In a recent award, the Permanent Court of Arbitration (PCA) dismissed claims raised against the Czech Republic and ordered the claimants to compensate the Czech Republic for its legal costs. After obtaining several freezing orders in Switzerland, the Czech Republic sought to enforce the cost award against one of the claimants. The <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?lang=de&amp;type=show_document&amp;highlight_docid=aza://19-07-2022-5A_335-2021" target="_blank" rel="noopener">Swiss Federal Tribunal</a> held that the cost award is not enforceable.
The Swiss Federal Tribunal noted that with respect to the legal costs, the award provided in its dispositive part that the «Claimants shall pay to the Respondent (…) the sum of US $ 1.75 million and GBP 178,125.50.» It further considered that neither the applicable arbitration rules (UNCITRAL Arbitration Rules 1976) nor Swiss law as the law of the seat of the arbitration (chapter 12 of the Swiss Private International Law Act) supported the notion of a joint and several liability of two or more debtors for legal costs regardless of the wording of the award. Observing that enforcement under Swiss law requires unambiguous language in the dispositive part of a decision or award and that there is no room for the enforcement court to interpret such language, it concluded that the court of second instance was right to reject the Czech Republic&#8217;s application for enforcement of the cost award against one of the claimants on the ground that the PCA award did not expressly provide for the claimants&#8217; joint and several liability for the legal costs.
The main takeaway from this decision for arbitrators is that they should carefully consider the language of the dispositive part of an award and expressly indicate whether or not obligations imposed on more than one party are joint and several. Otherwise, the obligation is not enforceable in full against one of the debtors. For their part, the parties are well advised to carefully consider the enforceability of the award soon after notification. Under the Swiss Rules of International Arbitration parties can request an interpretation of the award within 30 days after they have received the award. The same mechanism exists under the ICC Rules of Arbitration. An interpretation of the cost award by the arbitral tribunal will clarify whether the creditor can enforce the award on costs against one of the debtors in full or only in part. In general, arbitral tribunals hold that debtors are liable for legal costs jointly and severally.

Express Statement of Joint and Several Liability Required for Enforcement of an Award in Switzerland

