The case involved a contract between a Canadian mining company and a German consulting firm containing an ICC arbitration clause with jurisdiction in Zürich. A dispute arose as to the payment of the fee and the German consultant started arbitral proceedings in Zürich. The ICC appointed Hansjörg Stutzer as sole arbitrator and he issued an award in January 2013 upholding the claim. An appeal was made to the Federal Tribunal on due process grounds and the following are moderately interesting in the opinion:

(i) Not specifically mentioning a witness statement or the testimony at the hearing is not a violation of the right to be heard when the arbitral tribunal reaches a factual conclusion and simply states that “other evidence” does not support another conclusion. (See section 3.2. of the opinion in this respect.)

(ii) An allegedly insufficiently reasoned award does not violate the right to be heard as defined in Swiss international arbitration law. (See section 3.3 of the opinion in this respect.)

Translation:

4A_95/20131

Judgment of June 27, 2013

First Civil Law Court

Federal Judge Klett (Mrs.) Presiding

Federal Judge Corboz

Federal Judge Kolly

Clerk of the Court: Leemann

X.________ Corporation

Represented by Mr. Michele Caratsch and Mr. Patrick von Arx,

Appellant

Y.________ AG,

Represented by Dr. Urs Zenhäusern,

Respondent

Facts:

X.________ Corporation (the Defendant, Appellant) is a Canadian mining company. On April 4, 2008, X.________ entered into an agreement described as a “Technical Assistance Contract” with Y.________ AG (Claimant, Respondent), incorporated in Germany. It contained an arbitration clause.

The Claimant undertook, pursuant to the Agreement, to provide consulting services (among other things) in connection with the pre-feasibility study for the construction of a so-called “pelletizing plant” in the Canadian arctic. Total compensation of EUR 1’358’000 was agreed, 30% of which was to be paid upon signing the contract, 40% upon delivery of flow sheets, and 30% upon delivery of the technical documents.

The first installment was paid to the Claimant. The second installment, amounting to EUR 543’200, was not paid by the Respondent, whereupon the Claimant terminated the April 4, 2008, agreement.

On July 6, 2011, Y.________ AG initiated arbitration proceedings according to the Rules of the International Chamber of Commerce (ICC) and submitted that X.________ Corporation should be ordered to pay EUR 543’200, with interest at 5% from July 19, 2008. The latter submitted that the arbitration claim should be rejected, principally because it had never received the flow sheets contractually due by the Claimant.

The parties eventually agreed that a sole arbitrator should decide the matter. On December 8, 2011, the ICC Court of Arbitration appointed a sole arbitrator. On October 24-25, 2012, a hearing took place in Zürich during which various witnesses were heard.

In an award of January 15, 2013, the Arbitrator upheld the claim. He found that, in particular, the assessment of the evidence adduced and the witness statements at the hearing proved that the Defendant had received the flow sheet from the Claimant by email on June 6, 2008.

In a Civil law appeal, the Defendant submits that the Federal Tribunal should annul the award of January 15, 2013, and send the matter back to the Arbitral Tribunal for a new decision.

The Respondent submits that the appeal should be rejected. The Arbitrator stated his position in a submission of March 14, 2013, as to one of the exhibits mentioned by the Appellant and then waived any further submissions.

The Appellant’s request for a stay of enforcement was rejected by a decision of the Federal Tribunal of April 30, 2013.

Reasons

According to Art. 54 (1) BGG,2 the judgment of the Federal Tribunal is issued in an official language,3 as a rule in the language of the award under appeal. When it is in another language, the Federal Tribunal resorts to the official language chosen by the parties. The award under appeal is in English. As this is not an official language and the parties used German in the Federal Tribunal, the judgment of the Federal Tribunal shall be issued in German.

In the field of international arbitration, a civil law appeal is possible under the requirements of Art. 190-192 PILA4 (SR 291) (Art. 77(1)(a) BGG).

2.1. The seat of the arbitral tribunal is in Zürich in this case. Both parties had their seats outside Switzerland at the relevant time. As the parties did not exclude in writing the provisions of Chapter 12 PILA, they are applicable (Art. 176(1) and (2) PILA).

