly and outright their common intention to optout of any appeal. It is a matter of interpretation to decide whether this is indeed the case or not (ATF 134 III 260 at 3.1 and cases quoted5).

 

2.2 In this case, the Appellant was domiciled in Tunisia and the Respondent had its seat in France at the time the Shareholders’ Agreement of September 4, 2010, containing the arbitration clause was entered into. The aforesaid clause contains in particular the following wording:

 

"Neither party shall be entitled to commence or maintain any action in a court of law upon any matter in dispute arising from or concerning this Agreement or a breach thereof except for the enforcement of any award rendered pursuant to arbitration under this Agreement. The decision of the arbitration shall be final and binding and neither party shall have any right to appeal such decision to any court of law."6 (emphasis supplied by the Federal Tribunal).

 

Without objection from the Appellant, the Respondent translates the emphasized part of the aforesaid clause as follows: “ La Sentence arbitrale sera finale et obligatoire et aucune des parties n'aura le droit de faire appel de cette Sentence devant tout tribunal étatique”7 (Answer nr. 49).

 

Considered in the light of the principles of case law recalled above, the aforesaid clause certainly constitutes a valid renunciation to the appeal. It doubtlessly expresses the common will of the parties to renounce any right of appeal against any decision of the arbitral tribunal before any state court whatsoever. This intent to rule out any appeal against such a decision, clearly expressed in the emphasized sentence of the arbitral clause is reinforced and indirectly confirmed by the preceding sentence; it appears indeed that the state courts could not be seized by any party except to obtain the enforcement of an award issued by the arbitral tribunal. Moreover, the renunciation at hand closely resembles that which was dealt with in the judgment published at ATF 131 III 173 at 4.2.3.2. Reference may accordingly be made mutatis mutandis to the reasons contained in that decision whilst pointing out that in this case, as in the one which gave rise to the precedent quoted, the word “appeal” must manifestly be understood in its general meaning.

 

The Parties have therefore validly opted out of an appeal against any decision of the arbitral tribunal. Such renunciation applies not only to the final award, not appealed by the Appellant, but also to the Addendum to the award, which is a mere accessory of the former and shares its fate (ATF 131 III 164 at 1.1 and the case quoted). Hence the matter is not capable of appeal before the Federal Tribunal.

 

3.

The Appellant shall pay the judicial costs (Art. 66 (1) LTF) and pay the costs of the Respondent for the federal proceedings (Art. 68 (1) and (2) LTF). They shall be taken from the security for costs deposited with the Federal Tribunal.

 

 

 

 

Therefore the Federal Tribunal pronounces:

 

  1. The matter is not capable of appeal.

 

  1. The judicial costs set at CHF 8,000 shall be borne by the Appellant.

 

  1. The Appellant shall pay to the Respondent an amount of CHF 9,000 for the federal judicial proceedings.

 

  1. This amount shall be taken from the security for costs deposited with the Federal Tribunal.

 

  1. This judgment shall be communicated to the Parties and to the Chairman of the ICC Tribunal.

 

 

Lausanne, March 21, 2011.

 

 

In the name of the First Civil Law Court of the Swiss Federal Tribunal

 

 

The Presiding Judge:                                     The Clerk:

 

KLETT (Mrs)                                                            CARRUZZO

 

 

 

 
  • 1. Translator’s note:             Quote as X._____ v. Y._____ SA, 4A_486/2010. The original decision is in French. The text is available on the website of the Federal Tribunal www.bger.ch.
  • 2. Translator’s note:       LTF is the French abbreviation for the Federal Statute of June 17, 2005, organizing the Federal Tribunal, RS 173.110.
  • 3. Translator’s note:       The official languages of Switzerland are German, French and Italian.
  • 4. Translator’s note:       PILA is the most commonly used English abbreviation for the Federal Statute on International Private Law of December 18, 1987, RS 291.
  • 5. Translator’s note:       English translation at www.praetor.ch (judgment of March 6, 2008 4A 500/2007)
  • 6. Translator’s note:       In English in the original text.
  • 7. Translator’s note:       French rendering of the original English text.