Judicial Oversight of International Arbitration in Switzerland: Sufficient to Protect Fundamental Rights?

Switzerland is a global hub for arbitration, where parties enjoy broad procedural freedom and awards are subject to a fast, single-instance review by the Swiss Federal Supreme Court ("SFSC”), a system that stands out for its efficiency. The SFSC’s narrow review and the impossibility of an appeal or review of the merits preserve the finality of awards. However, they also allow for procedural irregularities or the violation of parties’ rights to go unnoticed or uncorrected, if not sufficiently severe to trigger one of the five annulment grounds.

This post examines whether Switzerland’s highly deferential model of judicial review remains sufficient to protect fundamental rights. It first outlines the structural limits of the SFSC set-aside procedure before addressing two growing tensions: first, between tribunal autonomy and effective rights protection in cases of quasi-compulsory arbitration; and second, between Swiss arbitration law and foreign public policy considerations.

Structural Limits of SFSC Review

The SFSC’s supervisory rather than appellate role means that it will only set aside awards challenged based on an exhaustive list of procedural issues set out under Art. 190(2) of the Private International Law Act (“PILA”), including tribunal constitution, jurisdiction, adherence to the claims, equal treatment, and public policy. Whilst this list does cover a range of the most prominent procedural issues, the threshold for the annulment of an award is very high. Between 1989 and 2019, only 7.65% of the reviewed awards were finally set aside, a statistic referred to by Dasser & Wójtowicz (2021) as the ‘Magic Seven’.

By far the most critical technical barrier to SFSC’s review is that it is bound by the factual findings of the arbitral tribunal. This means that it cannot rectify such findings unless they are found in violation of fundamental procedural guarantees, such as the right to be heard and the right to equal treatment, even if those findings appear inaccurate or otherwise inconsistent with ordinary procedural rules. This again reinforces the power and autonomy carried by the arbitral tribunals, even with regard to the parties’ rights. When the SFSC does set aside an award, it essentially acts as a court of cassation, annulling the decision and sending it back to the tribunal instead of issuing a new judgement on the merits.

Another example of this arbitral autonomy is the court’s interpretation of the concept of ordre public (Art. 190(2)(e)). It is a primary substantive check for review and the only substantive ground for annulment. However, it is interpreted so restrictively that the Federal Tribunal considers success under this ground a "chose rarissime". According to Dasser & Wójtowicz (2021), between 1989 and 2019, the SFSC had heard 220 cases on this ground, yet annulment was only granted twice, equalling a success rate of 0.9%. What is really needed to annul an award on the ground of ordre public is a disregard of widely recognised legal values such as pacta sunt servanda, the protection of human dignity, the prohibition of abuse of rights, etc. This very tension has been highlighted in recent international law developments where human rights obligations or non-consensual regulatory powers intersect with arbitration. As the SFSC, or any other Swiss court or tribunal, cannot review the merits of an arbitral award, cases have been brought up to external bodies such as the European Court of Human Rights (“ECtHR”) to ensure the protection of fundamental rights. This demonstrates that arbitral awards can only be viewed as truly final if the tribunal respects minimal procedural guarantees, yet even in such cases additional layers to the single-instance review are not excluded.

The 2021 revision of Chapter 12 of the PILA has modernised the revision framework through the codification of a remedy of revision (Art. 190a), which, although exclusively under extraordinary circumstances, allows awards to be reopened. The reform also codified the vital cooperation mechanism that is juge d’appui, which grants Swiss state courts the power to appoint arbitrators, take evidence, and enforce interim measures, even in support of arbitrations not seated in Switzerland. The 2021 reform reflects a subtle shift away from the once idealised model of full arbitral tribunal autonomy, admitting that state intervention might be necessary at times.

The Swiss model of arbitration is increasingly popular, and as a result the SFSC has seen its median annual caseload of set-aside proceedings triple in the last decade to 35 cases per year (Dasser & Wójtowicz, 2021). This exponential growth is driven mostly by sports arbitration coming from the Court of Arbitration for Sport (“CAS”), accounting for almost half of the SFSC’s arbitration docket. The Swiss arbitration system remains immensely popular with international business. With more than two out of three cases involving exclusively foreign parties, the SFSC has effectively found itself becoming a nearly international supervisory court, directly shaping the outcomes for a majorly foreign caseload.

