The Federal Tribunal rejects a motion to set aside because the matter was not capable of appeal. Parties clearly expressed that they wanted to avail themselves of the possibility to waive in advance any rights to challenge an award rendered by an arbitral tribunal sitting in Switzerland
The case involved a family dispute in which a son entered into a preliminary agreement for a donation by his father to his adopted daughter’s husband. The contract contained an arbitration clause. When the donor died the daughter took the view that she was not bound and her husband relinquished the claim to have the money paid to a third party. That third party sued because there was an arbitration clause in favour of the JSM Permanent Court of Arbitration in Zilina in the Slovak Republic. Slovomir Jancok was appointed as arbitrator and on September 9, 2011 he rejected a challenge to his jurisdiction and ordered payment of € 167’000 with costs.
A Civil law appeal was made to the Federal Tribunal and the following are interesting in the opinion:
- A representative may indeed bind a third party to an arbitration clause if he was validly empowered to do so. In this case the issue of the validity of the power to represent the appellant was governed by Slovak law and the Federal Tribunal, whilst reiterating the principle, felt that the appeal had not been sufficiently reasoned in this respect (see section 3.1.1 of the opinion in this respect).
- The arbitration clause provided for arbitration in Zug and the Parties had opted out of an appeal “within the meaning of Art. 192 of the Federal Law on International Private Law (PILA)”. The Court rightly found that this was a perfectly valid renunciation to appeal and accordingly held that the matter was not capable of appeal (see section 3.2 of the opinion in this respect).
Judgment of December 9, 2011
First Civil Law Court
Federal Judge Klett (Mrs), Presiding
Federal Judge Kolly,
Federal Judge Kiss (Mrs),
Clerk of the Court: Widmer.
A. Xa.________ (born in 1949, the Appellant) is the adopted daughter of C.________ (born in 1926) and the mother of S. X.________ (born in 1972), who is married to E. Xa.________ (born in 1977).
On February 11, 2011 S. X.________ (hereafter: “the Representative”) acting as representative of C.________ (hereafter: “the future Donator”) entered into a preliminary agreement to a donation contract with E. Xa.________, the future recipient. The object of the contract was certain properties which were to be transferred provided that an easement in the donor’s favour would be created to give him the lifelong usage of the properties and that the recipient would undertake to care for the donor. Should the future donation contract fail to be concluded, a payment of EUR 167,000 was agreed upon (Art. 2 (8) of the Contract).
Article 3 of the Contract contains an arbitration clause according to which the disputes between the parties to the Contract including those as to the validity, breach, interpretation, and termination of the Contract and any disagreements as to the arbitrability of the dispute would be decided exclusively in front of the JSM Permanent Court of Arbitration in Zilina (Slovak Republic). Zug was agreed as the venue of the arbitration and “according [in another translation “within the meaning of”] Art. 192 of the Federal Law on International Private Law (PILA2)” an annulment of the arbitral award by the highest Court in Switzerland was excluded. Mr Slovomír Jancok was appointed as arbitrator.
On June 11, 2011 C.________ died. The Appellant, his successor, took the view that she was not bound by the preliminary agreement. On July 15, 2011, E. Xa.________ relinquished the claim to have the money paid to B. Y.________ (the Respondent).
On August 15, 2011, the Respondent filed a request to the Permanent Court of Arbitration of JSM and submitted that the Appellant should be ordered to pay the amount of EUR 167,000 to the Respondent.
On September 9, 2011, the Arbitral tribunal, composed of Mr Slovomír Jancok as sole arbitrator, rejected a challenge to the jurisdiction of the Arbitral tribunal based on the invalidity of the arbitration agreement and ordered the Appellant to pay the amount of EUR 167,000 to the Respondent with costs.
On October 13, 2011, the Appellant filed a civil law appeal against the award. Simultaneously she applied for an exemption of costs and the appointment of counsel by the Court.
On November 2, 2011, the Respondent, without being invited to do so, submitted that the matter was not capable of appeal for “lack of authorization” due to the exclusion of a recourse according to Art. 190 (2) PILA, or that the appeal was to be rejected. Simultaneously she filed various documents into the record.
In a letter of November 14, 2011, the Appellant supplemented her arguments contained in the October 13, 2011 appeal and upon request produced a signed copy of the appeal brief and of the award under appeal with a non-official German translation, as well as two other documents to be made part of the record.
No answers to the appeal were requested. The submission of November 2, 2011, and its enclosures were copied to the Appellant for information on November 24, 2011.
The Appellant consequently filed a submission on December 1st, 2011, confirming her request for Court appointed counsel.
