Master Thesis

International Commercial Arbitration Law

Stockholm University
Faculty of Law

The Dark Side of the Swiss Approach to the

Enforcement of Multi-Tiered Clauses:
A study on the nature of multi-tiered clauses

By Dylan Mac Quaide

4 June 2021
Supervisor: Daria Kozlowska Rautiainen

Word count: 13,158

Table of Contents
Abstract ................................................................................................................................................... III

Abbreviations ........................................................................................................................................... IV

1. Introduction ..................................................................................................................................... 1
1.1. Aim, research inquiries and thesis structure ......................................................................................... 3
1.2. Methodology and legal sources ............................................................................................................. 4
1.3. Scope and limitations ............................................................................................................................ 6
1.4. Relevance............................................................................................................................................... 7

2. An implicit dismissal of the substantive nature in favor of a Swiss procedural approach .................. 8
2.1 An understandable missed opportunity to define the nature of multi-tiered clauses (4A_18/2007, 6
June 2007)............................................................................................................................................................ 8
2.2 A rejection of the substantive remedies to non-compliance (4A_628/2015, 16 March 2016) ............ 11
2.3 Concluding remarks ............................................................................................................................ 13

3. A theorization of the notions of jurisdiction and admissibility in international commercial

arbitration ............................................................................................................................................... 15
3.1 A procedural bar directed to the arbitral tribunal or to the arbitration claim? (Jurisdiction vs
admissibility)...................................................................................................................................................... 15
3.2 Casuistic approach pursuant to the intentions of the parties .............................................................. 16
3.3 Consequences of the characterization ................................................................................................. 17
3.4 Application of a presumption in favor of the admissibility approach ................................................. 21
3.5 Concluding remarks ............................................................................................................................ 22

4. The Swiss semi-jurisdictional approach .......................................................................................... 23

4.1 The premise of an extension of the scope of judicial review permitted by the mischaracterization of
an admissibility issue (4P.284/1994, 17 August 1995) ...................................................................................... 23
4.2 A failure to question the initial jurisdictional characterization of a multi-tiered clause (4A_18/2007,
6 June 2007)....................................................................................................................................................... 25
4.3 An unfounded express refusal to distinguish the notions of jurisdiction and admissibility
(4A_46/2011, 16 May 2011) .............................................................................................................................. 27
4.4 The flaws of the Swiss semi-jurisdictional approach highlighted by the solution of staying the
arbitral proceedings in case of non-compliance (4A_628/2015, 16 March 2016) ........................................... 31
4.5 Concluding remarks ............................................................................................................................ 34

5. Conclusion ...................................................................................................................................... 35

Bibliography ........................................................................................................................................... 38

State Court Decisions .............................................................................................................................. 42

II
Abstract

Since 2007, Swiss caselaw has developed in a satisfactory manner with regard to the
enforcement of multi-tiered clauses. Not only has the Swiss Federal Supreme Court clearly
established the cumulative requirements that have to be met to enforce the pre-arbitral tier
contained in a multi-tiered clause when a party does not comply with it and directly files an
arbitration claim, but the Court has also resolved the question of how the arbitral tribunal should
sanction such a violation.

In contrast, the issue of the nature of multi-tiered clauses has never benefited from the same
attention. Yet, this is a fundamental question as it primarily determines whether the Swiss
Federal Supreme Court can review arbitral decisions on claims of non-compliance.

The thesis provides a critical assessment of how Swiss caselaw defines the nature of multi-
tiered clauses. The author argues that classifying claims of non-compliance as raising a
jurisdictional issue is a mistake and leads to an unjustified extension of the scope of judicial
review through the application of art. 190(2)(b) PILA.

III
Abbreviations

art. article

ASA Bulletin Journal of the Swiss Arbitration

Association

ATF Officially published judgements of the

Swiss Federal Supreme Court (Arrêts du
Tribunal fédéral)

CAS Court of Arbitration for Sport

cf. confer

CO Federal Act of 30 March 1991 on the

Amendment of the Swiss Civil Code (Part
Five: The Code of Obligations) (SR 220)

CPC Swiss Civil Procedure Code of 19

December 2008 (SR 272)

ed(s) editor(s)

edn. edition

et al. et alii

FIDIC International Federation of Consulting

Engineers

ftn. footnote(s)

ibid. ibidem

ICC International Chamber of Commerce

ICCA International Council for Commercial

Arbitration

ICC ADR Rules Alternative Dispute Resolution (ADR)

Rules of the International Chamber of
Commerce 2001

ICC Rules Rules of Arbitration of the International

Chamber of Commerce 1988

IV
i.e. id est

IIUM International Islamic University of

Malaysia

Model Law United Nations Commission on

International Trade Law (UNCITRAL)
Model Law on International Commercial
Arbitration of 1985, amendments as
adopted in 2006

No. number

para. paragraph(s)

p. page(s)

PILA Swiss Federal Statute on Private

International Law of 18 December 1987
(SR 291)

SSRN Social Science Research Network

Vol. volume

WIPO World Intellectual Property Organization

ZR Jurisprudence of the Courts of the Canton

of Zurich (Zürcherische Rechtsprechung)

V
1. Introduction

That escalated quickly! Also referred to as escalation, hybrid or integrated clauses and other
possible terms,1 multi-tiered clauses are contractual provisions in an agreement which do not
limit themselves to one single method to resolve any dispute the parties may encounter during
their relationship. The underlying idea is to provide a tailor-made dispute resolution mechanism
which might explain their common association with international arbitration as the latter’s
flexibility is precisely one of its popular features. 2 Pursuant to a multi-tiered clause, arbitration
takes place in the event that the parties have failed to settle after the exhaustion of the pre-
arbitral tier(s). For instance, such prior stage(s) may take the form of negotiation, mediation, or
conciliation, or of a procedure subject to an expert determination or to a dispute adjudication
board (DAB).3 Issues relating to the enforcement of the agreed initial step(s) arising out of an
alleged non-compliance by a party are relatively contemporaneous from a worldwide
perspective and Switzerland is no exception.

Indeed, the very first decision of the Swiss Federal Supreme Court in this respect only dates
back to 2007.4 In this landmark ruling, the Court established the cumulative requirements for
the enforceability of a multi-tiered clause when a party does not comply with it and directly
files an arbitration claim. In summary, the pre-arbitral tier must bear a mandatory character. 5
To this end, the multi-tiered clause must use a compulsory language (“shall” instead of “may”)
and set the conditions under which the pre-arbitral tier can be exhausted. For example, the
absence of any time limit for its initiation or completion is a strong indication of a mere
permissive agreement. 6 Moreover, the party relying on the enforcement of the multi-tiered
clause must have acted in good faith, or more precisely, has not committed any abuse of rights.7
This is a two-fold duty: Not only does this party must have proposed or accepted the invitation

1
Baizeau, D, 'Chapter 18, Part XVI: Multi-tiered and Hybrid Arbitration Clauses', in Arroyo, M (ed), Arbitration
in Switzerland: The Practitioner's Guide, 2nd edn. (Kluwer Law International 2018), para. 5.
2
Baizeau, para. 12-13; Erlank, W, Enforcement of Multi-Tiered Dispute Resolution Clauses, SSRN Electronic
Journal, September 2002, p. 8, https://www.researchgate.net/publication/228326655_Enforcement_of_Multi-
Tiered_Dispute_Resolution_Clauses (accessed on 15 May 2021); Kayali, D, 'Enforceability of Multi- Tiered
Dispute Resolution Clauses', Journal of International Arbitration, 2010, Vol. 27, Issue 6, p. 551.
3
For an overview of the common pre-arbitral tiers, cf. Kayali, p. 553-555; Garimella, S.R and Siddiqui, N.A, 'The
Enforcement of Multi-Tiered Dispute Resolution Clauses: Contemporary Judicial Opinion', IIUM Law Journal,
2016, Vol. 24, No. 1, p. 162-165.
4
4A_18/2007, 6 June 2007.
5
4A_18/2007, 6 June 2007, 4.3.2.
6
Ibid.
7
4A_18/2007, 6 June 2007, 4.3.3.1.

1
to settle according to the pre-arbitral tier before the arbitration, but it is also required to raise a
claim of non-compliance and to actively seek the implementation of the pre-arbitral tier during
the arbitral proceedings. 8

It can be said that judgments which followed in 20119 and 201410 served to develop caselaw by
determining whether violations of the respective pre-arbitral tiers did occur in situations where
the procedure had been initiated but was ended prematurely.

Finally, 2016 represents the year where the Swiss Federal Supreme Court upheld the
enforceability of a multi-tiered clause for the first time and resolved the question of how to
sanction non-compliance it had left open in all past decisions. It found that a simple stay of the
arbitral proceedings was the most adequate option. 11

Overall, it is safe to say that Swiss caselaw is aligned with the approach adopted by those
jurisdictions with a developed jurisprudence which now acknowledge the enforceability of
multi-tiered clauses as long as they are drafted properly. 12 In less than a decade, the Swiss
Federal Supreme Court has managed to set a clear framework for the enforcement of multi-
tiered clauses and to come up with satisfactory solutions living up to Switzerland’s long-
standing reputation in international arbitration. Since the Court’s ruling from 2016 consensually
seen as a welcome amendment, very little criticism remains among the Swiss doctrine. 13

8
4A_18/2007, 6 June 2007, 4.3.3.2
9
4A_46/2011, 16 May 2011, 3.5.2; Cf. Scherer, M, 'Multi-tier Dispute Resolution Clauses: Swiss Supreme Court
Considers Impact Of (Omitted) Pre-arbitral Expert Appointment and Conciliation on Arbitral Tribunal’s
Jurisdiction', Kluwer Arbitration Blog, 25 May 2011,
http://arbitrationblog.kluwerarbitration.com/2011/05/25/multi-tier-dispute-resolution-clauses-swiss-supreme-
court-considers-impact-of-omitted-pre-arbitral-expert-appointment-and-conciliation-on-arbitral-tribunals-
jurisdiction/ (accessed on 27 May 2021).
10
4A_124/2014, 7 July 2014, 3.4.4 and 3.5; Cf. Scherer, M and Moss, S, 'Swiss Supreme Court analyses
enforceability of pre-arbitral procedure in multi-tier dispute resolution provision (FIDIC DAB)', Kluwer
Arbitration Blog, 1 October 2014, http://arbitrationblog.kluwerarbitration.com.ezp.sub.su.se/2014/10/01/swiss-
supreme-court-analyses-enforceability-of-pre-arbitral-procedure-in-multi-tier-dispute-resolution-provision-fidic-
dab/ (accessed on 27 May 2021).
11
4A_628/2015, 16 March 2016, 2.4.4.1, published in ATF 142 III 296; Groselj, L, 'Stay of arbitration proceedings
– Some examples from arbitral practice', in Scherer, M (ed), ASA Bulletin, 2018, Vol. 36, Issue 3, p. 572-573.
12
Baizeau, para. 32 and 56.
13
For reservations on the two-fold duty of the party relying on the enforcement of a multi-tiered clause, cf. Berger,
B and Kellerhals, F, International Domestic Arbitration in Switzerland, 3 rd edn., Stämpfli Verlag AG, Bern, 2015,
para. 583; For a critique of the promoted solution of staying the arbitral proceedings, cf. Mitrovic, M, 'Dealing
with the Consequences of Non-Compliance with Mandatory Pre-Arbitral Requirements in Multi-Tiered Dispute
Resolution Clauses. The Swiss Approach and a Look Across the Border', in Scherer, M (ed), ASA Bulletin, 2019,
Vol. 37, Issue 3, p. 577-578.

