Talking it over

On 19 June 1864, Raphael Semmes – the captain of the Confederate navy ship CSS Alabama – took a calculated risk. Having docked for supplies and a partial refit in the French port of Cherbourg, his ship had been blockaded for several days by its Union sloop-of-war counterpart, the USS Kearsarge.
Escorted from domestic waters by a French navy vessel, Captain Semmes aimed to slip past his opponent, but the Kearsarge holed the Confederate sloop below the waterline, putting an end to her otherwise successful two-year career of harassing Union shipping.
The story could have ended there, but the Alabama went on to trigger the start of modern arbitration, which, claim Swiss lawyers proudly, was born in Geneva.
The Confederate raider – along with several other ships – had been built in a British dockyard. For a variety of commercial reasons, the British government not too subtly supported the Confederacy and, after the war, the Union brought a claim against London.
That action – known as the Alabama Claims – was arbitrated in Geneva in 1872 and resulted in London handing over $15.5 million for damage caused by Captain Semmes’ ship and others.

World leaders

Ever since, Geneva and Zurich have been leading centres of international arbitration. But that position has gradually eroded as first London, Paris and New York challenged. More recently newcomers such as Singapore, Hong Kong and Dubai have attempted to get a slice of the arbitration action.
Nonetheless, Swiss lawyers maintain their jurisdiction still commands a competitive advantage. What’s more, the ramifications of the global financial crisis over the past few years have seen a boom in alternative dispute resolution.
‘Last year was very good for litigation and commercial arbitration in Switzerland,’ says Michael Kramer, managing partner of Zurich law firm Pestalozzi. ‘As have been the past five years. And the future looks good for that practice area.’
Homburger partner René Bösch agrees, pointing out that his firm is involved in the development of a local arbitrators’ network. So what’s the jurisdiction’s main selling point?
According to Mr Bösch the answer is simple: ‘Swiss law is a very stable and reliable framework. And there is no intervention from the political side in the process.’

Party autonomy

Few Swiss lawyers are better appraised of the local arbitration scene than Christopher Boog. The Schellenberg Wittmer partner produced a doctoral thesis on the subject and enthuses fulsomely on it.
‘Switzerland’s arbitration law reflects the Holy Grail of international arbitration,’ he says, ‘which is party autonomy. The law is very slim and it respects party autonomy to the limit. There are very few mandatory provisions, very little court intervention; there’s only one stage of appeal, and the reasons for setting aside an award are very limited.’
While arbitrations themselves in Switzerland are not necessarily quicker than those elsewhere, the one-stage appeal process to the Federal Supreme Court is much faster.
Lawyers maintain the court takes an average of four months to decide a case, meaning that parties know that when their arbitration finishes, that will be the maximum time they have to wait to have final judgment.

Constant review

Mr Boog adds that rival jurisdictions have multi-layered appeals and that some cases can run to six or seven years before the process is exhausted.
He also points to figures showing that the Swiss appeal court overturns fewer than 7 per cent of arbitration awards. ‘The Swiss arbitration law is constantly being reviewed to make sure we are competitive with other jurisdictions,’ says Mr Boog.
Indeed, the country’s latest arbitration rules – which were adopted in 2004 – were revised last June, and the Swiss parliament is also currently reviewing the law.