International Arbitration Lawyers in Geneva, Switzerland

Arbitration is the private resolution of disputes between parties bound to an arbitration agreement in the contract, or otherwise, by obtaining a final and binding termination of the dispute in a decision (award) issued by privately appointed judges (arbitrators).

Disputes must be referred to arbitration if the parties have agreed to an arbitration clause in their contract. This agreement legally replaces the ordinary jurisdiction of the state courts by arbitration. Most national laws, following the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, require national courts to decline jurisdiction and refer a dispute to arbitration if the parties have so agreed.

It is essential to draft the arbitration clause correctly. Many an arbitration has been complicated and some even frustrated by a pathologically drafted arbitration agreement. It is therefore highly advisable to obtain legal counsel before entering into an arbitration agreement. Landolt & Koch will ensure that your arbitration clause is the right one for your contract and your business.

What is Arbitration?

In institutional arbitration the arbitration agreement refers to arbitration rules which are promulgated and administered by an arbitration institution, such as the ICC Rules of Arbitration, the Swiss Rules of International Arbitration or ICDR Rules of the American Arbitration Association. In that case the arbitration is conducted under the auspices of the institution.

When parties agree to arbitrate but do not refer to institutional arbitration rules, they have an ad hoc arbitration clause. The United Nations Commission on International Trade Law (UNCITRAL) developed the UNCITRAL arbitration rules, a widely used set of rules to govern ad hoc arbitrations. Parties may refer to them in the arbitration clause or they may subsequently be adopted at the outset of arbitral proceedings. There is generally no institutional supervision over ad hoc arbitrations.

Knowing what institutional rules to select for the arbitration requires knowledge of the advantages and disadvantages of the different arbitration rules on the market. Landolt & Koch has extensive experience with a wide variety of arbitral rules and is able to advise our clients on the choice of the most appropriate rules for their contract and the type of dispute they may face.

Institutional or Ad Hoc Arbitration?

Arbitral tribunals generally consist of a sole arbitrator or a panel of three arbitrators. The number of arbitrators is either determined by agreement of the parties or by the arbitral institution or in the case of ad hoc arbitration by the court at the place of arbitration.

Who Decides The Dispute And How Are They appointed?

The parties are free to select a place of arbitration in their arbitration clause. The place of arbitration determines which national arbitration law (lex arbitrii) will govern the proceedings and which courts will have supervisory powers over the arbitration. In choosing a place of arbitration parties will tend to select a neutral venue, i.e. in neither of the parties’ countries, with an arbitration friendly legal and judicial system. Ease of access and the general price level of services, as well as international arbitration expertise of the local bar are also important factors to consider. The choice of the place of arbitration may have a profound impact on the cost of an arbitration but also on the validity or enforceability of an award.

If the parties have not chosen a place of arbitration, it will be determined by the arbitral institution or, in an ad hoc setting, by the arbitral tribunal if the parties give them that power. If nothing is foreseen and the parties cannot agree on how to select the venue the issue may have to be decided by a court.

Landolt & Koch’s knowledge of the arbitral laws of many jurisdictions and our ongoing study of international arbitral case law, gives us the necessary perspective to propose to our clients the most appropriate venue and to develop with them negotiating tactics to persuade the contractual counterparty to accept the proposition.

Where Is The Dispute Decided?

Constitutionally neutral since the Congress of Vienna in 1815, Switzerland is by its nature ideally suited for international arbitration. Its multi-lingual and federal nature, its geographical position in the center of Europe and its small size encouraged Switzerland’s lawyers to develop keen cross-cultural skills to find mutually acceptable solutions for all cultural and linguistic groups that make up the country. The ability to deal with different legal and cultural traditions as well as a practical approach to resolving problems has led to the development of a sophisticated arbitration bar comprising many of the world’s best known arbitrators.

Geneva has long been at the forefront in the development of international law and arbitration. Indeed, one might say that arbitration as an instrument of modern dispute resolution was born here. In 1872 the United States and the British governments decided to settle a dispute over the U.S.’s claims for damages against the United Kingdom arising from the British role in building the Confederate warship Alabama, by arbitration in Geneva rather than resorting to war. Since then Geneva has been playing a leading role as a modern-day hub of international arbitration and for the development him of international law.