2
However, what should be a fundamental question, i.e., the nature of multi-tiered clauses, has
never benefited from the same attention from Swiss caselaw as the conditions to meet in order
to enforce a pre-arbitral tier or the possible remedies to non-compliance.14 Yet, neglecting the
importance of the characterization of multi-tiered clauses is a mistake as the answer primarily
determines whether the Swiss Federal Supreme Court is entitled at all to hear appeals against
an arbitral tribunal’s determination relating to a claim of non-compliance.

1.1. Aim, research inquiries and thesis structure

The thesis aims to answer the following main research question: Does the characterization of
multi-tiered clauses in Swiss law have a solid legal basis? The author argues that the
characterization of multi-tiered clauses in Switzerland is not well-founded which causes an
unjustified denial of the finality of the arbitral tribunal’s decision on claims of non-compliance
through the application of art. 190(2)(b) PILA as a ground for judicial review. Accordingly, the
present study provides a critical assessment of how Swiss caselaw defines the nature of multi-
tiered clauses.

To achieve this, the following underlying inquiries have to be duly considered in a distinctive
manner.

First: Is a multi-tiered clause of a substantive or of a procedural nature in Swiss law?

The first step of the characterization revolves around the question of whether multi-
tiered clauses fall within one or the other category of contractual agreements. While the
answer does not necessarily determine at this stage of the analysis whether the Swiss
Federal Supreme Court can review an arbitral tribunal’s decision following a claim of
non-compliance, delving into this subject highlights the methodological flaws present
in Swiss caselaw which has followed a procedural approach without addressing this first
debate on the nature of multi-tiered clauses and the possibility for a pre-arbitral tier to
be a substantive agreement. (Section 2).

14
Oetiker, C and Walz, C, 'Non-Compliance with Multi-Tier Dispute Resolution Clauses in Switzerland', ASA
Bulletin, 2017, Vol. 35, Issue 4, p. 874; Stacher, M, 'Jurisdiction and Admissibility under Swiss Arbitration Law
– the Relevance of the Distinction and a New Hope', in Scherer, M (ed), ASA Bulletin, 2020, Vol. 38, Issue 1, p.
55.

3
 Second: How should a procedural pre-arbitral tier be theoretically characterized?

When a multi-tiered clause is deemed a procedural agreement, two conflicting

approaches exist in the international commercial arbitration community: either the
prerequisite functions as a jurisdictional bar to the arbitral tribunal, or it is bar directed
only to the admissibility of the arbitration claim. This issue constitutes the second and
final step of the characterization of multi-tiered clauses and is far from being
inconsequential. Primarily, it has an effect on the finality of the arbitral tribunal’s
determination on a claim of non-compliance since only jurisdictional matters are
typically reviewable by national courts (Section 3).

Third: Is a multi-tiered clause affecting jurisdiction or admissibility in Swiss law?

This last question relates to how the aforementioned second controversy is transposed
in Swiss caselaw and why jurisdiction and admissibility are unconvincingly confused
by the Swiss Federal Supreme Court leading to an extension of its scope of judicial
review through the application of art. 190(2)(b) PILA (Section 4).

1.2. Methodology and legal sources

In a nutshell, this thesis follows a historical approach coupled with a doctrinal research method
ensuring a distinct assessment of each legal issue. This provides for an elaborated theorization
to give a more in-depth understanding of the practice in Switzerland notably by finding its roots.
In other words, tackling each controversy separately (namely the question of whether multi-
tiered clauses are of a substantive or of a procedural nature and the debate revolving around
which of the concepts of jurisdiction and admissibility come into play within the procedural
approach) with a chronological analysis of caselaw is a deconstruction that permits to highlight
the recurrent flaws of the Swiss approach to the nature of multi-tiered clauses.

The historical approach confers the advantage of grasping the true meaning and impact of past
holdings and their contextualization. 15 The question of how as well as the question of why both

15
Melton, B.F, Jr., 'Clio at the Bar: A Guide to Historical Method for Legists and Jurists', Minnesota Law Review,
1998, Vol. 83, p. 391-392.

4
need to be addressed in this respect. 16 When seized for the first time on the question of
enforcement of a multi-tiered clause in 2007, the Swiss Federal Supreme Court did not have to
delve into the nature of the agreement and to consider the substantive and procedural approach
to dismiss the appeal. As a result, neglecting this issue has spread to further rulings. Equally, if
not more, the Vekoma case17 influenced the future state of Swiss caselaw with regard to pre-
arbitral tiers by treating an issue of admissibility (a time limit for the initiation of arbitration)
already with a jurisdictional angle through the application of art. 190(2)(b) PILA as a ground
for judicial review. These decisions are seminal in the sense that they can reveal more about
the present law than one would first expect.

On the other hand, the traditional doctrinal research method “[…] aims to give a systematic
exposition of the principles, rules and concepts governing a particular legal field or institution
and analyses the relationship between these principles, rules and concepts with a view to solving
unclarities and gaps in the existing law”. 18 Swiss caselaw precisely lacks clarity since the
question of whether multi-tiered clauses are of a substantive or of a procedural nature has never
been addressed independently from the question of how to sanction non-compliance. Besides,
jurisdiction and admissibility are seen as intertwined notions instead of distinct concepts.
Therefore, a need for reorganization is present.

Doctrinal research is a tool which also permits to achieve an analysis of the current state of law
(de lege lata position) notably by offering to view the law as a system.19 Such a task permits to
question the extensive role of the Swiss Federal Supreme Court with respect to alternative
dispute resolution mechanisms involving a pre-arbitral tier. It also enables to assess whether
notions such as jurisdiction and admissibility as defined in domestic procedural law do retain
the same meaning when transposed in the international arbitration context, and finally serves
the author to point out the fact that the interpretation of pre-arbitral tiers as agreements affecting
the arbitral tribunal’s jurisdiction in Swiss caselaw is not commercially sensible.

16
Dubber, M.D, 'New Historical Jurisprudence: Legal History as Critical Analysis of Law', Critical Analysis of
Law, 2015, Vol. 2, No. 1, p. 3.
17
4P.284/1994, 17 August 1995, reported in 'Transporten Handelsmaatschappij “Vekoma” BV v. Maran Coal
Corporation, Bundesgericht, I. Zivilabteilung, Not Indicated, 17 August 1995', ASA Bulletin, 1996, Vol. 14 Issue
4, p. 673-679.
18
Smits, J. M., 'What is Legal Doctrine? On the Aims and Methods of Legal-Dogmatic Research', in Van Gestel,
R., Micklitz H.W and Rubin E.L, (eds.), Rethinking Legal Scholarship: A Transatlantic Dialogue, New York,
Cambridge University Press, 2017, p. 5.
19
Smits, p. 6.

5
Doctrinal research is a “two-part process” which first requires to locate the sources of the law
before conducting any interpretation and analysis of the text. 20 Accordingly, although several
types of legal authorities are used in this work, the emphasis is put on the rulings of the Swiss
Federal Supreme Court as the number of relevant provisions of the PILA and their respective
content is very limited. In relation to the enforcement of multi-tiered clauses, one has to realize
the prominent role of caselaw which does not merely add further precision to a well-established
set of norms. Rather, it actually fills in quite important gaps. Most of the discussion naturally
pertains to the international arbitration context and come from the highest judicial authority to
exist in Switzerland which has exclusive jurisdiction to review awards pursuant to art. 191
PILA.

Scholarly literature is essential as well. Commentaries which thoroughly analyze a specific

decision of the Swiss Federal Supreme Court prove valuable from a historical perspective to
showcase immediate reactions of the doctrine. In contrast, more contemporary and general
materials offer the benefit of hindsight and enable to systemize the law.

International doctrine and the Model Law are also used to discuss the differences between the
notions of jurisdiction and admissibility in particular and why it is important to distinguish them
in the international arbitration context, especially given that only jurisdictional issues are
typically reviewable by national courts.

1.3. Scope and limitations

Multi-tiered clauses can be the source of a great variety of issues worth exploring. However,
the most discussed topic concerning those agreements remains their enforcement. Despite the
relatively low number of cases, as the current state of caselaw already appears both satisfactory
and comprehensive, considerations about what makes a multi-tiered clause enforceable and
how to sanction the violation of the pre-arbitral tier by a party do no longer call for a thorough
analysis or critique. That is why this thesis only focuses on their nature and how Swiss caselaw
has dealt with this specific subject so far. Indeed, a need for clarification and for a reassessment

20
Hutchinson, T and Duncan, N, 'Defining and Describing What We Do: Doctrinal Legal Research', Deakin Law
Review, 2012, Vol. 17, No. 1, p. 110.

6
of the practice in Switzerland feels much more tangible in such a context as it is be demonstrated
hereafter.

1.4. Relevance

The method of deconstructing caselaw mentioned above also implies that this thesis intends to
shed light on issues of characterization which have not attracted the most attention either from
the Swiss Federal Supreme Court or from Swiss scholars.

The present thesis is naturally of interest from a Swiss perspective but also strives to offer a
notable contribution to the international arbitration community as issues of characterization of
multi-tiered clauses in Switzerland might find an echo in other jurisdictions where enforcement
of such agreements is sought before national courts as a reaction to an arbitral tribunal’s
determination on a claim of non-compliance. Among questions of law/substance and of
jurisdiction or admissibility, a high number of national laws are similar to the Swiss PILA in
the sense that only a jurisdictional defect can constitute a valid ground for annulling an award.
Thus, the findings of this thesis, i.e., claims of non-compliance with a multi-tiered clause should
not raise issues of jurisdiction, and the following arbitral decisions should not be reviewable as
a consequence, can apply as a recommended international standard.

7
2. An implicit dismissal of the substantive nature in favor of a Swiss
procedural approach

This section discusses how, or better said, to what extent Swiss caselaw has addressed the
question of whether multi-tiered clauses are of a substantive or of a procedural nature.