Current Challenges: Tensions and Human Rights Scrutiny

A primary challenge is the tension between high tribunal autonomy and limited judicial oversight, which can be found in contexts where the parties to a dispute are not in a position in which they can meaningfully choose whether to arbitrate, even though arbitration is voluntary in nature. This can happen in cases where a party is contractually bound by arbitration, under terms they had little practical ability to reject, leaving them with no real choice. Such cases indirectly grant the relevant arbitral tribunal quasi-regulatory powers, in practice substituting for a state court. This is nearly always the case in professional sports, where the athlete has the option to either agree to the arbitration clause or not partake in any competitions and, therefore, not get professional status. The Semenya v. Switzerland case illustrates this tension, in which the ECtHR, after an SFSC review of a CAS award, held that because Caster Semenya had no real choice but to submit to the CAS, the SFSC’s rather narrow ordre public review was insufficient (see Blog post here and here). The ECtHR emphasised that the SFSC must conduct a more rigorous examination in cases where compulsory arbitration and civil rights are implicated to meet the standards of the European Convention on Human Rights. Though sports arbitration is the prevailing example, the procedural issue pointed out by the ECtHR extends to any arbitration that features a structural imbalance and non-consensual jurisdiction, exposing the parties to an elevated possibility of rights violation.

A second challenge arises from the intersection of Swiss public international law commitments and foreign constitutional constraints on arbitration, more specifically within the EU. Within EU law, the principle of primacy is of high importance, meaning it supersedes national law. Therefore, any arbitration proceeding taking place in an EU Member State has to give way to EU law when selecting the applicable law, in theory that of the arbitral tribunal’s country of domicile. In EDF Energies Nouvelles S.A. v. Kingdom of Spain, a Geneva-seated tribunal issued an award in 2023 under the Energy Charter Treaty (“ECT”) in a dispute between a French investor and Spain. Spain had then appealed against this award, grounding its appeal in EU law. In 2024, the SFSC decided to uphold the award, giving way to jurisdiction over an intra-EU investment dispute under Art. 26 of the ECT, notwithstanding the earlier Court of Justice of the European Union (CJEU)’s Achmea and Komstroy rulings that held similar arbitration clauses to be incompatible with EU law. The SFSC held that EU law, and therefore CJEU jurisprudence, is not binding in Swiss set-aside proceedings and decided to instead apply the Vienna Convention on the Law of Treaties to establish jurisdiction. With Switzerland being surrounded by EU Member States and the EU legal system, it has become a challenge to resist external pressures of extraterritorial constitutional doctrines and simultaneously remain consistent with the PILA.

Whilst Swiss arbitration might not have to consider EU law, it might be indirectly forced to do so in specific cases when the award might affect EU public policy. Hence, the tribunal gets the option between taking EU law into consideration or issuing an award that will not be enforced in the relevant country, leading to the award carrying little to no effect, even when fully compliant with the Swiss lex arbitri and not set aside by the SFSC. In the RFC Seraing v. FIFA case before the CAS, the arbitrators issued an award which could later not be set aside by a court other than the SFSC, as per usual in Swiss-seated arbitration. However, the CJEU found this to potentially infringe fundamental EU law rights, such as effective judicial protection. Belgian courts initially treated it as res judicata under Belgian law, but the CJEU held that before enforcement in an EU Member State, state courts must have the ability to review the award for compliance with EU public policy. Consequently, Swiss-seated arbitral awards touching on EU public policy risk non-enforcement in EU Member States, since EU courts must have the opportunity to review them before recognition (see Blog post here).

Conclusion

These challenges put their finger on the core structural tension in Swiss international arbitration. A model which aims to maximise finality and tribunal autonomy can result in errors in rights protection remaining uncorrected and risks non-enforcement in distinct legal systems that require a multi-level review process. Cases of quasi-compulsory arbitration, as is the case in the majority of sports arbitration, could benefit from a broader standard of judicial review that more explicitly incorporates ECHR requirements. The ECtHR judgment in Semenya v. Switzerland is particularly indicative in this regard, as it highlights potential shortcomings in the limited scope of review where individuals are effectively compelled to accept arbitration and therefore lack meaningful access to full judicial protection.