2.2. Only the grievances listed in Art. 190(2) PILA are admissible (BGE 134 III 1865 at 5, p.187; 128 III 50 at 1a p.53; 127 III 297 at 1a, p.282). According to Art. 77(3) BGG, the Federal Tribunal reviews only the grievances raised and reasoned in the appeal brief; this corresponds to the duty to provide reasons at Art. 106(2) BGG for the violation of constitutional rights and of cantonal and intercantonal law (BGE 134 III 186 at 5, p.187, with reference). Criticism of an appellate nature is not allowed (BGG 134 III 5656 at 3.1, p.567; 119 II 380 at 3b, p.382).

2.3. The Federal Tribunal bases its judgment on the factual findings of the arbitral tribunal (Art. 105(1) BGG). It may neither correct nor supplement the factual findings of the arbitral tribunal, even when they are blatantly inaccurate or based on a violation of the law within the meaning of Art. 95 BGG (see Art. 77(2) BGG, ruling out the applicability of Art. 97 BGG as well as Art. 105(2) BGG). Yet the Federal Tribunal may review the factual findings of the arbitral award under appeal when some admissible grievances within the meaning of Art. 190(2) PILA are raised against such factual findings or new evidence is exceptionally taken into consideration (BGG 138 III 297 at 2.2.1, p.34; 134 III 565 at 3.1, p.567; 133 III 139 at 5, p.141; each with references). Whoever claims an exception to the rule and seeks to rectify or supplement the facts on this basis must show, with references to the record, that the corresponding factual allegations were already made in the arbitral proceedings, in conformity with procedural rules (BGE 115 II 484 at 2a, p. 486; 111 II 471 at 1c, p. 473; each with references).

The Appellant argues three violations of the right to be heard (Art. 190(2)(d) PILA) by the Arbitral Tribunal.

3.1. Art. 190(2)(d) PILA permits an appeal when the mandatory procedural rules, according to Art. 182(3) PILA, are violated. According to the latter provision, the arbitral tribunal must, in particular, guarantee the right of the parties to be heard. This essentially corresponds to the constitutional right embodied at Art. 29(2) BV8 (BGE 130 III 35 at 5, p.37 f.; 128 III 234 at 4b, p.243; 127 III 576 at 2c, p.578 f.). Case law derives from this, in particular, the right of the parties to state their views as to all facts important for the judgment, to submit their legal arguments, to prove their factual allegations important for the judgment with suitable evidence submitted in a timely manner and in the proper format, to participate in the hearings, and to access the record (BGE 130 III 35 at 5, p.38; 127 III 576 at 2c, p.578 f.; each with references). This corresponds to a duty of the arbitral tribunal to actually hear and review the legally relevant submissions of the parties. Yet, this does not mean that the arbitral tribunal must expressly address each argument made by the parties (BGE 133 III 235 at 5.2, p.248 f.; 121 III 331 at 3b, p.333). No right to a reasoned decision can be derived from the principle of the right to be heard within the meaning of Art. 190(2)(d) PILA, according to relevant case law (BGE 134 III 186 at 6.1, p.187 with references).

3.2. The Appellant first submits that in the arbitral proceedings, it took the view that the flow sheets at issue were never received from the Respondent; as proof, it submitted to the Arbitral Tribunal the written witness statement of its Technical Director, Dr. A________, and he was also heard as a witness at the hearing of October 24, 2012. Both in his written statement and in his oral testimony Dr. A________ repeatedly testified that neither he nor any other employee of the Appellant ever received the aforesaid flow sheets.

