Switzerland Update: New Corporate Law: Arbitration Clause in the Articles of Association

The new company law, which comes into force on 1 January 2023, brings many changes.

The articles of association may now contain an arbitration clause (Art. 697n revCO). Arbitral tribunals offer the advantage of arbitrators who are particularly knowledgeable about the subject or industry, which can be an advantage especially in Cantons without a commercial court. The arbitration clause also offers the advantage that the relevant arbitral award may be easier to enforce abroad, especially if the enforcing state is not a member of a corresponding international convention (such as the Lugano Convention) and if the local law does not recognize any decision by a Swiss state court. The opportunities to limit the publicity of the proceedings to the extent legally permissible and to tailor the proceedings to the needs of the parties are further advantages of arbitration.

The arbitration clause contained in the articles of association is directly applicable. No declaration of consent or accession, e.g. by the purchaser of the company’s shares, is required. However, the introduction of the arbitration clause requires a qualified majority of the general meeting (Art. 704 para. 1 item 14 revCO). In addition, a reference to the articles of association must be entered in the commercial register if they contain an arbitration clause (Art. 45 para. 1 lit. u revHRegV).

The articles of association may only provide for an arbitral tribunal with its seat in Switzerland (Art. 697n para. 1 revCO), but they can specify specific rules of procedure of an arbitral institution (Art. 697n para. 3 revCO). The rules on domestic arbitration apply as mandatory rules (Art. 697n para. 2 revCO), which means that, in contrast to international arbitration proceedings, no waiver of legal remedies is permissible. It is possible to challenge the arbitral award before the competent state court for procedural errors or arbitrariness.

Provided that the articles of association do not restrict the objective scope of the arbitration clause, it applies to all disputes under company law (Art. 697n para. 1 revCO). Arbitrable disputes under company law thus include, in particular, actions for annulment and nullity (Art. 706 and 706b CO), actions for dissolution (Art. 736 para. 4 revCO), actions for (subsequent) contribution of share capital (Art. 634b revCO), actions for restitution (Art. 678 revCO) as well as liability and responsibility actions (Art. 752 et seq. CO), but also e.g. the action for ordering a special investigation (Art. 697d revCO).

The question of the subjective scope of the arbitration clause is also primarily governed by the articles of association. These can determine who is to be bound by the arbitration clause. The articles of association may therefore, for example, provide for arbitration only for disputes between the company and individual corporate bodies, so that arbitration is available, for example, for the enforcement of liability claims. If the articles of association do not specify otherwise the applicability of the arbitration clause, it binds the company, its corporate bodies and their members as well as all shareholders (Art. 697n revOR). It is in the interests of legal certainty and of the most uniform possible resolution of disputes that an arbitration clause, which does not contain any restrictions, binds not only the company itself but also its bodies, i.e., the general meeting of shareholders, the board of directors, and the auditors as well as their members (in particular the individual members of the board of directors and the management). It is important to note that the arbitration clause in the articles of association cannot cover disputes between shareholders, in particular those arising from shareholders’ agreements. However, if desired, arbitration clauses can be included in these agreements.

By Vischer, Switzerland, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact switzerland@transatlanticlaw.com

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