This debate is relevant especially with respect to negotiation, mediation and conciliation pre-
arbitral tiers where a substantive nature is conceivable as they are non-adversarial phases unlike
other dispute resolution mechanisms where the question does not need to be posed. 21

On the one hand, multi-tiered clauses might be considered substantive similarly to any other
contractual obligations which cannot possibly affect the arbitral proceedings. On the other hand,
if multi-tiered clauses are rather deemed procedural, this means that the pre-arbitral tier is an
actual precondition to the arbitration. 22 The term “condition precedent” is commonly used to
describe that the contractual step agreed by the parties is a procedural requirement to be satisfied
prior to initiating arbitration. Thus, this characterization has some importance since substantive
agreements escapes from the scope of judicial review whereas it might not be the case for
procedural ones.

2.1 An understandable missed opportunity to define the nature of multi-tiered

clauses (4A_18/2007, 6 June 2007)

In its 2007 landmark decision, the Swiss Federal Supreme Court discussed the enforceability
of a pre-arbitral tier contained in a multi-tiered clause for the very first time and set the
requirements such an agreement23 and the party invoking it24 need to satisfy in this respect.

21
Oetiker and Walz, p. 873; Born, G and Šćekić, M, 'Pre-Arbitration Procedural Requirements: A Dismal Swamp’,
in Caron, D.D, Schill, S.W, Cohen Smutny A, and Triantafilou, E.E (eds), Practising Virtue: Inside International
Arbitration, Oxford University Press, 2015, p. 249.
22
Jolles, A, 'Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement', Arbitration: The
International Journal of Arbitration, Mediation and Dispute Management, 2006, Vol. 72, Issue 4, p. 329; Baizeau,
para. 58; Born and Šćekić, p. 249.
23
4A_18/2007, 6 June 2007, 4.3.2.
24
4A_18/2007, 6 June 2007, 4.3.3.

8
This case concerned an agreement composed of a mediation phase to be conducted in
accordance with WIPO Mediation Rules followed by arbitration if not successful. The Court
first noted the growing success of alternative dispute resolution notably embodied by mediation
or conciliation, mentioned their presence in several institutional rules such as WIPO and briefly
described their purposes and functioning. 25 Yet, the Swiss Federal Supreme Court did not define
the nature of these agreements and a fortiori did no resolve the controversial issue as to whether
multi-tiered clauses are either of a substantive or of a procedural nature. Although regrettable,
this can easily be explained by the fact that the mediation first tier contained in the dispute
resolution clause in question was found to be too vague to be deemed enforceable. 26 As the
appeal was dismissed on this ground, the Court did not feel the need to elaborate on either the
nature of multi-tiered clauses or the remedy to the non-compliance by a party though the latter
was at least mentioned as a highly controversial issue and expeditiously touched upon. 27

It is the method relied upon at a time where the possible remedies had not been reviewed
extensively yet and the overall coherence of caselaw which is arguably criticizable. It remains
curious that the Swiss Federal Supreme Court stated that multi-tiered clauses must be
interpreted in accordance with the general principles of contract interpretation like any standard
arbitration clause28 without setting a framework to define the nature of the agreement examined
in the first place.

Under the general principles of contract interpretation, the judge must seek to establish the
common intentions of the parties based on circumstantial evidence. In the event that it is not
possible, he or she must refer to what is known as the principle of trust
(Vertrauensprinzip/principe de la confiance). What is taken into consideration is the meaning
that the parties pursuant to the principle of good faith could and should have given to their
reciprocal manifestations given all the circumstances.29

25
4A_18/2007, 6 June 2007, 4.3.1.
26
4A_18/2007, 6 June 2007, 4.3.2.
27
4A_18/2007, 6 June 2007, 4.3.1.
28
4A_18/2007, 6 June 2007, 4.3.2.
29
4P.162/2003, 21 November 2003, published in ATF 130 III 66, 3.2.

9
Also, while the language used by the parties was recognized as a key factor to determine the
mandatory character of a pre-arbitral tier,30 its influence on the nature of the multi-tiered
clause31 was not touched upon.

The Swiss Federal Supreme Court was seized to review the award on the ground provided by
art. 190(2)(b) PILA:

“The award may only be annulled: […] if the arbitral tribunal wrongly accepted or declined
jurisdiction […]”

The claim of non-compliance with the multi-tiered clause raised was confirmed in the judgment
to be an objection to the jurisdiction ratione temporis of the arbitral tribunal since according to
the Court, no other ground for appeal could be attached to this issue. 32 Also, a domestic norm
providing for judicial conciliation and functioning as a jurisdictional bar to initiating litigation
in Swiss law was comparatively used to justify the angle chosen. 33

Jurisdiction being a procedural matter, one could reasonably conclude that the Court shared its
position as to the nature of multi-tiered clauses through the provision applicable to seek the
annulment of the award. However, the reality is more complex because the Court briefly
reflected on the possible remedies to non-compliance including awarding damages before
leaving the question open. The fact that this substantive solution was envisaged at that time
indicates that art. 190(2)(b) PILA was only applied by default and that it did not dictate the
solution to adopt to sanction non-compliance, a fact expressly acknowledged in a later case. 34
Therefore, an ambiguity about the nature of multi-tiered clauses remained.

Such a legal loophole is definitely prejudicial to the legitimacy of the judicial review practiced
by the Court. A thorough analysis of the nature of the multi-tiered clause would have been
needed to determine whether the issue raised falls within the scope for challenging awards. As
mentioned, an issue pertaining to the jurisdiction of the arbitral tribunal is susceptible of being

30
4A_18/2007, 6 June 2007, 4.3.2.
31
Born and Šćekić, p. 249.
32
4A_18/2007, 6 June 2007, 4.2; the reasoning of the Swiss Federal Supreme Court about the notion of jurisdiction
leading to an extension of the scope of judicial review is further discussed and criticized based on the precise
language of the multi-tiered clause in question in Section 4.2.
33
4A_18/2007, 6 June 2007, 4.2; Cf. Section 4.2.
34
4A_46/2011, 16 May 2011, 3.4.

10
appealed. On the other hand, a substantive issue has to do with the merits of the case and is to
be decided finally by the arbitral tribunal.

By sticking closely to the questions posed by the multi-tiered clause examined in casu, most
likely for reasons of procedural economy, the Swiss Federal Supreme Court missed the
opportunity to offer greater guidance on what could possibly constitute a material contractual
commitment, and in contrast, a condition precedent to arbitration. Ironically, the Court
neglected the first step in the assessment of its own jurisdiction to hear the appeal as a finding
of a substantive agreement would have automatically dismissed the appellant’s request to
review the award.

2.2 A rejection of the substantive remedies to non-compliance (4A_628/2015,

16 March 2016)

In contrast to the issue of the remedies to the non-compliance, later decisions have all been
similarly unconcerned by addressing the debate over the substantive or the procedural nature
of multi-tiered clauses but benefited from either the non-mandatory character of the agreement
examined35 or from the fact that the pre-arbitral tier had not been violated36 as a justification.

However, this oversight extended to the one decision from 2016 which finally upheld the
enforceability of the multi-tiered clause examined and as a result annulled the award which had
dismissed the claim of non-compliance.37 Again, this is understandable as the Swiss Federal
Supreme Court’s practice seems pragmatic by focusing on assessing the possible remedies at
the arbitral tribunal’s disposal in case of non-compliance. From today’s perspective it may be
true that spending time defining the nature of a multi-tiered clause can be redundant since the
disadvantages of substantive remedies are relatively easy to spot and that the procedural remedy
promoted by the Swiss Federal Supreme Court in 4A_628/2015, namely a stay of the arbitral
proceedings, has been a welcome development. 38 In this ruling concerning the enforcement of

35
Ibid.
36
4A_124/2014, 7 July 2014, 3.5.
37
4A_628/2015, 16 March 2016, published in ATF 142 III 296.
38
Baier, J, 'Review of the Recent Case Law of the Swiss Federal Supreme Court', in Müller, C, Besson, S and
Rigozzi (eds), A, New Developments in International Commercial Arbitration, Schulthess Geneva /Zurich, 2016,
p. 158-159, Boog, C and Menz, J, 'Landmark Swiss Decision on Failure To Comply with a Mandatory Pre-arbitral
Tier', Kluwer Arbitration Blog, 4 May 2016, http://arbitrationblog.kluwerarbitration.com/2016/05/04/landmark-
swiss-decision-failure-comply-mandatory-pre-arbitral-tier/ (accessed on 15 May 2021).

11
a mediation tier, the Court convincingly dismissed the option of awarding damages to the party
claiming that non-compliance occurred.39 Such a sanction would occur too late in the procedure
thus voiding the obligation to use mediation prior to arbitration of its essence. 40 Furthermore,
due to the fact that mediation does not impose any duty to settle, it would be difficult to
substantiate the damage caused by the non-compliance.41 Besides, building on a past decision
from 2011,42 it expressly repeated that it is doubtful that one single remedy can adapt to all
possible cases but this time concluded that procedural remedies are the only ones that seem
effective.43 This suggests at least that the nature of multi-tiered clauses cannot be purely
substantive in its view. 44

In a nutshell, the remedy should theoretically be derived from the nature of the specific clause
examined. In defence of the Swiss Federal Supreme Court, this principle nevertheless deserves
to be somewhat nuanced in practice. For example, if the parties were to agree on a penalty
payment45 or on liquidated damages in case of non-compliance with a mediation first tier, a
substantive nature would fit their common intentions better as the amount due in case of breach
would be established from the conclusion. However, in the absence of any other factors, this
would be entirely due to the chosen remedy. In other words, the remedy might also have an
effect on the nature in cases of this sort which justifies the temptations to tackle the issue of the
nature and the issue of the remedy in a single assessment, or rather to examine thoroughly the
question from the latter’s angle as it has been done in Swiss caselaw. In this respect, scholars
also tend to adopt the general expression “procedural or substantive approach” to summarize
the debate.46

As of now, given the limited number of multi-tiered clauses reviewed in caselaw, it would be
quite harsh to judge the Swiss Federal Supreme Court as lacking flexibility. Yet, in the event
the aforementioned multi-tiered clause has to be dealt with in the future, based on the recurrent
shortcuts used in Swiss caselaw, one could reasonably fear a certain automatism resulting in

39
4A_628/2015, 16 March 2016, 2.4.4.1, published in ATF 142 III 296.
40
Ibid.
41
Ibid., difficulty in establishing any damage is supported by the application of the theory of difference
(Differenztheorie/théorie de la différence) held incompatible with the loss of a chance doctrine in 4A_61/2007, 13
June 2007, 4.4.3, published in ATF 133 III 462.
42
4A_46/2011, 16 May 2011, 3.4.
43
4A_628/2015, 16 March 2016, 2.4.4.1, published in ATF 142 III 296.
44
Oetiker and Walz, p. 874.
45
Jolles, p. 337; Boog, C, 'How to Deal with Multi-tiered Dispute Resolution Clauses – Note - 6 June 2007 Swiss
Federal Supreme Court', ASA Bulletin, 2008, Vol. 26, Issue 1, p. 111.
46
Mitrovic, p. 562; Jolles, p. 336; Boog, p. 108.