<h4>I. Introduction</h4>
The Panel of Recognized International Market Experts in Finance has announced revisions to its Arbitration Rules, which entered into force on January 1, 2022 (the 2022 Rules). This Bulletin highlights the key changes introduced by the 2022 Rules.
<h4>II. Arbitrating Financial Disputes</h4>
Market participants in the financial sector are often confronted with complex, technical disputes. Despite the many advantages of international arbitration, the financial sector traditionally relied on state courts to adjudicate disputes.
Recently, there has, however, been an increased interest from the financial sector in alternative dispute resolution, mainly arbitration. Starting in 2013, the influential International Swaps and Derivatives Association (ISDA) published an arbitration guide, which included arbitration model clauses. Over the last couple of years, the major arbitral institutions have reported an increasing number of disputes from the financial sector.
The recent increase in financial services arbitrations can be explained, in particular, by the following factors:
<ul>
<li>Financial products are increasingly tailor-made to suit the specific needs of individual clients. The resolution of disputes arising out of such bespoke financial instruments requires a high level of technical understanding. Accordingly, parties have an interest to ensure that such disputes are adjudicated by subject-matter experts appointed by themselves.</li>
<li>International arbitration is also preferable for the purposes of enforcement. The wide scope of application of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) is especially important for parties located in emerging markets, which are becoming more and more important in banking and finance transactions.</li>
<li>International arbitration offers procedural benefits over domestic litigation for example with respect to procedural flexibility, confidentiality, and limited possibilities for appeal.</li>
<li>Parties from emerging economies are less prepared to accept the jurisdiction of the courts of England and Wales or the Southern District of New York, and are open to alternative resolution in a more neutral forum.</li>
</ul>
<h4>III. P.R.I.M.E. Finance</h4>
The Panel of Recognized International Market Experts in Finance (P.R.I.M.E. Finance) was established after the global financial crisis in 2008, with the aim of ensuring the resolution of complex financial disputes by renowned experts and fostering stability in global financial markets. Recognizing the need for a tailor-made forum and procedures, P.R.I.M.E. Finance launched the P.R.I.M.E. Arbitration Rules in 2012 (the Rules).
The Rules are based on the UNCITRAL Arbitration Rules but have been adapted to accommodate the specific needs of the adjudication of financial disputes, in particular disputes relating to matters such as derivative instruments, sovereign lending, investment and advisory banking, financing instruments, private equity, asset management, etc.
Because experience and expertise is key in resolving financial disputes, P.R.I.M.E. Finance offers access to a pool of more than 200 experts and arbitrators, who are intimately familiar with the relevant market practices, customs and usages. Since 2016, arbitrations under the Rules are administered by the Permanent Court of Arbitration at The Hague (PCA).
As of January 1, 2022, a revised set of P.R.I.M.E. Arbitration Rules (the 2022 Rules) entered into force.
<h4>IV. Key Changes of the 2022 Rules</h4>
The 2022 Rules respond to specific needs of parties intending to arbitrate disputes in the banking and finance area. They provide a sophisticated tool kit for navigating arbitration proceedings efficiently. These are the six most important changes you need to know about:
<ol>
<li> Light touch to full service administration by the PCA: By default, the PCA offers a light touch administration. It enjoys, however, the necessary tools to safeguard the integrity and the impartiality of the arbitration proceedings. The PCA can, for example, confirm arbitrators (Article 11), extend or shorten time limits (Article 4) and exercise limited scrutiny over the arbitral award (Article 39). The PCA therefore acts as a safety valve for the arbitration proceedings under the 2022 Rules.</li>
<li> Multi-party and multi-contract arbitrations: Complex banking and finance disputes often involve multiple parties and interests. The 2022 Rules introduce a clear and detailed framework with regard to issues of joinder, consolidation or coordination of arbitral proceedings (Articles 31─34). All parties are required to agree expressly to any joinder or consolidation. Under the 2022 Rules, the PCA may revoke appointments and appoint new or confirm the appointed arbitrators in case of a joinder (Article 31). The option to conduct a single arbitration under multiple contracts prevents the risk of conflicting awards (Article 33). New is also the possibility to coordinate interrelated parallel proceedings if consolidation is not an option (Article 34).</li>
<li> Time and cost efficiency: The 2022 Rules include provisions on expedited arbitration proceedings. They are applicable by default if the amount in dispute is below EUR 4 million. Alternatively, the parties can expressly opt in (Article 17). The drafting group intentionally set short time limits knowing that the PCA can – if necessary – adjust any time limit or declare the expedited provisions inapplicable if the disputed issues become too complex. A three-member tribunal has to render a final award within 90 days, a one-member tribunal within 60 days after the last hearing or substantive submission (Article 39). Finally, the arbitral tribunal is entitled under the 2022 Rules to facilitate settlement attempts without the risk that the parties can later challenge an award (Article 16).</li>
<li>Amicus Curiae: The drafting group included the possibility of amicus curiae submissions, in which industry experts may explain policy positions or industry practices to the arbitral tribunal, addressing the question: What is the relevance and the background of certain regulations and practices?</li>
<li> Early determination: The 2022 Rules allow the arbitral tribunal to render an award based on an early determination (Article 35). Once the parties have submitted their positions, the arbitral tribunal may decide that the claims are manifestly outside of its jurisdiction, inadmissible or without legal merit. Recently, other arbitration institutions have included similar provisions (e.g., Article 22(1)(viii) LCIA Rules; Article 43 HKIAC Rules; Article 26 SIAC Investment Rules).</li>
<li> Transparency: The two new elements relating to transparency are disclosure obligations of third parties and the possibility of a publication of arbitral awards. If a third party has a significant interest in the outcome of the dispute, its identity has to be revealed in the notice of arbitration (Article 5 para. 3 lit. g), the response to the notice of arbitration (Article 6 para. 2 lit. b) or the request for joinder (Article 31 para. 3 lit. e). This includes third-party funders. The publication of awards serves as a guideline for arbitrators and increases legal certainty for the parties. Each party may object to the publication of the award (Article 39).</li>
</ol>
While the key feature of arbitration under P.R.I.M.E. Finance Rules remains its expert panel with a selection of over 200 accomplished experts and arbitrators, the revisions implemented as of January 1, 2022 mean another important step for P.R.I.M.E. Finance to establish itself as an attractive mechanism to solve disputes in the banking and finance industry. We recommend considering arbitration under the 2022 Rules as a dispute resolution mechanism when entering into financial transactions.

Florence
Jaeger

Express Statement of Joint and Several Liability Required for Enforcement of an Award in Switzerland

P.R.I.M.E. Finance launches revised Arbitration Rules

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