In view of the outcome of the proceedings, the reasons of the Arbitral tribunal as contained in the non-official translation submitted by the Appellant herself will be used to decide this appeal.
A civil law appeal is allowed against arbitral awards pursuant to the requirements of Art. 190-192 PILA (Art. 77 (1) BGG3).
The seat of the Arbitral tribunal is in Zug in this case. The Parties do not have their domicile in Switzerland. As they did not rule out in writing the provisions of chapter 12 PILA they are applicable (Art. 176 (1) and (2) PILA).
The grievances limitatively listed in Art. 190 (2) PILA are the only ones allowed (BGE 134 III 186 at 5; 128 III 50 at 1a p. 53; 127 III 279 at 1a p. 282). According to Art. 77 (3) BGG the Federal Tribunal reviews only the grievances that are brought before the Tribunal and reasoned in the appeal; this corresponds to the duty to submit reasons contained at Art. 106 (2) BGG for the violation of constitutional rights and of cantonal and intercantonal law (BGE 134 III 186 at 5 with references).
The appeal brief at hand may not meet the requirements for reasons in support of the appeal as will be explained hereunder. It must be considered in this respect that an appeal must be filed with complete and legally sufficient reasons within the time limit to appeal (Art. 42 (1) BGG; see BGE 134 II 244 at 2.4). As, according to the Appellant’s own indications, the award under appeal was notified on September 13, 2011, the time limit to appeal expired on October 13, 2011 (Art. 100 (1) BGG). The Appellant thus cannot be heard as to her supplementary arguments contained in the November 14, 2011 submission.
The Federal Tribunal bases its decision on the facts found by the arbitral tribunal (Art. 105 (1) BGG). It may not rectify or supplement the factual findings of the arbitral tribunal, even when they are blatantly wrong or rely on a violation of the law within the meaning of Art. 95 BGG (Art. 77 (2) BGG ruling out the applicability of Art. 105 (2) and Art. 97 BGG). However the Federal Tribunal may review the factual findings of the award under appeal when some admissible grievances within the meaning of Art. 190 (2) PILA are brought against such factual findings or, exceptionally, when new evidence is taken into consideration (BGE 133 III 139 at 5 p. 141; 129 III 727 at 5.2.2 p. 733, with references). He who claims an exception to the rule that the Federal Tribunal is bound by the factual findings of the arbitral tribunal (and wishes to rectify or supplement the facts on that basis) must show, with reference to the record, that the corresponding factual allegations were already made in the arbitral proceedings in accordance with applicable rules (see judgment 4A_640/2010 of April 18, 2011 at 2.3 with references to BGE 115 II 484 at 2a p. 486 and BGE 111 II 471 at 1c p. 473).
To the extent that the Appellant deviates in her submissions from the factual findings of the Arbitral tribunal and supplements them, yet without raising any admissible grievance or justifying the exceptional admission of new evidence, she shall not be heard. In particular, it is beside the point that she disputes the factual findings of the Arbitral tribunal globally and sweepingly.
When none of the parties has a domicile, a habitual residence or an establishment in Switzerland, the parties may exclude any appeal against the arbitral award through a specific statement in the arbitration clause or in a subsequent written agreement. The exclusion of any appeal is authorized in particular for awards as to the jurisdiction of an arbitral tribunal (BGE 133 III 235 at 4.3; 131 III 173 at 4.1 with references).
The requirement that none of the parties should have a territorial connection with Switzerland is not disputed in this case. The only issue is whether they validly renounced the filing of an appeal.
A valid renunciation by the Appellant firstly requires that she should be bound subjectively by the arbitration clause contained in the preliminary agreement in which the exclusion of an appeal was stated, even though she did not sign the contract. A review of the subjective scope of the arbitration clause is therefore tied to the issue as to whether the renunciation to appeal can be opposed to the Appellant (see BGE 134 III 267 at 3.2.4 p. 266 ff, with several references to legal writing). The Appellant being bound subjectively in this case presupposes that the Representative who concluded the contract on behalf of the future donator was validly empowered for the corresponding contractual conclusion, so that the future Donator was bound as original contracting party to the contract with the arbitration clause it contained (see in this respect judgment 4P.137/2002 of July 4, 2003 at 7.2.4). It is also necessary that the Appellant (as successor of the original contracting party) should be within the scope of the arbitration clause which, according to what was explained, needs to be examined notwithstanding the exclusion of appeals (see BGE 134 III 267 at 3.2.4 p. 266 ff, with references; it would be different with regard to compliance with jurisdiction “ratione materiae” or the objective scope of the arbitration clause by the arbitral tribunal: BGE 134 III 267 at 3.2.4 p. 265 ff). Whether or not an arbitration clause was validly extended to a non-signatory is assessed on the basis of the law most favorable to the validity of the arbitration clause according to Art. 178 (2) PILA (BGE 129 III 727 at 5.3.2 p. 736; 128 III 50 at 3a, with references).