12
treating the multi-tiered clause with a procedural approach (permitting judicial review through
art. 190(2)(b) PILA and perhaps even applying a procedural remedy) in addition to upholding
the agreed penalty payment or liquidated damages, instead of embracing its purely substantive
nature.

It is interesting to note that the very first final judgment on the enforcement of multi-tiered
clause in Switzerland issued by the Cassation Court of the Canton of Zurich had defined a
conciliation tier as a substantive agreement and as a second step, came to the conclusion that
no sensible substantive remedy could be found. 47

Given its inherent flaws, this approach has not spread to later cantonal rulings, 48 and to the
federal level. However, from a purely theoretical perspective, the structure of the Cassation
Court of the Canton of Zurich’s reasoning remains dogmatically desirable by first sharing a
clear position on the nature of multi-tiered clauses before assessing the corresponding remedies
to the non-compliance though ending up finding not a single sensible one. At the polar opposite,
the Swiss Federal Supreme Court has found a satisfying remedy, but it has not acknowledged
the debate over the nature of multi-tiered clauses independently from the assessment of the
possible sanctions to non-compliance. A relative lack of rigor exists as seeking the most
effective solution should not be the Court’s priority, respecting the intentions of the parties is,
pursuant to the general principles of contract interpretation. Naturally, these tasks might
intertwine in most cases, but that should not always be taken for granted.

2.3 Concluding remarks

Swiss caselaw has never addressed the question of whether multi-tiered clauses are of a
substantive or of a procedural nature directly despite its importance as the first step in the
analysis of the Swiss Federal Supreme Court’s own jurisdiction to hear appeals on awards
deciding to uphold or to dismiss claims on non-compliance. However, it is possible to consider
that in the Court’s view, they cannot be of a purely substantive nature for two reasons. First,

47
Cassation Court of the Canton of Zurich, ruling of 15 March 1999, published in ZR 99 (2000), No. 29, discussed
in Jolles, p. 330; Cf. Erlank, p. 30; Garimella/Siddiqui, p. 185; Baizeau, ftn. 56.
48
Thurgau Court of Appeals, ruling of 23 April 2001, reported in 'Not indicated v. Not indicated, Obergericht des
Kantons Thurgau, 23 April 2001', ASA Bulletin, 2003, Vol. 21, Issue 2, p. 418-420; Jolles, p. 331; Baizeau, para.
55 and ftn. 46; Zurich Court of Appeals, ruling of 11 September 2001, published in ZR 101 (2002), No. 21, 77-81,
discussed in Jolles, p. 331; Cf. Erlank, p. 31; Garimella and Siddiqui, p. 186; Baizeau, ftn. 56.

13
judicial review of decisions on non-compliance is made from a jurisdictional angle through the
application of art. 190(2)(b) PILA and jurisdiction is a procedural matter. Second, it has been
expressly held that the only conceivable sanctions to violation of a pre-arbitral tier are
procedural. Also, there is a future risk that awards on the non-compliance with a pre-arbitral
tier yet unequivocally drafted as a material contractual commitment would still be reviewable
because of the application by default of the aforementioned provision. The shortcuts present in
caselaw may lead to a certain automatism wrongly denying the finality of an arbitral decision
on a question related to the merits.

14
3. A theorization of the notions of jurisdiction and admissibility in
international commercial arbitration

This section provides theorization on two notions that have been only briefly addressed by the
Swiss Federal Supreme Court which has underestimated their inherent differences in the
context of international commercial arbitration. Defining multi-tiered clauses as procedural
agreements only constitutes the first step of the analysis of their nature. Discussing jurisdiction
and admissibility as two distinct branches of the procedural approach remains an essential
refinement of the characterization of multi-tiered clauses for a number of significant
consequences for the arbitration discussed hereafter and primarily on the availability of judicial
review as only jurisdictional issues can be typically appealed.

3.1 A procedural bar directed to the arbitral tribunal or to the arbitration claim?
(Jurisdiction vs admissibility)

In the international commercial context, most scholars acknowledge the existence of two
distinct approaches as to how to characterize a procedural requirement in a multi-tiered clause.49

The jurisdictional approach advocates that non-compliance with a multi-tiered clause has a
direct consequence on the jurisdiction of the arbitral tribunal. The party relying on the
enforcement of the pre-arbitral tier raises a claim to argue that the arbitral tribunal lacks
authority on the dispute until the procedural requirement has been complied with. 50 This
situation can be referred to as a lack of jurisdiction ratione temporis meaning that the deficiency
exists at a given point in time and is capable of being remedied.

Under the admissibility approach, non-compliance with a multi-tiered clause does not affect the
jurisdiction of the arbitral tribunal but rather the arbitration claim filed. Such a claim is judged
premature and cannot be heard by the arbitral tribunal for the reason that it should have first

49
Vetulli, E.H and Kaufman, E.E, 'Chapter I: The Arbitration Agreement and Arbitrability, Deciding who decides:
Issues arising out of the Failure to fulfil Pre-Arbitration Requirements', in Klausegger , C, Klein, P et al. (eds),
Austrian Yearbook on International Arbitration 2017, Wien, Manz’sche Verlags- und Universitätsbuchhandlung,
p. 60-61.
50
Born and Šćekić, p. 243.

15
been submitted in the context of the pre-arbitral tiers agreed to by the parties. 51 The
inadmissibility of the claim is also provisional (ratione temporis)52 as it can also be cured by a
subsequent compliance with the multi-tiered clause.

3.2 Casuistic approach pursuant to the intentions of the parties

It would be a mistake to definitely classify claims of non-compliance as pertaining to one of

the aforementioned approaches. 53 In effect, such a rigidity would bear the risk of being contrary
to the intentions of the parties. Unfortunately, it has been observed that this is precisely what
arbitral tribunals or courts tend to do when their selected characterization “ […] expresses a
conclusion, rather than the reasoning for that conclusion”. 54 Others decline to provide any
answer at all as they don’t consider it necessary to recognize the mandatory character of the
clause at hand, in addition to adopting pragmatic remedies. 55

The intentions of the parties are first evidenced by the written content of the multi-tiered clause
that is the wording as well as the structure of the agreement in question.

Gary Born provides examples of multi-tiered clauses pertaining to each of the two approaches
that are reproduced herein in order to include concrete considerations in the discussion.

Jurisdiction:
“[t]his arbitration agreement shall not take effect, and no arbitral tribunal shall have any
authority or jurisdiction, until” specified pre-arbitration procedural requirements have been
satisfied”.56

51
Ibid.
52
Heiskanen, V, 'Admissibility in International Arbitration', in Cottier, T, Nadakavukaren Schefer, K et al. (eds),
Elgar Encyclopedia of International Economic Law, Edward Elgar Publishing, 2017, p. 320.
53
Vetulli and Kaufman, p. 63.
54
Born and Šćekić, p. 246.
55
Born and Šćekić, p. 245.
56 Born, G.B, International Commercial Arbitration, 3rd edn. (Kluwer Law International, 2020), p. 999-1000 and

ftn. 1729.

16
Admissibility:
“[n]either party shall have any rights under this Article 4, including any rights to monetary or
other relief, unless it shall have served a notice of dispute within six months of the
circumstances giving rise to any claim under this Article 4”. 57

To somewhat relativize Born’s contribution, the aforementioned agreements seem closer to

models which perfectly embody one of the respective approaches than what users of
international arbitration have been susceptible to draft to resolve their potential dispute up to
now. Nevertheless, illustrating the different approaches with specific phrasing and key terms
corresponding to each approach may serve as suggestions practitioners could get inspiration
from when they need to make sure their intentions are correctly reflected on paper. Likewise,
arbitrators or judges also need references to make their decision on how to characterize the
clause presented to them.

Sticking exclusively to the language of the multi-tiered clause is sometimes insufficient to

establish the intentions of the parties and to serve as a basis to decide which of the two
approaches the agreement falls into. 58 To put it simply, since clear solutions as to the
characterization of multi-tiered clauses do not typically come as obvious, legal uncertainty
subsists. Thus, one needs to inject some more theorization and policy in the discussion by
looking at the consequences inherent to each approach.

3.3 Consequences of the characterization

As one could presume, distinguishing jurisdictional and admissibility issues is not just confined
to a mere intellectual exercise. 59 The characterization of a procedural requirement in a multi-
tiered clause actually has a bearing on a number of aspects in the arbitral proceedings and on
the power of courts as well. With references made to the Model Law, these consequences are
tackled in what could correspond to a chronological order in a dispute resolution procedure.
The last and most important in practice remains the availability of judicial review.

57
Born, p. 999-1000 and ftn. 173.
58
Vetulli and Kaufman, p. 63.
59
Heiskanen, p. 321.

17
Firstly, even though it is not obliged to do so, an arbitral tribunal can raise a possible
jurisdictional defect on its own motion. 60 The principle of Kompetenz-Kompetenz as transcribed
in the first sentence of art. 16(1) of the Model Law reflects this idea, among other things,
through the permissive term “may” and the complementary expression “including any
objections […]”.

“The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to
the existence or validity of the arbitration agreement […]”.

In contrast, an arbitral tribunal is unlikely to consider issues of admissibility ex officio. Only in

the event of a claim of non-compliance with the multi-tiered clause raised by a party will the
arbitral tribunal decide whether the claim filed by the other party is admissible.

Secondly, notwithstanding the above, it is required from the parties to actively raise an
objection to the jurisdiction of the arbitral tribunal if a defect exists in their opinion.
Accordingly, it is generally considered in international commercial arbitration that the parties
waive their right to oppose the authority of the arbitral tribunal when they have failed to comply
with this duty, claims of non-compliance with multi-tiered clauses being no exception. 61 Art.
16(2) of the Model Law is representative of the time limit within which a party has to satisfy
the requirement to raise an objection when it states:

“A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the
submission of the statement of defence […]”.

No such express principle exists for defects concerning the admissibility of the claim filed
before the arbitral tribunal. Nevertheless, since nothing particularly prevents the possibility of
a party to argue that the other party’s claim is inadmissible at the earliest stage of the arbitration,
one does not see any reason against the application of a similar waiver.

