The new Swiss perspective on international arbitration

Gentium Law’s Matthew Parish discusses a quiet revolution.

Switzerland is distinctive as a centre of international arbitration. It packs a punch well above its size. Although statistics about arbitration are by their nature confidential, anecdotal evidence indicates the diminutive country of a mere 7.5 million people is host to several hundreds of arbitrations per year. This is a remarkable figure.

The London Court of International Arbitration has perhaps only 150 cases per annum, while the International Chamber of Commerce hosts roughly double that number. In petite Geneva – a mere 185,000 people – arbitration lawyers may be the largest group of legal specialists in the city.

The reasons why Switzerland serves as so compelling an arbitral magnet are manifold and complex. Yet the logic of the jurisdiction’s attractiveness may be as impeccable as the motions of a Swiss watch.

The traditional image of Geneva is a city of peaceful dispute resolution. The League of Nations was established in this Huguenot refuge at the end of the First World War and the European headquarters of the United Nations followed. The Swiss national personality is adverse to confrontation and this may explain the country’s remarkable skill at staying out of foreign wars and civil conflicts. The nation also has a noteworthy reputation for political neutrality, its quiet streets and cocooned banks jointly preserving an atmosphere of the strictest confidentiality. The aura of Switzerland exudes all the elements of a successful arbitration.

Devoid of substantial natural resources, Switzerland is nevertheless a wealthy country because its people are commercial in outlook and naturally entrepreneurial. This attitude likewise finds reflection within the Swiss arbitration community. Small law firms preclude wastage. Legislation does not regulate business, or professional activities, excessively. Switzerland must have one of the shortest arbitration laws in the world. The Swiss Rules of International Arbitration are, likewise, some of the most efficient. Nor will the courts encourage parties to waste resources in judicial review of arbitral awards. Successful arbitration appeals are almost impossible, save in cases of grave due process violations. Recent legislative changes made arbitration law even simpler: anathema to the usual European legislative traditions of entrenching ever-greater complication.

Swiss law is a simplifying blend of French and German Civil Code traditions, and has been exported worldwide. Although the country’s courts operate in the nation’s four official languages in an inquisitorial tradition, Switzerland’s arbitration tribunals operate for, by far the most part, in a fifth (unofficial) language: English. Indeed, it is a curious Swiss anomaly that although the French and German-speaking Swiss communities live mostly apart, divided by the invisible Röstigraben linguistic barrier between the two, the one thing that binds arbitration lawyers from Geneva and Zürich is their common use of the English language to ply their trade. Moreover Swiss arbitration embraces a number of Anglo-Saxon features, not only in the language used, but also largely in style. Common law cross-examination is regarded as typical, as are party experts, oral closing submissions and many of the other trappings of international arbitration imported from the Anglo-American world. Familiarity with common law legal language and culture is so prized among the arbitration elite of the Swiss legal community that LLM studies in the US are commonly regarded as a prerequisite to progression and partnership.

Another intriguing feature of the Swiss legal market is the business model embraced by its law firms. There are no large law firms in Switzerland. Most arbitration practices are boutiques (including mine). Even with the currently buoyant Swiss franc, hourly rates are moderate by international standards. Yet firms are profitable. The high overheads associated with international law firms are marked by their absence from the Swiss legal market. Businesses are streamlined, associates are typically remunerated proportionate to business generation and firms are arranged on a lean ‘eat what you kill’ model of profit sharing, more akin to a barristers’ chambers than an English solicitors’ firm. Most Swiss lawyers perceive themselves as sole practitioners, even if they operate under the umbrella of a well-known model.

The Swiss market in international arbitration combines many features reassuring to the modern lawyer: urbane use of the English language, often aggressive advocacy, effective witness handling, procedural sophistication, and a subtle blend of common law and civil law styles that makes for sharp legal analysis among the practitioners of the arbitral art. Moreover, lawyers working in Swiss arbitration are used to working across a range of different legal systems and curial laws, participating as international members of arbitral tribunals where all three arbitrators hail from different jurisdictions, and adapting to legal texts and materials in a range of different languages. All of this is water under the bridge for the Swiss arbitration counsel.

There is one distinctive feature of Swiss arbitration, however: unlike in the English style, where parties routinely agree time extensions between themselves, procedural timetables tend to be set in stone. The Swiss find timekeeping a prerequisite to civilisation: witness the extraordinary reliability of the rail services. The first thing an arbitral tribunal will do, once constituted, is fix a final hearing date and then establish a reverse timetable from that date. The timetable will not lightly be moved. This feature of Swiss arbitration finds echo from Swiss court procedures: a brief filed even a few hours late may be rejected as inadmissible.

And finally, Switzerland has fine hotels and restaurants, much to the relief of weary arbitration counsel, their witnesses and their clients. The best advice to an arbitration lawyer visiting this beautiful country is to stay an extra night, to indulge the unusually tranquil Swiss charm.