The Appellant’s submissions do not lead to the conclusion that the Arbitral Tribunal “completely ignored” the statements of its main witness as to the central issue in dispute. The Appellant itself states that its witness testified before the Arbitral Tribunal and thus repeated, among other things, his witness statement according to which it had never received the flow sheets. The Appellant confirms, moreover, that the witness statements at issue were recorded by the Arbitral Tribunal. Contrary to the view expressed in the appeal brief, the fact that the statement of Dr. A________ remained unmentioned in the pertinent reasons of the award under appeal shows no violation of the principles stated at Art. 190(2)(d) PILA. Based on extensive scrutiny of the exchange of emails between representatives of the Respondent and the Appellant’s Dr. A________ or Mr. B________ at the relevant time, the Arbitral Tribunal considered as proved that the latter had received the flow sheets in dispute. There is neither a violation of the right to be heard, nor a denial of right in the fact that, thereafter, it no longer expressly addressed the witness statements mentioned in the appeal but found generally that the other evidence – in particular, the witness statements – could not change the results of the evidence.

3.3. The Appellant argues that the Arbitral Tribunal completely ignored an email of August 15, 2008, from B.________, a member of its management, to C.________, which was on the record and relevant as evidence.

The email of August 15, 2008, was indeed submitted as Exhibit C by the Respondent and mentioned in its rejoinder of September 14, 2012, yet it was not specifically mentioned in the award. The Respondent rightly points out, however, that counsel for the Appellant submitted the aforesaid document during the cross-examination of witness C.________, and mentioned its contents. The record of the hearing clearly shows that the Arbitrator had the email of August 15, 2008, and had acquainted himself with its contents. Contrary to the view held in the appeal brief, the fact that the document at issue is not mentioned specifically in the award under appeal does not lead to the conclusion that it was ignored completely by the Arbitrator in the decision process. Contrary to what the Appellant seems to assume, there is no right to reasons based on the principle of the right to be heard within the meaning of Art. 190(2)(d) PILA. To the extent that the Appellant alleges insufficient reasons in the award under appeal, it shows no appeal ground as contained in the law (BGE 134 III 186 at 6.1, p.187 f.; 127 III 576 at 2b, p.577 f.; each with references).

3.4. The Appellant furthermore alleges in its brief that the cross-examination of witness C.________ may be formally mentioned in the award under appeal, but that the Arbitral Tribunal “did not fully take into account” the witness statements of C.________ on the record in its decision-making process; these would prove that there were various obvious inconsistencies in connection with the delivery and the receipt of the flow sheets.

In this the Appellant shows no violation of the right to be heard. Instead, it criticizes the result of the evidence in the arbitral proceedings in a mere appellate manner.

4. The appeal proves unjustified and must be rejected to the extent that the matter is capable of appeal. In such an outcome of the proceedings, the Appellant must pay the costs and compensate the other party (Art. 66 (1) as well as Art. 68 (2) BGG).

Therefore the Federal Tribunal pronounces:

1. The appeal is rejected to the extent that the matter is capable of appeal.

2. The judicial costs set at CHF 8’500 shall be borne by the Appellant.

3. The Appellant shall pay to the Respondent CHF 9’500 for the federal judicial proceedings.

4. This judgment shall be notified in writing to the parties and to the ICC Arbitral Tribunal with seat in Zürich.

Lausanne, June 27, 2013

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

The Presiding Judge: The Clerk:

Klett (Mrs.) Leemann

1. Translator’s Note: Quote as X.________ Incorporation v. Y.________ AG, 4A_95/2013. The original decision is in German. The text is available on the website of the Federal Tribunal, www.bger.ch.
2. Translator’s Note: BGG is the German abbreviation for the Federal Statute of June 17, 2005, organizing theFederal Tribunal, RS 173. 110.
3. The official languages of Switzerland are German, French, and Italian.
4. 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: The English translation of this decision is available here: http://www.swissarbitrationdecisions.com/right-to-be-heard-equality-between-the-parties.
6. Translator’s Note: The English translation of this decision is available here: http://www.swissarbitrationdecisions.com/extension-of-arbitration-clause-to-non-signatories-case-of-a-gua.
7. Translator’s Note: The English translation of this decision is available here: http://www.swissarbitrationdecisions.com/jurisdiction-of-the-cas-upheld-a-pathological-clause-has-to-be-s.
8. Translator’s Note: BV is the German abbreviation for the Swiss Federal Constitution.