Thirdly, another element worth mentioning for strategic purposes has to do with the order the
arbitral tribunal follows to decide jurisdictional and admissibility issues. Pursuant to art. 16(3)
of the Model Law:

60
Born, p. 1344.
61
Born, p. 3555-3556.

18
“The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a
preliminary question or in an award on the merits […]”.

In light of the above, the arbitral tribunal can make a first separate determination as to its own
jurisdiction ratione temporis through bifurcation. Admissibility issues do not really differ as
the power to render partial awards is generally conferred by national statutes or arbitration
rules.62

In any event, the party relying on the non-compliance with a multi-tiered clause has every
reason to insist on the need to have the arbitral tribunal make an early determination as to either
its jurisdiction or the admissibility of the claim in order to save time and costs. It should only
be borne in mind that questions of admissibility are more likely to be resolved in an award on
the merits of the case63 which explains why parties may want to label their objection based on
a failure to comply with a multi-tiered clause to pertain to jurisdiction.

Fourthly, when an arbitral tribunal decides to uphold an objection as to the admissibility of the
claim for the reason that the pre-arbitral tier has not been complied with, it has broad procedural
flexibility.64 Either it closes the proceedings, or it simply orders their suspension inviting the
parties to comply with the agreed procedural prerequisite. After the exhaustion of the pre-
arbitral tier, the same claim as the one previously filed will be deemed admissible to be heard
if the parties still need their dispute to be resolved by arbitration.

Instead, if the claim of non-compliance is viewed as a jurisdictional issue, an arbitral tribunal

has no other choice than closing the proceedings when it finds that the objection is correct. 65
Indeed, even in case of a lack of jurisdiction ratione temporis, an arbitral tribunal becomes
functus officio because its mandate should not have started in such a premature way. Therefore,
staying the proceedings is not a power it can use as the arbitral tribunal actually has none.

Nevertheless, some scholars pointed out the fact that art. 16(3) of the Model Law confers the
arbitral tribunal the right to rule on a jurisdictional issue only in the final award would make it

62
Blackaby, N and Partasides, C, et al., Redfern and Hunter on International Arbitration, 6 th edn., Oxford, Oxford
University Press, 2015, para. 9.23.
63
Heiskanen, p. 319.
64
Heiskanen, p. 321.
65
Ibid.

19
possible for it to temporarily accept jurisdiction on the proviso that the parties will satisfy the
procedural prerequisite later on. 66 In other words, the arbitral tribunal cannot order a stay of the
proceedings when it decides that it lacks jurisdiction, but it could pragmatically reach a similar
result if it avoids making any determination as to a claim of non-compliance until its award on
the merits.

Fifthly and lastly, as of judicial review, the consequence of the distinction is easy to grasp.
While a decision upholding or declining jurisdiction can be appealed before national courts (de
novo review), a determination as to the admissibility of the arbitration claim typically cannot
(review with deference). 67

Issues pertaining to the arbitral tribunal’s jurisdiction are among the few grounds for
challenging awards of virtually all national statutes. It is easily explainable as an erroneous
decision in this respect must be rectifiable since “[…] it determines the applicable dispute
resolution system (litigation or arbitration)”. 68 Art. 34(2)(a)(i) of the Model Law is
representative when it provides that a party can seek to set aside an award if the arbitration
agreement “[…] is not valid under the law to which the parties have subjected it or, failing any
indication thereon, under the law of this State”.

It has been noticed that, in practice, national laws do not tend to allocate the scope of judicial
review according to a clear separation between issues of jurisdiction and issues of admissibility.
A proper characterization is also disregarded when courts are seized by a party seeking to annul
an award concerning non-compliance with a pre-arbitral tier.69

Yet, while it can be said that most of the consequences of the characterization enumerated above
might not be significant enough to demonstrate a compelling need for courts to acknowledge a

66
Jones, D, 'Dealing with Multi-Tiered Dispute Resolution Process', Arbitration: The International Journal of
Arbitration, Mediation and Dispute Management, 2009, Vol. 75, Issue 2, p. 191-192 ; Bull, C, 'Commencing
Arbitration', in Van den Berg, A.J (ed), International Arbitration: The Coming of a New Age?, ICCA Congress
Series, No. 17, 2013, p. 153.
67
Vetulli and Kaufman, p. 70; Paulsson, J, 'Jurisdiction and Admissibility', in Aksen, G, et al. (eds), Global
Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in honour of Robert Briner,
ICC Publishing, Publication 693, November 2005, University of Miami Legal Studies Research Paper No. 2010-
30, p. 601; Park, W.W, 'The Arbitrator's Jurisdiction to Determine Jurisdiction', Boston University, School of Law,
Public Law Research Paper, 2007, No. 17-33, p. 74.
68
Stacher, p. 57.
69
Born and Šćekić, p. 246; Casey, B, Defranchi, L, Kaiding, J and Lal, H, 'Multi-Tiered Dispute Resolution
Clauses in International Arbitration – The Need for Coherence', ASA Bulletin, 2020, Vol. 38, Issue 4, p. 797.

20
clear distinction between jurisdiction and admissibility, the availability of judicial review
exclusively affiliated to the jurisdictional approach is the one element which legitimizes the
importance of the debate and embodies its most serious stake.

3.4 Application of a presumption in favor of the admissibility approach

In a vast majority of cases, it is preferable to assume that a procedural requirement is not a

jurisdictional bar to arbitration. There is a number of reasons supporting this statement. The
expedition of the dispute resolution as well as the expertise of the authority called to intervene
constitute the two main grounds for considering the jurisdictional approach with deference.

Indeed, it is safe to presume that for efficiency purposes, most parties desire that their
conflicting views on the dispute resolution mechanism should be heard by a single centralized
authority which makes a final determination of the issue.70

Furthermore, it is argued that arbitral tribunals are naturally in a better position to fulfil this
function in comparison to courts which lack experience in dealing with the procedural
framework of the arbitration, and a fortiori pre-arbitral tiers.71

Regardless of the possible complications on the arbitral process resulting from treating a pre-
arbitral tier as a jurisdictional bar which affects the temporal validity of the agreement to
arbitrate,72 what should primarily condemn the jurisdictional approach and stress its
incapacity to match the intentions of most parties remains the safeguarding of the superfluous
involvement of national courts through “[…] an unjustified extension of the scope for
challenging awards […]”. 73 Allowing courts to review arbitral decisions on non-compliance
may even deter practitioners from including multi-tiered clauses in their contracts and work
against the promotion of amicable settlement in the case of non-adversarial pre-arbitral tiers.

Therefore, the only sensible approach is treating a procedural requirement with the rebuttable
presumption that it affects the admissibility of the claim filed before the arbitral tribunal.

70
Born and Šćekić, p. 259; Paulsson, p. 617; Vetulli and Kaufman, p. 73-74.
71
Born and Šćekić, p. 259.
72
Cf. section 4.3, p. 27-28.
73
Paulsson, p. 601.

21
3.5 Concluding remarks

Among the two branches within the procedural approach, given the fact that issues of
admissibility are typically excluded from the scope of judicial review, one should presume that
a pre-arbitral tier affects the admissibility of the arbitration claim instead of the jurisdiction of
the arbitral tribunal for efficiency purposes. However, the emphasis should always be put on
the intentions of the parties which means that this presumption has to be rebutted when the
language of the multi-tiered clause unequivocally indicates that the parties did not wish to give
any authority to the arbitral tribunal prior to the compliance with the agreed procedural
requirement. Only on these (rare and unadvised) occasions should the jurisdiction of the arbitral
tribunal be deemed affected and arbitral decisions on claims of non-compliance susceptible of
appeal.

22
4. The Swiss semi-jurisdictional approach

This section first aims to explain why Swiss caselaw relies upon the application of art. 190(2)(b)
PILA to review awards deciding to uphold or to reject claims of non-compliance with a
procedural pre-arbitral tier contained in a multi-tiered clause. Exploring the reasons for which
Swiss caselaw has repeatedly viewed multi-tiered clauses as implementing a jurisdictional bar
to the arbitration demonstrates the lack of doctrinal basis for such a conclusion. Moreover, one
could seriously question the consistency of the Swiss approach with respect to the remedy to
non-compliance promoted in caselaw. The solution of staying the arbitral proceedings might
explain why some Swiss scholars 74 seriously started doubting whether the Swiss Federal
Supreme Court was entitled to hear appeals of this sort. Such criticism can be naturally applied
retroactively to earlier judgments.

4.1 The premise of an extension of the scope of judicial review permitted by

the mischaracterization of an admissibility issue (4P.284/1994, 17 August 1995)

The Vekoma case75 did not relate directly to the enforcement of multi-tiered clauses or the
characterization of procedural requirements despite the fact that the arbitration agreement in
question provided that the parties shall try to settle through negotiation prior to arbitration. This
does not mean that it lacks any relevance to the characterization of procedural requirements in
a multi-tiered clause. In fact, it is historically valuable as it explains that the temptation of the
Swiss Federal Supreme Court to broaden the scope of review of arbitral awards by avoiding the
distinction between jurisdiction and admissibility is not a new nor an isolated practice. 76

Indeed, the source of the dispute came from an alleged non-compliance with a contractual time
period fixing 30 days within which the parties could commence arbitration under the ICC Rules
after the negotiation phase had failed. The arbitral tribunal had to decide whether Maran Coal
had filed its arbitration claim outside of the agreed time limit by first establishing the date

74
Mitrovic, p. 574-589; Stojiljkovic, M, 'Arbitral Jurisdiction and Court Review: Three Swiss Federal Supreme
Court Decisions to Reconsider', ASA Bulletin, 2016, Vol. 34, Issue 4, p. 903-907.
75
4P.284/1994, 17 August 1995, reported in 'Transporten Handelsmaatschappij “Vekoma” BV v. Maran Coal
Corporation, Bundesgericht, I. Zivilabteilung, Not Indicated, 17 August 1995', ASA Bulletin, 1996, Vol. 14 Issue
4, p. 673-679.
76
For a non-exhaustive list of scenarios in which the Swiss Federal Supreme Court had to decide whether an issue
was jurisdictional with a historical tendency to broaden the scope of art. 190(2)(b) PILA, cf. Stacher, p. 62-73.

