Switzerland is one of the most prominent venues for international arbitration. Year after year, the statistics of the International Court of Arbitration of the International Chamber of Commerce (the 'ICC') show that Zurich and Geneva are among the most frequently selected seats for arbitrations under the ICC Rules of Arbitration.
The main reasons for the country's leading position lie in Switzerland's arbitration-friendly legislation and in its long-standing tradition of arbitration: Swiss arbitration proceedings can in fact be traced back to medieval times. Other factors, such as Switzerland's location at the heart of Europe, its excellent infrastructure, the well-developed legal system, the high professional standards in the legal profession, as well as its political stability have contributed to Switzerland becoming one of the most preferred places for international arbitration. In particular its reputation for 'neutrality' makes Switzerland the natural choice for parties seeking to resolve their dispute in an unbiased environment, for example, in a country to which neither of the parties belongs.

Switzerland's arbitration-friendly legislation

Switzerland's success as a place for international arbitration is foremost rooted in its arbitration-friendly environment. International arbitration in Switzerland is governed by Chapter 12 of the Swiss Private International Law Act 1989 (the 'PILA'). Since its enactment in 1989, Chapter 12 has been considered an advanced code for international arbitration committed to the principles of flexibility and party autonomy. It provides for a legal framework that gives the parties (and the arbitrators) within the boundaries of due process utmost freedom to tailor the arbitral proceedings to their needs. The statutory requirements of equal and fair treatment of the parties and their right to be heard must be respected.
Furthermore, Switzerland has a reliable court system which provides the necessary support for arbitral proceedings when required. Swiss courts apply the law in a very arbitration-friendly manner, thereby contributing to the progress and reliability of arbitral proceedings.

Restrictive and swift annulment proceedings

Judicial intervention in arbitration is kept to a minimum by Chapter 12 of the PILA. Grounds for setting aside an arbitral award are in principle restricted to violations of fundamental procedural rights. The arbitral tribunal's ruling on the merits cannot be challenged unless it violates public policy. The Swiss Federal Supreme Court-- which is the only instance for setting aside proceedings and thus the sole judicial body with the power to annul an arbitral award--has consistently exercised great restraint when ruling on setting aside petitions. Statistics show that only about 7% of challenges to arbitral awards have been successful before the Federal Supreme Court. It was, for example, only recently that the Federal Supreme Court for the first time annulled two arbitral awards on public policy grounds. Swiss law thus provides for a high degree of finality of arbitral awards. Parties who do not have their domicile, their habitual residence, or a place of business in Switzerland even have the option to partially or entirely exclude challenge proceedings.
The fact that Chapter 12 of the PILA only provides for one tier of jurisdiction for the challenge of arbitral awards, as opposed to the two or three prevalent in most other European countries, moreover makes procedures for the challenge of awards expeditious and less costly: Swiss annulment proceedings average just four to five months. This guarantees that the arbitral award will become final within a very short period of time following the rendering of the award.

Revision of the Swiss Rules of International Arbitration

In 2004, the Chambers of Commerce and Industry of Basel, Bern, Geneva, Ticino, Vaud and Zurich, joined by Neuchâtel in 2008, adopted the Swiss Rules of International Arbitration (the 'Swiss Rules') in order to promote institutional arbitration in Switzerland. The creation of the Swiss Rules constituted a further step in the advancement of Switzerland as one of the leading centres for arbitration. Compared to other institutional rules, administration under the Swiss Rules is leaner, yet effective, thus rendering arbitration under the Swiss Rules expeditious.

The Swiss Rules have been a success story, with nearly 600 cases submitted to arbitration to date. On 1 June 2012, a revised version of the Swiss Rules came into force, which takes into account the experiences gained under the 2004 Swiss Rules as well as recent developments and best practice in arbitration. One of the main goals of the revision was to further enhance efficiency of the arbitral process in terms of time and cost, while at the same time preserving the flexibility of the proceedings, as well as the primacy of party autonomy. The revision will undoubtedly enhance the success of the Swiss Rules further.

Domestic Arbitration under the Federal Code on Civil Procedure

In the last few years, arbitration has been used less frequently in domestic matters than in international matters. However, on 1 January 2011, the new Federal Code on Civil Procedure ('CCP') entered into force, which replaced the outdated former framework for domestic arbitration proceedings (i.e., the Intercantonal Concordat on Arbitration of 1969). The CCP has significantly modernized and enhanced the attractiveness of the legislative framework for domestic arbitration by strengthening the principles of flexibility and party autonomy. It is expected that the new provisions will result in a boost of domestic arbitration in Switzerland.

The outlook

With its modern framework for both international and domestic arbitration, Switzerland is well braced for the fierce competition between the various places of arbitration and the various arbitration rules. But leaning back would nevertheless be the wrong strategy for the future. Instead, the Swiss arbitration community has launched a discussion to debate whether Chapter 12 of the PILA is in need of modernization and, if so, to what extent. Whatever the outcome of this debate, one can be sure that Switzerland will defend its position as one of the leading venues for arbitration in the future.

Dr Georg von Segesser is a senior partner at  Swiss law firm Schellenberg Wittmer in Zurich and a Fellow of the Chartered Institute of Arbitrators. Sonja Stark-Traber is a senior associate at Schellenberg Wittmer in Zurich