3.1.1 As to the issue of the legally valid authority of the Representative of the future Donator, it is undisputed that it is governed by Slovak law. The arbitral tribunal held in this respect that there was a power of attorney dated June 23, 2009, with a signature witnessed by a notary, the validity of which was not in dispute. As to the scope of the power of attorney, the arbitral tribunal held that it was a special power of attorney, which entitled the Representative to conclude the donation contract exactly under its conditions, which had been set in advance. The arbitral tribunal then denied that the power of attorney had been exceeded by the Representative, as he had merely entered into a preliminary agreement guaranteeing the conclusion of the contract with a claimant in case of withdrawal, which went fell short of a direct conclusion of a donation. In alternative reasons the arbitral tribunal even stated that, had the Representative exceeded the power of attorney, this would have been cured by the ratification of the contract. Thus it was proved that the Appellant, as a successor of the future donator, had to know about the preliminary agreement by July 25, 2011, at the latest, as she was given a draft of the preliminary agreement on that day. According to Art. 33 of the Slovak Civil code she had a duty to object to the contract without delay, which she did not do.
The Appellant raises no legitimate or legally permissible grievances against these findings. In particular, it is unacceptable for her to argue that the preliminary contract would not have been accepted by her or by the future Donator without discussing the reasons of the arbitral tribunal and explaining to what extent the arbitral tribunal would have applied Slovak law, in contradiction with the case law of the highest court of the Slovak Republic ,or the dominant legal writing (see as to the power of the Federal Tribunal to review foreign law within the framework of a jurisdictional appeal: judgment 4P.137/2002 of July 4, 2003 at 7.2). The matter is not capable of appeal in this respect, for lack of appropriate arguments. As the alternate reasoning of the Arbitral tribunal (which purported to justify its decision independently as to that issue) is not appealed appropriately, one must assume the valid conclusion of a contract in view of the power to represent (see BGE 133 IV 119 at 6.3; 121 III 46 at 2 p. 47; 116 II 721 at 6a p. 730), without further addressing the Appellant’s various other arguments in this respect.
For the sake of completeness, the following must be held with regard to the Appellant’s argument against the main reasoning of the Arbitral tribunal regarding the sufficient powers of the Representative:
The Appellant shall not be heard to the extent that she argues that there are several clues that the July 23, 2009, power of attorney is forged, as the arbitral tribunal found that the validity or the authenticity of the power of attorney was not in dispute in the arbitral proceedings. In doing so, she is presenting a new and therefore unacceptable factual allegation, which does not result from the decision under appeal (Art. 95 (1) BGG). The matter is also incapable of appeal as to the Appellant’s argument in this context that her right to be heard within the meaning of Art. 190 (2) (d) PILA would have been violated because she would not have been given the right to inspect the original of the power of attorney; the argument is insufficiently reasoned in the first place, as the Appellant does not argue (at least not in a legally sufficient manner with reference to the record [see 2.3 above]), that she would have submitted a request to inspect the power of attorney to the Arbitral tribunal. To the extent that the Appellant claims that the Representative would have exceeded the power of attorney because he would have been in a conflict of interest at the conclusion of the contract, she does not sufficiently address the reasoning of the arbitral tribunal, according to which the power of attorney would have authorized exactly the contract that was concluded. She also does not explain why such a view would be contrary to Slovak law.
3.1.2 The arbitral tribunal also found that the Appellant, as heir of the future donator was subjectively bound by the preliminary agreement and the arbitration clause it contained. It explained in this respect that the Appellant herself stated in her answer to the claim that she was the successor of the future donator. Also, on the basis of the documentary evidence available (judgment as to the Appellant’s adoption, death certificate of the future Donator) the conclusion had to be drawn that the Appellant was bound by the arbitration clause. According to § 460 of the Slovak Civil code the inheritance is acquired with the bequeather’s death and according to § 3 (2) of the Slovak arbitration law the arbitration clause binds the successors of the parties unless excluded by the contractual parties in the arbitration agreement. The arbitral tribunal rejected in particular the Appellant’s argument that she would not yet have succeeded the future Donator and would therefore not be bound by the agreement preliminary to the donation.