23
corresponding to the end of the negotiation with Vekoma. It finally held that commencement
of the arbitration was timely, and as a result, rejected the respondent’s objection that the
contractual right to arbitrate had already lapsed. 77

Vekoma sought annulment of the arbitral award before the Swiss Federal Supreme Court.
Relying on an earlier date to set the starting point of the time period, the Court reached an
opposite solution. It concluded the arbitral tribunal lacked jurisdiction for the reason that the
time limitation had not been complied with. The challenge was then upheld, and the award set
aside.78

Independently from any critique of the Court’s reasoning, what can be noticed is that the
determination as to whether the arbitration claim was timely filed relates to an issue of
admissibility.79 While it is possible to see an unjustified re-examination of the arbitral tribunal’s
factual findings on the date the negotiations have failed, 80 the judicial scope of review as
provided by art. 190(2)(b) PILA simply did not permit the Court to make a ruling on the
admissibility of a claim.81 Paulsson rightly observes that neither the consent to arbitrate nor the
validity of the arbitration agreement were disputed.82 Besides, as Stacher puts it: “[T]he
principle of trust does not suggest that missing a time limit transfers jurisdiction back to the
state-court system”.83

This case is highly indicative of a deep-rooted practice to adopt a de novo review through the
lens of a jurisdictional issue in relation to pre-arbitral procedural requirements which are rather
for arbitrators to decide in a final manner.84 One could go even further by claiming that it is the
matrix of all rulings by the Swiss Federal Supreme Court on the enforcement of multi-tiered
clauses up to today.

77
Paulsson, p. 602; Casey, Kaiding and Lal, p. 799-800; Park, p. 75-76.
78
Ibid.
79
Paulsson, p. 602.
80
Friedland, P.D, 'The Swiss Supreme Court Sets Aside an ICC Award', Journal of International Arbitration,
1996, Vol. 13, Issue 1, p. 114-115; In defense of the Court, cf. Karrer P.A, and Kälin-Nauer, C, 'Is there a Favor
Iurisdictionis Arbitri? Standards of Review of Arbitral Jurisdiction Decisions in Switzerland', Journal of
International Arbitration, 1996, Vol. 1, Issue 3, p. 34-35.
81
Paulsson, p. 602; Casey, Kaiding and Lal, p. 799-800; Born, p. 1009; Stacher, M, 'Jurisdiction and Admissibility
under Swiss Arbitration Law – the Relevance of the Distinction and a New Hope', in Scherer, M (ed), ASA Bulletin,
2020, Vol. 38, Issue 1, p. 67.
82
Paulsson, p. 602.
83
Stacher, p. 67.
84
Born, p. 1009.

24
4.2 A failure to question the initial jurisdictional characterization of a multi-
tiered clause (4A_18/2007, 6 June 2007)

In 2007, the Swiss Federal Supreme Court dealt with the enforcement of a multi-tiered clause
for the first time. It is reproduced herein as its precise language serves the following analysis.

“Any controversy or dispute relating to the present contract and which cannot be resolved
amicably (including by mediation under the World Intellectual Property Organization Rules),
shall be submitted to an arbitral tribunal which alone shall have jurisdiction to decide finally,
to the exclusion of the ordinary courts. Moreover, the arbitral tribunal alone shall have
jurisdiction to decide on any dispute concerning the applicability of this arbitration clause.
Negotiations already underway shall in no way constitute a hindrance to the initiation of
arbitration proceedings.”85

The appellant sought to vacate the award which had dismissed its claim of non-compliance
relying on art. 190(2)(b) PILA:

“The award may only be annulled: […] if the arbitral tribunal wrongly accepted or declined
jurisdiction […]”

In its reasoning, the Court never touched upon the distinction between jurisdictional and
admissibility issues. It summarized the appellant’s complaint as a claim that the arbitral tribunal
lacked jurisdiction ratione temporis.86 Then, it added that such an objection was included in the
scope of art. 190(2)(b) PILA before admitting that no other ground for challenging the award
from the exhaustive list of art. 190(2) seemed to fit. 87

This last short statement could constitute a first semi-confession that claims of non-compliance
with a procedural requirement contained in a multi-tiered clause do not dogmatically belong to
the ground provided by art. 190(2)(b) PILA but that a judicial intervention was needed. The

85
4A_18/2007, 6 June 2007, Facts, A, English translation by Baizeau, para. 35.
86
4A_18/2007, 6 June 2007, 4.2.
87
Ibid.

25
fact that the Court was somewhat conscious of the theoretical flaws of its practice was further
developed in a later case. 88

The Court still sought to legitimate the recourse to art. 190(2)(b) PILA by making a comparison
to art. 274f CO.89 This domestic norm imposed a jurisdictional requirement by providing that
disputes between landlords and tenants had to be submitted to a conciliation procedure before
one party could seize the competent court. 90

Yet, when the arbitral tribunal interpreted the clause, it stated that a mediation procedure of this
sort was absolutely incomparable with conciliation before the judge imposed by procedural
codes in Switzerland as a prerequisite to litigation. One can notice that the Swiss Federal
Supreme Court took this view into consideration in order to hold that the mediation tier could
not be mandatory, but not to the extent of questioning the characterization of procedural
requirements in a multi-tiered clause.

This missed opportunity is arguably excusable as the arbitral tribunal itself had treated the claim
as jurisdictional objection following the initial characterization made by the respondent. It is
still regrettable that the lack of legal framework in Switzerland at that time pushed the arbitral
tribunal to treat the claim of non-compliance simply as it was presented and that the
jurisdictional approach survived in the appeal procedure, therefore forming a vicious circle.

It is argued that the procedural requirement in the multi-tiered clause in question should have
been recharacterized and that a closer look at its content was even sufficient to realize this. The
word “jurisdiction” appears twice. While the first reference is a common exclusion of national
court in favor of arbitration, the second gives the exclusive authority to the arbitral tribunal to
decide all issues of applicability of the agreement which necessarily includes claims of non-
compliance with the mediation tier. This indicates that the arbitral tribunal’s jurisdiction could
not be affected as it was expressly intended to be safeguarded in the event that the arbitration
clause was rendered inapplicable. This definitely falls outside of the scope of art. 190(2)(b)
PILA.

88
4A_46/2011, 16 May 2011, 3.4.
89
4A_18/2007, 6 June 2007, 4.2, (art. 274f CO was repealed on 19 December 2008 with effect from 1 January
2011).
90
4C.17/2004, 2 June 2004, 3.3.1.

26
One could be surprised that this ruling of the Swiss Federal Supreme Court did not meet
criticism about the extension of the scope of art. 190(2)(b) PILA at the time it was issued. This
can be explained by the fact that the assessment of the compulsory nature of the mediation tier
and the duties imposed by the principle of good faith as conditions for the enforceability of a
multi-tiered clause were at the center of the attention. Indeed, what would make a multi-tiered
clause enforceable was naturally the first question practitioners wanted an answer to, and the
Court took a clear position in this respect.

4.3 An unfounded express refusal to distinguish the notions of jurisdiction and

admissibility (4A_46/2011, 16 May 2011)

The Swiss Federal Supreme Court was seized again in 2011 to review the enforceability of a
multi-tiered clause providing for expert determination followed by conciliation as pre-arbitral
tiers after the arbitral tribunal had dismissed the claim of non-compliance raised and upheld
jurisdiction in its final award.

In the appeal procedure, the respondent reminded that art. 186(2) PILA imposes a duty to raise
a plea to the lack of jurisdiction of the arbitral tribunal prior to any defence on the merits. It
then argued that the appellant waived its right to object the arbitral tribunal’s jurisdiction as it
had only concluded to the inadmissibility of the claim during the arbitral proceedings.
Subsidiarily, the respondent added non-compliance could not affect the arbitral tribunal’s
jurisdiction but only the admissibility of the claim. In its view, art. 190(2)(b) PILA could not
be relied upon to set aside the award.

These arguments gave the opportunity to Swiss Federal Supreme Court to finally address the
notions of jurisdiction and admissibility. In the Court’s opinion, the respondent’s arguments
were overly formalistic by distinguishing pleas to the jurisdiction of the arbitral tribunal and
objections to the admissibility of the claim. 91 It reminded that under Swiss procedural law,
jurisdiction figures among the requirements for the admissibility of a claim. 92 Following this
logic, the existence of a correlation between these two notions was upheld as opposed to

91
4A_46/2011, 16 May 2011, 3.3.2.
92
4A_46/2011, 16 May 2011, 3.3.2.

27
acknowledging the alleged dichotomy. The express refusal to make distinction between
jurisdictional and admissibility issues then allowed the recourse to art. 190(2)(b) PILA.

This position is far from being built on a solid foundation. Pursuant to art. 59(2)(b) CPC, cited
in the judgment,93 jurisdiction ratione materiae and ratione loci both do figure among the
conditions for the admissibility of claims that must be met for Swiss courts to enter into the
merits (Prozessvoraussetzung/conditions de recevabilité). In a nutshell, one can affirm that
admissibility encompasses these two jurisdictional requirements. 94 In contrast, the same
provision remains silent regarding jurisdiction ratione temporis. Yet, the Swiss Federal
Supreme Court specifically relied upon this last notion to dismiss the alleged distinction
between jurisdiction and admissibility in order to hear the challenge of the award. Therefore,
its argumentation in this regard seems quite fallible.

Besides, conciliation before the judge is generally a mandatory prerequisite to litigation (art.
197 CPC). When the parties cannot find a settlement through this mean, an authorization to
proceed is issued to the claimant (art. 209 CPC). This document then has to be joined to a
statement of claim filed in a timely manner (art. 221(2)(b) CPC). Otherwise, the court seized
has to declare the claim inadmissible. 95 However, such a practice does not mean that jurisdiction
ratione temporis is affected nor it proves the correlation between the two notions. It simply
indicates that, in the litigation context, non-compliance with judicial conciliation is an issue
belonging to the general concept of admissibility.

One can notice that in state court proceedings, national courts tend to overlook the distinction
between jurisdiction and admissibility since this issue has no bearing on the reviewability of
rulings by lower courts. 96 This reasoning can be extended to the legislator of the Swiss CPC.
And that is why notions pertaining to litigation in Switzerland should not serve as basis to
discuss similar issues in arbitration as the situation in the latter could not be more different. 97
In summary, not only did the Swiss Federal Supreme Court dogmatically fail to convince that
non-compliance with conciliation is a jurisdictional issue in litigation, but it also wrongly

93
Ibid.
94
Oetiker and Walz, p. 875.
95
Ibid.
96
Mitrovic, p. 575; Paulsson, p. 603.
97
Mitrovic, p. 576.

28
assumed that the pertinence of its brief reasoning could outlive once transposed in the
arbitration context.