As members of the Geneva arbitration bar, the partners of Landolt & Koch participate in the development of Geneva as an international place of arbitration by their publications and participation in conferences and seminars. By sharing experiences with our fellow members both as arbitrator and as counsel we contribute to making Geneva an ever more effective venue for international arbitration.

Geneva as Place of Arbitration

Disputes that are referred to arbitration result in an arbitral award. Awards are final and binding on the parties. Unlike a court judgment, an award cannot be appealed to a higher court, and most arbitral laws sharply restrict the reasons for which an award may be annulled by the court at the place of arbitration.

The international enforceability of arbitral awards is particularly important since most often the place the award has been issued will not be where the succumbing party will have its assets. Thus the award will have to be enforced in that party’s home jurisdiction if it does not execute the arbitrator’s decision.

Arbitral awards are internationally recognized and enforced under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, which is one of the world’s most successful treaties, having been ratified or adhered to by almost 150 states. The New York Convention severely limits the reasons for which an enforcement court may refuse to enforce a foreign arbitral award.

With solid experience in Swiss debt enforcement law, Landolt & Koch can efficiently assist our clients in enforcing arbitral awards against recalcitrant award debtors who have assets in Geneva or elsewhere in Switzerland. Our extensive international network of legal contacts also allows us to effectively coordinate enforcement efforts in multiple jurisdictions.

How Is The Dispute Decided And The Decision Enforced?

Arbitration costs generally comprise three categories (i) the cost of the arbitral institution (when there is one), (ii) the fees and expenses of the arbitrators, and (iii) a party’s direct costs. A party’s direct costs includes its costs of legal representation, the costs of any experts, and out of pocket expenses. Arbitrations are financed by each party generally advancing half of the estimated arbitration costs. Those costs will be finally allocated between the parties in the final award.

Outside the US, the general rule in commercial and sports arbitration is that the losing party pays the winning party’s costs which includes the direct costs. This rule is also increasingly being applied in investment arbitration. This means that parties embarking upon international arbitration face the risk of having to pay not only all of the institution’s costs and the arbitrators’ fees and expenses, but, as well, the legal costs of the winning opponent.

Surveys indicate that parties’ direct costs compose the lion’s share of the total arbitration costs, in the order of about 75% to 85% of the total, with the arbitrators’ costs representing around 10 to 20% of the total and the arbitral institution usually taking no more than 5%.

The costs of the arbitral institution and the arbitrators are generally either a function of the value in dispute or of the time worked by the institution and the arbitrators. Where these costs vary with the amount in dispute, arbitral institutions will often make available a costs calculator for the parties to be able to estimate these arbitration costs.

Arbitration Costs

Because arbitration is a private form dispute resolution parties have somewhat more influence over controlling costs than they would in ordinary litigation. One way of controlling cost is by choosing to have the dispute decided by a sole arbitrator rather than a 3-member panel.

There is generally no costs efficiency in preferring ad hoc arbitration to institutional arbitration. With ad hoc arbitration there may be additional costs such as the costs of an application for the constitution of the arbitral tribunal. Also in ad hoc arbitration arbitrators generally have greater freedom to set their fees.

Because the parties’ own legal costs make up about three quarters of the total costs of an arbitration, most significant savings can be made in relation to a party’s direct costs, i.e. costs of legal representation. This includes the costs of experts and other out of pocket expenses. Savings can also be achieved by streamlining arbitral proceedings, by narrowly defining the issues in dispute, limiting the number and scope of written submissions, shortening hearings and the use of IT to facilitate the submission of documentary evidence and conducting meetings and hearings by video conferencing rather than in person.

The ICC’s Commission on Arbitration and ADR has published a guide on “Techniques for Controlling Time and Costs in Arbitration” which can be downloaded from here. (http://www.iccwbo.org/Advocacy-Codes-and-Rules/Document-centre/2012/ICC-Arbitration-Commission-Report-on-Techniques-for-Controlling-Time-and-Costs-in-Arbitration/ )

Controlling Costs in International Arbitration