The Appellant merely argues in this respect that the arbitral tribunal would have violated her right to be heard within the meaning of Art. 190 (2) PILA because it would have rejected her request to introduce evidence by way of the records of the inheritance because the request would have been vague. However, she would have pointed out explicitly that according to § 470 (1) of the Slovak Civil code the heir would be liable for the testator’s debts only up to the amount of the inheritance going to him and that the documentary evidence was decisive to determine the value of the inheritance.
From the right of the parties to be heard in arbitral proceedings, case law deduces, among other things, their right to prove their factual allegations important for the decision by suitable means offered timely and in the right format (see BGE 133 III 139 at 6.1 p. 143; 130 III 35 at 5 p. 38; 127 III 576 at 2c, with references). With her renewed submission at hand the Appellant does not show to the satisfaction of the law that the arbitral tribunal would have overlooked a submission she would have made according to the rules with a view to proving an important fact for the decision. That the Appellant would have made such a submission in the arbitral proceedings at all is not to be deduced from the award under appeal and the Appellant makes no reference to the record to substantiate her allegation to the contrary, which means that she is not to be heard in this respect (see above at 2.3). Moreover the Appellant is unable to show in her submission that she would have been able to prove the facts necessary for such a decision with the records of the inheritance. Thus she merely makes a general argument that the heir’s liability would be limited according to § 470 of the Slovak Civil code. She does not claim, and justifies specifically, that in this case the requirements for a limitation of her liability would have resulted from the records of the inheritance, let alone the requirements for a release from her fundamental commitment to the preliminary agreement with the arbitration clause it contained. The matter is not capable of an appeal as to the violation of the right to be heard due to the failure of sufficient arguments.
3.1.3 To sum up, a valid conclusion of the preliminary agreement by a duly authorized representative of the future Donator must be assumed, with a valid arbitration clause contained therein, to which the Appellant is bound as legal successor (as to an arbitration clause binding the legal successor see BGE 129 III 727 at 5.3.1 p. 735).
The validity of the renunciation to any appeal must accordingly be examined.
The statement by which the right to appeal an arbitral award is excluded according to Art. 192 (1) PILA must be explicit. According to new case law made by the Federal Tribunal, it is sufficient that the statement should unmistakably show the common intent of the parties to forgo any challenge of the international arbitral award in front of the Federal Tribunal within the meaning of 192 (1) PILA. Whether or not it is so must be ascertained by way of interpretation of the specific arbitration clause (see BGE 133 II 235 at 4.3.1 p. 240 ff; 131 III 173 at 4.2, in particular 18.104.22.168, with references).
In the case at hand the Parties ruled out an annulment of the arbitral award by the highest Court in Switzerland in the arbitration clause “within the meaning of Art. 192 of the Federal Law on International Private Law (PILA)”. With the reference to Art. 192 PILA the Parties clearly expressed that they wanted to renounce the challenge of the arbitral award in front of the Federal Tribunal within the meaning of that provision (see in this respect BGE 131 III 173 at 22.214.171.124 p. 177). This is a valid renunciation to appeal.
The matter is accordingly not capable of appeal.
It appears from the foregoing that the appeal was hopeless from the start and the request for Court appointed counsel in the proceedings in front of the Federal Tribunal is therefore to be rejected (Art. 64 (1) BGG; see BGE 129 I 129 at 2.3.1). Costs will exceptionally not be imposed (Art. 66 (1) second phrase BGG). The Respondent was not represented by counsel and submitted a brief without being requested to do so and is accordingly not entitled to costs (Art. 68 (1) and (2) BGG; BGE 133 III 439 at 4 p. 446).
Therefore the Federal Tribunal pronounces:
1. The Appellant’s petition for dispensation of costs and court appointed counsel in the federal proceedings is rejected.
2. The matter is not capable of appeal.
3. No judicial costs are imposed.
4. No costs are awarded to the Parties.
5. This judgment shall be notified to the Parties and to the Arbitral tribunal in Zug.
Lausanne December 9, 2011
In the name of the First Civil law Court of the Swiss Federal Tribunal.
The Presiding Judge: The Clerk:
KLETT (Mrs) WIDMER
- 1. Translator’s note: Quote as A. Xa._____ v. B. Y._____, 4A_631/2011. The original of the decision is in German. The text is available on the website of the Federal Tribunal www.bger.ch
- 2. 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.
- 3. Translator’s note: BGG is the German abbreviation for the Federal Statute of June 17, 2005 organizing the Federal Tribunal, RS 173 110.