Among Swiss scholars, Berger and Kellerhals still classify the arbitral tribunal’s jurisdiction
ratione temporis as a condition of admissibility or simply view them as intertwined notions,
without further elaboration.98

Another part of the Swiss doctrine and the author argue that refusing to draw a distinction is a
mistake.99 Indeed, jurisdiction in arbitration first concerns the parties’ fundamental consent to
use this alternative dispute resolution mechanism. 100 In substance, a claim of non-compliance
with the procedural requirement of a multi-tiered clause does not aim to question this prior
consent of excluding the authority of national courts in favor of the arbitral tribunal. The
legitimacy of another forum is not the question posed.101 A pre-arbitral tier only sets the
conditions under which the parties can submit a claim before the arbitral tribunal (admissibility
of the claim). As demonstrated, the existence of the arbitration agreement is established from
the outset, i.e., from its conclusion. 102

It is true that the position of the Swiss Federal Supreme Court is better defended by Oetiker and
Walz. They acknowledge the fact that jurisdiction takes another meaning in the arbitration
context by summarizing the question it poses in “[…] who is bound by the arbitration agreement
and with regard to what”. 103 However, in their views, this includes issues of jurisdiction ratione
temporis or in other words “[…] the question as to when this binding effect exists […]”. 104
Following this logic, a pre-arbitral tier would then bear an influence on the temporal validity of
the arbitration agreement.

While this statement does not seem logically incorrect, postponing the binding effect of the
arbitration agreement until the exhaustion of the pre-arbitral tier would actually result in
complications the parties could not have wished to go through when drafting their dispute
resolution clause in a vast majority of cases. If a party were to file a litigation claim in violation

98
Berger and Kellerhals, para 582-583; Oetiker and Walz, p. 875-876.
99
Mitrovic, p. 574-579; Stojiljkovic, p. 904-907; Jolles, p. 335; Stacher, p. 62-65.
100
Vetulli and Kaufman, p. 61.
101
Paulsson, p. 616; Stacher, p. 63.
102
Stacher, p. 63.
103
Oetiker and Walz, p. 875.
104
Ibid.

29
of the agreed pre-arbitral tier, the other party could not raise an objection to the court’s
jurisdiction as the arbitration agreement would not be effective yet. 105 Moreover, a party
refusing to comply with the pre-arbitral tier would deprive the jurisdiction of an arbitral
tribunal, possibly for an undetermined period of time.106 It is hardly conceivable that pursuant
to the initial intentions of the parties, non-compliance would allow a party to withdraw from
the arbitration agreement and a fortiori from the authority of the arbitral tribunal. 107 As a
consequence, the theory in which a pre-arbitral tier affects as a rule the temporal validity of the
arbitration agreement to justify the application of the notion of jurisdiction ratione temporis
instead of admissibility of the claim must be dismissed.

One should rather assume that the validity of an arbitration agreement does not depend on
compliance with the pre-arbitral tier so that arbitral tribunal still benefits from the principle of
Kompetenz-Kompetenz.108 This approach actually corresponds to that of the Swiss Federal
Supreme Court. It stated that art. 190(2)(b) PILA is applied “[…] somehow by default” for a
lack of provisions susceptible of constituting better grounds for sanctioning the violation of the
mechanisms set in a multi-tiered clause.109 Basically, the Court confessed that the arbitral
tribunal does not genuinely lack jurisdiction. First, it has never disputed the fact that the arbitral
tribunal remains the legitimate first authority to decide issues concerning its own jurisdiction.
Second, the Court expressly assured that the application of art. 190(2)(b) PILA does not dictate
which remedy the arbitral tribunal has to select when it upholds the claim of non-compliance.110
In other words, a mere suspension of the proceedings was recognized as a conceivable solution
in the Court’s view since it already had strong doctrinal support. 111

This kind of semi-jurisdictional approach highlights the fact that the decision seriously lacked
a proper justification of why judicial review of the award was permissible. The Court held that
non-compliance with a mandatory pre-arbitral requirement is not sufficiently serious to amount
to a violation of procedural public policy provided by art. 190(2)(e) PILA but needs to be “[…]

105
Mitrovic, p. 577; Stacher, p. 63.
106
Mitrovic, p. 577.
107
Jolles, p. 335.
108
Jolles, p. 335; Jones, p. 190.
109
4A_46/2011, 16 May 2011, 3.4.
110
Ibid.
111
Berger and Kellerhals, para. 584.

30
sanctioned in one way or the other”.112 This gives the impression that the Court wanted to retain
its traditional broad scope of judicial review without fully embracing the jurisdictional approach
it used to this end. The automatic recourse to art. 190(2)(b) PILA is definitely contrary to the
general principles of contract interpretation. Besides, circumventing some of the inherent flaws
of the jurisdictional approach to reach a solution of compromise is not satisfying from a
dogmatic perspective. The following reflection sums up the situation:

“[O]ne wonders whether the Court here was applying the law or rather making the law”. 113

In a nutshell, the theoretical subtlety between jurisdiction and admissibility might explain the
refusal of a change of caselaw. Nevertheless, given the more than real consequences of the
distinction overlooked in the judgment, one can safely consider that the Swiss Federal Supreme
Court deserves to be criticized.

4.4 The flaws of the Swiss semi-jurisdictional approach highlighted by the

solution of staying the arbitral proceedings in case of non-compliance
(4A_628/2015, 16 March 2016)

For the first time, the Swiss Federal Supreme Court found that the pre-arbitral tier in question,
namely a conciliation phase subject to the ICC ADR Rules, had a mandatory character, non-
compliance was established and the party relying on the enforcement of the clause did not
commit any abuse of right.114

As all three conditions were met for the enforceability of the multi-tiered clause, the Court
annulled the award dismissing the claim of non-compliance and had to finally share its position
as to how violation of a multi-tiered clause should be sanctioned. 115 It admitted that this
question had been left open, not only because it was not necessary to resolve it in previous
rulings, but also for the reason that that there was a lack of consensus due to the fact that

112
4A_46/2011, 16 May 2011, 3.4, English translation by Swiss International Arbitration Decisions,
https://www.swissarbitrationdecisions.com/sites/default/files/16%20mai%202011%204A%2046%202011.pdf
(accessed on 29 May 2021); Oetiker and Walz, p. 884-885; Baizeau, para. 59.
113
Stojiljkovic, p. 904 about 4A_628/2015, 16 March 2016, published in ATF 142 III 296 which is similar in this
respect.
114
4A_628/2015, 16 March 2016, respectively 2.4.1, 2.4.2 and 2.4.3, published in ATF 142 III 296.
115
Casey, Kaiding and Lal, p. 806; Baizeau, para. 50.

31
tribunals or scholars come from different legal backgrounds and do not always attach the same
meaning to basic notions pertaining to this context. 116

The inconsistencies of the semi-jurisdictional approach held in 2011 became even more striking
given the remedy the Court ultimately promoted. It is noticeable that the Court intended to find
a pragmatic solution above all. 117 Rejecting possible substantive remedies in the form of
damages, the Court discussed the adequacy of three procedural sanctions. 118

The first option for the arbitral tribunal consists of declining jurisdiction ratione temporis and
closing the arbitral proceedings. This is not satisfactory in the Court’s view because a number
of issues would arise from this solution. 119 Ending the arbitral tribunal’s mandate would pose
the question as to whether the same arbitrator(s) would be eligible again once the arbitral
tribunal has to be reconstituted. 120 The procedure would also suffer from unnecessary delays
and costs potentially detrimental to both parties.121 Finally, termination of the arbitral
proceedings bears the risk that the prescription period will have lapsed when the same claim is
filed before the arbitral tribunal again after the exhaustion of the pre-arbitral tier.122

The second possibility is declaring the claim as temporarily inadmissible. The court dismissed
this approach as well for it would share the exact same adverse effects as declining jurisdiction
in its view.123

The third procedural remedy amounts to ordering a stay of the arbitral proceedings. The arbitral
tribunal would set the modalities for their resumption and fix a time limit for completing the
pre-arbitral tier.124 The Court held that this last solution was to be generally preferred following
the opinion of the majority of the Swiss doctrine. 125

116
4A_628/2015, 16 March 2016, 2.4.4.1, published in ATF 142 III 296.
117
Mitrovic, p. 577; Boog and Menz.
118
Casey, Kaiding and Lal, p. 807.
119
4A_628/2015, 16 March 2016, 2.4.4.1, published in ATF 142 III 296.
120
Ibid.
121
Ibid.
122
Ibid.
123
Ibid.
124
Ibid.
125
Ibid.

32
It is quite undisputed among scholars that a simple suspension of the arbitral proceed is a more
satisfactory way to deal with non-compliance with a multi-tiered clause than ordering a
closure.126 The latter is only the logical consequence of the jurisdictional approach. 127 The
arbitral tribunal has no other option than terminate the proceedings when it upholds a claim of
non-compliance because it has no authority over the present dispute. However, the same cannot
be said for the situation in which the arbitral tribunal finds the claim inadmissible. As a matter
of fact, nothing prevents the arbitral tribunal to opt for a stay as it is a matter left to its discretion
arising out of its jurisdiction.

Once again, the correlation between the notions of jurisdiction and admissibility traditionally
advocated by the Swiss Federal Supreme Court pushed it to reach a solution without solid
doctrinal basis.128 As explained, an arbitral tribunal without jurisdiction cannot retain its
mandate while the parties are complying with the pre-arbitral tier. Viewing non-compliance
with pre-arbitral tier from a jurisdictional angle for judicial review cannot be combined with
the solution of a stay of the arbitral proceedings without dogmatic flaws.129

Moreover, as efficiency has been stressed as one of the main reasons to promote the suspension
of arbitral proceedings,130 one could seriously question the implications of this combination.
The extension of the scope of art. 190(2)(b) PILA obviously bears the risk of increasing the
length of the proceedings to resolve the dispute as well as involving additional expenses.
Overlooking these issues inevitably amounts to an implicit doublespeak. 131

This deserves to be somewhat nuanced. While granting a right of appeal definitely creates an
incentive for parties to use this tool, 132 this might also instil fear to a party tempted to bypass
the pre-arbitral tier as such a bold decision would bear the risk of a one step forward, two steps
backward move. As a stay of the proceedings does not reach the same degree of deterrence on
the parties as a closure,133 judicial review can complement it in this respect.

126
Boog and Menz; Jolles, p. 336-337; Berger and Kellerhals, para. 584; In favor of a closure, cf. Mitrovic, p. 578.
127
Boog, p. 109.
128
Boog and Menz.
129
Casey, Kaiding and Lal, p. 808.
130
4A_628/2015, 16 March 2016, 2.4.4.2, published in ATF 142 III 296.
131
Stojiljkovic, p. 907.
132
Mitrovic, p. 578; Stojiljkovic p. 906.
133
Mitrovic, p. 578.

33
Still, one cannot help but notice the Swiss Federal Supreme Court’s lack of coherence when it
held that it is up to the arbitral tribunal to fix the modalities of the suspension since in its view,
“[…] the arbitration is a type of private justice, in which the intervention of the state merely
seeks to provide a framework for the autonomy of the parties to be implemented, the role of the
state court called upon to oversee the good functioning of this type of justice consists of letting
it run its course wherever possible”. 134 Logically, such awareness on the limited role of the
Court should have pushed it to provide a proper justification of why an intervention as an appeal
body is necessary at all in case of non-compliance with a multi-tiered clause. Yet, this
justification has been barely present to say the least.

