Impact of the COVID-19 Pandemic On (Physical) Litigation and International Arbitration Proceedings in Switzerland

This article first appeared on Global Arbitration News by Baker McKenzie, here.

With the emergence of the COVID-19 virus in early 2020, Switzerland along with many other countries introduced extensive measures to prevent the spread of the virus. Social distancing and protection measures provide new challenges in business relations – but also in legal proceedings. COVID-19 measures have had (and are still having) an unprecedented impact on the justice system. The article at hand offers a brief overview on the impact of the COVID-19 pandemic and the measures related thereto on (physical) proceedings in litigation and international arbitration, focusing on key changes and developments in the Swiss legal landscape prior-, during and post-pandemic.

Proceedings in litigation and international arbitration de lege lata

In the midst of the pandemic in spring of 2020, many courts tried to find structural measures to enable social distancing in courtrooms or allow remote proceedings. In one prominent precedent, the Commercial Court of Zurich set an oral main hearing for 7th April, 2020 (case no. HG180093-O (in German)). Due to the ongoing pandemic, the Vice-President of the Commercial Court circulated a link in order to conduct this oral main hearing remotely via the free app ‘Zoom Cloud Meetings’. The claimant requested the suspension of the virtual main hearing, which the Commercial Court denied. Eventually, the claimant did not take part in the virtual main hearing. After the hearing, the Commercial Court issued its decision, in which it granted the respondent’s request. The claimant in the sequel filed an appeal with the Swiss Federal Supreme Court (“SFSC”) in civil matters. In the appeal, the claimant argued that there was no legal basis to conduct virtual proceedings against the will of one party.

In the decision published on 6th July 2020, the SFSC confirmed that there is no legal basis in the Swiss Civil Procedure Code (“CPC”) for the execution of virtual proceedings against the will of a party involved (case no. 4A_180/2020 (in German)). In this context, the SFSC highlighted art. 54(1) CPC, whereupon ‘[h]earings and any oral passing of judgment shall be conducted in public. The decisions are made accessible to the public‘. According to the SFSC, the COVID-19 pandemic does not serve as sufficient justification to impose virtual hearings in state court proceedings. Thus, conducting virtual main hearings against the will of one party would contravene the CPC.

In contrast to litigation proceedings, the lex arbitri, the 12th Chapter of the Private International Law Act (“PILA”), does not expressly provide for a right to a physical hearing (cf. art. 182(1) PILA). Complementary arbitration rules contain isolated provisions in this regard, such as art. 25(4) of the Swiss Rules of International Arbitration (Swiss Rules 2012), or art. 26(1) ICC Rules (2021). That said, international arbitration in Switzerland is more flexible when it comes to excluding a right to a physical hearing in arbitration, or vice versa, inferring such a right.

Proceedings in litigation and international arbitration de lege COVID-19

On 20th April 2020 – i.e. after the main hearing of the aforementioned case – the COVID-19 Ordinance on Justice and Procedural Law (SR 272.81) entered into force. Therein, art. 2(1) and (2) state that in deviation from art. 54 CPC, hearings may be conducted by video conference if one of the following requirements are met: (a) the parties agree on it; (b) if there is a party belonging to the vulnerable groups considered ‘at risk’ from COVID-19 and requests a video conference; (c) if one of the members of the court is belonging to this aforementioned vulnerable group; and, (d) if there are important reasons, in particular urgency for trial. If one of these criteria is met, a hearing may be held remotely via video conference without physical presence. However, it must be ensured that sounds and images are transmitted simultaneously between all persons involved.

Given that the said rules expressly refer to the procedural rules pursuant to CPC, they are not applicable to international arbitration. As mentioned, however, such COVID-19-specific regulation is, in principle, also not required as there are arguably already sufficient legitimate grounds under the PILA which allow to hold international arbitration proceedings also remotely.

In this context, reference can be made to a decision of the Austrian Supreme Court decided on 23rd July 2020, in which it was held that an arbitral tribunal has the power to hold hearings remotely against one party’s will (case no. 18 ONc 3/20s (in German)). The Austrian Supreme Court relied on art. 6 of the European Convention on Human Rights (“ECHR”) and expressly confirmed that arbitral proceedings conducted remotely without the parties’ consent do not violate due process and the fundamental principle of the right to be heard. The ECHR is also ratified by Switzerland. Thus, this decision by the Austrian Supreme Court can be considered as landmark decision with clearly broader significance – also for international arbitration in Switzerland.

Proceedings in litigation and international arbitration de lege ferenda

For the time being, virtual proceedings in litigation found legal ground in the COVID-19 law. The validity of these rules was extended until 31st December 2021. However, the vote against it via referendum is set for 13th June 2021. That said, the (extraordinary) rule for litigation proceedings to be held remotely as video conference may be overturned already this June.

It is worth noting that on 26th February 2020, the Swiss Federal Council published the report and the draft bill concerning the revision of the CPC. The revised CPC includes inter alia the possibility to examine witnesses, parties and experts by video conference. However, there is no provision to fully conduct hearings remotely. The report and the draft bill ended the formal consultation process. Before entering into force, the draft bill must be adopted and revised by the Swiss Parliament. It is expected that the revision will enter into force no earlier than 2022. It remains to be seen whether the measures imposed under COVID-19 regarding virtual hearings may also have a future impact and are one step towards the digitalization of Swiss civil procedure in the current legislative process.

author

Valentina Hirsiger

Dr. Valentina Hirsiger is a member of Baker McKenzie’s Arbitration and Litigation Group in Zurich. Prior to joining the Firm as an associate in 2016, Dr. Hirsiger worked as a law clerk in a Swiss district court. She was also an associate lecturer and research assistant at the University of…

author

Lukas Frommelt

Lukas Frommelt is a trainee lawyer at Baker McKenzie's Zurich office. His area of specialization is dispute resolution, general contract and corporate law, as well as mergers and acquisitions. He obtained his law degree from the University of St. Gallen (HSG). Prior to his studies in law, he studied business…

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