4.5 Concluding remarks

The tendency of mischaracterizing issues of admissibility in Swiss caselaw is not new nor
confined to the subject of non-compliance with pre-arbitral tiers as demonstrated by the Vekoma
case. In the Swiss Federal Supreme Court’s view, the general notion of admissibility even
encompasses jurisdiction, therefore permitting the application of art. 190(2)(b) PILA for
judicial review of arbitral decisions on claims of non-compliance. As the Court’s express
refusal to make a distinction is based on the meaning the two concepts bear in Swiss procedural
law, it overlooks the different function the notion of jurisdiction has in the arbitration context,
i.e. ensuring that the parties validly consented to subject their dispute to this alternative dispute
resolution mechanism. It is hard to conceive that failure to comply with a pre-arbitral tier should
have a retroactive bearing on this question. Rather, jurisdiction is established from the
conclusion of the agreement and violation of a pre-arbitral tier should only affect the
admissibility of the arbitration claim. Swiss caselaw has adopted a semi-jurisdictional approach
that circumvents the complications that would result from treating pre-arbitral tiers as true
jurisdictional bars. However, the application of art. 190(2)(b) PILA only by default coupled
with the suspension of the arbitral proceedings as the most adequate sanction to non-compliance
exemplifies its lack of doctrinal basis to justify judicial review.

134
4A_628/2015, 16 March 2016, 2.4.4.2, published in ATF 142 III 296, English translation by Swiss International
Arbitration Decisions,
https://www.swissarbitrationdecisions.com/sites/default/files/16%20mars%202016%204A%20628%202015.pdf
(accessed on 29 May 2021)

34
5. Conclusion

Since 2007, Swiss caselaw has developed with regard to determining what makes multi-tiered
clauses enforceable and which remedy to their non-compliance is the most adequate. However,
this progress has been made at the expense of defining the nature of multi-tiered clauses. It is
argued that this subject has been overlooked by the Swiss Federal Supreme Court despite its
importance for founding the inclusion of arbitral decisions on claims of non-compliance in the
scope of judicial review.

It appears that Swiss caselaw has implicitly rejected the possibility for multi-tiered clauses to
be of a substantive nature for two reasons so far. First, art. 190(2)(b) PILA has been historically
applied (by default) as a ground for challenging awards ruling on non-compliance. As it is
considered that judicial review is made from a jurisdictional angle, it is accordingly a procedural
approach which has been adopted. Second, it has been confirmed later on that substantive
remedies could not offer satisfactory solutions. While the conclusions reached in this respect
do not call for criticism in the context of the cases examined, the underlying problem resides in
the risk of treating automatically any multi-tiered clause with a procedural approach even in
potential cases where the parties would clearly intend the pre-arbitral tier to be a mere material
contractual commitment. In other words, Swiss caselaw seems to plainly reject this possibility
and deal in absolutes against the general principles of contract interpretation it must follow.

The international commercial arbitration community has distinguished two branches within the
procedural approach. Either a claim of non-compliance with a multi-tiered clause amounts to
an objection to the jurisdiction of the arbitral tribunal, or it is rather an objection directed at the
claim filed. The two possibilities seem valid in abstracto. A rigid classification should be
avoided in favor of a casuistic approach capable of suiting the intentions of the parties.
Nevertheless, it stands out that the viewing non-compliance with a multi-tiered clause as an
issue of admissibility is much more commercially desirable. As the aim of pre-arbitral tiers is
to facilitate dispute settlement, prolonging disputes on the dispute resolution procedure through
the involvement of national courts functioning as appeal bodies is superfluous. As a result, a
rebuttable presumption in favor of the admissibility approach should be applied as it
corresponds to the parties’ desire to let the arbitral tribunal make a final determination on claims
of non-compliance with a multi-tiered clause in a vast majority of cases.

35
Swiss caselaw does not follow such a method. Since the Vekoma case, a tendency of
mischaracterizing issues of admissibility and wrongly include them in the scope of judicial
review provided by art. 190(2)(b) PILA has been noticed. The Swiss Federal Supreme Court
failed to question the jurisdictional nature of pre-arbitral tier presented in annulment
proceedings until it expressly declared that admissibility encompasses jurisdiction in Swiss
procedural law, thus justifying its authority to hear challenges of awards deciding to uphold or
to reject claims of non-compliance with a multi-tiered clause. Such a statement is unconvincing
already on its own but fails to acknowledge the specific function of the notion of jurisdiction in
the arbitration context. Jurisdictional issues relate to questioning whether the parties validly
consented to exclude the authority of national courts in favor of resolving the dispute through
arbitration. It is argued that when a party raises a claim of non-compliance with a multi-tiered
clause, it does not direct its objection to the forum, nor it alleges that the failure to comply with
the pre-arbitral tier amounts to a withdrawal from the agreement to arbitrate. The Swiss Federal
Supreme Court implicitly acknowledges the inherent flaws of the jurisdictional approach and
admits applying art. 190(2)(b) PILA only by default. As a consequence, it cannot be said that
Swiss caselaw is deprived of doctrinal inconsistencies. The promoted solution of staying the
arbitral proceedings in case of non-compliance is indicative as one can wonder how an arbitral
tribunal which finds that it lacks jurisdiction ratione temporis can legitimately retain its
mandate during the exhaustion of the pre-arbitral tier by the parties.

Neglecting a thorough analysis of what multi-tiered clauses are pushed Swiss caselaw in a
certain automatism adopting a bastardized version of the jurisdictional approach which still
suffers from an unjustified extension of the scope of judicial review.

However, in two related cases from 2019, the Swiss Federal Supreme Court held that missing
the deadline for filing an appeal before the CAS does not amount to its lack of jurisdiction but
rather affects the admissibility of the claim. 135 The Court recognized that treating this issue with
a jurisdictional approach would unfairly enable an athlete to withdraw from the arbitration
agreement contained in the statutes of a sports federation and to seize national courts instead
by purposefully waiting for the expiration of the time limit. 136 Therefore, art. 190(2)(b) PILA
cannot be applied for judicial review. 137

135
4A_413/2019, 28 October 2019, 3.3.2; 4A_287/2019, 6 January 2020, 4.2.
136
4A_413/2019, 28 October 2019, 3.3.2
137
4A_413/2019, 28 October 2019, 3.3.2; 4A_287/2019, 6 January 2020, 4.2.

36
It is regrettable that the Court limited this reasoning to what it called “atypical arbitration” such
as sports arbitration. 138 Citing the Vekoma case and 4A_18/2007, it still reminded that in the
context of regular arbitration, claims of non-compliance with a time limit to initiate arbitration
or with a pre-arbitral tier are questions of jurisdiction ratione temporis.139 Yet, as demonstrated,
the undesired consequences of the jurisdictional approach this time expressly noted by the Court
actually extend to any type of arbitration. 140 Besides, a lack of legal certainty is likely to derive
from what is exactly comprised in the term “atypical arbitration”.

Hopefully, these two recent related cases may spark the spread of a narrower application of art.
190(2)(b) PILA to all arbitrations. 141 With time, one may witness claims of non-compliance
with a multi-tiered clause being excluded from the scope of judicial review as they will be rather
viewed as raising an issue of admissibility.

138
4A_413/2019, 28 October 2019, 3.3.2
139
Ibid.
140
Stacher, p. 68.
141
Stacher, p. 73.

37
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Switzerland', ASA Bulletin, 2017, Vol. 35, Issue 4, p. 872-887

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State Court Decisions

Judgments of the Swiss Federal Supreme Court

4P.284/1994, 17 August 1995, reported in 'Transporten Handelsmaatschappij “Vekoma” BV v.

Maran Coal Corporation, Bundesgericht, I. Zivilabteilung, Not Indicated, 17 August 1995', ASA
Bulletin, 1996, Vol. 14 Issue 4, p. 673-679

4P.162/2003, 21 November 2003, published in ATF 130 III 66

4C.17/2004, 2 June 2004

4A_ 18/2007, 6 June 2007

4A_61/2007, 13 June 2007, published in ATF 133 III 462

4A_46/2011, 16 May 2011, reported in 'X. GmbH (précédemment V. GmbH) v. Y. Sàrl, Ière
Cour de droit civil, 4A_46/2011, 16 May 2011', ASA Bulletin, 2011, Vol. 29, Issue 3, p. 643-
665, English translation by Swiss International Arbitration Decisions,
https://www.swissarbitrationdecisions.com/sites/default/files/16%20mai%202011%204A%20
46%202011.pdf (accessed on 29 May 2021)

4A_124/2014, 7 July 2014, reported in 'A. SA v. B. SA, Federal Supreme Court of Switzerland,
1st Civil Law Chamber, Case No. 4A_124/2014, 7 July 2014', ASA Bulletin, 2014, Vol. 32,
Issue 4, p. 826-848, English translation by Swiss International Arbitration Decisions,
https://www.swissarbitrationdecisions.com/sites/default/files/7%20juillet%202014%204A%2
0124%202014.pdf (accessed on 29 May 2021)

4A_628/2015, 16 March 2016, published in ATF 142 III 296, and reported in 'X. Ltd v. Y.
S.p.A., Federal Supreme Court of Switzerland, 1st Civil Law Chamber, Case No. 4A_628/2015
(142 III 296), 16 March 2016', ASA Bulletin, 2016, Vol. 34, Issue 4, p. 988-1014, English
translation by Swiss International Arbitration Decisions,

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https://www.swissarbitrationdecisions.com/sites/default/files/16%20mars%202016%204A%2
0628%202015.pdf (accessed on 29 May 2021)

4A_287/2019, 6 January 2020, English translation by Swiss International Arbitration

Decisions,
https://www.swissarbitrationdecisions.com/sites/default/files/6%20janvier%202020%204A%
20287%202019.pdf (accessed on 29 May 2021)

4A_413/2019, 28 October 2019, English translation by Swiss International Arbitration

Decisions,
https://www.swissarbitrationdecisions.com/sites/default/files/28%200ctobre%202019%204A
%20413%202019.pdf (accessed on 29 May 2021)

Cantonal judgments

Cassation Court of the Canton of Zurich, ruling of 15 March 1999, published in ZR 99 (2000),
No. 29

Thurgau Court of Appeals, ruling of 23 April 2001, reported in 'Not indicated v. Not indicated,
Obergericht des Kantons Thurgau, 23 April 2001', reported in ASA Bulletin, 2003, Vol. 21,
Issue 2, p. 418-420

Zurich Court of Appeals, ruling of 11 September 2001, published in ZR 101 (2002), No. 21, p.
77-81

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