BGE 4A_124/2020: The extension of an arbitration clause

Blogbeitrag Urteil 4A_124-2020 Englisch LP 161220.pdf (33.9 KiB)

BGE 4A_124/2020: The extension of an arbitration clause

In its judgment of November 13, 2020, the Swiss Federal Supreme Court ruled on the admissibility of extending an arbitration clause to a third party in an international arbitration matter. In doing so, it reviewed the arbitral tribunal's legal assessment of the meaning of its behavior in accordance with the principle of reliance. (E.3.3.) The following statement of the Federal Supreme Court was particularly important: "The arbitral tribunal did not assume that the parties' declarations of intent actually coincided in order to bind the complainant to the arbitration clause contained in the V.________ Contract, but affirmed an extension of the arbitration clause to the complainant based on an interpretation of its declaratory behavior according to the principle of reliance."

In principle, an extension of an arbitration clause to non-signatories is not new. However, since arbitration replaces access to the courts, in order to safeguard the right to the lawful judge (according to the ECHR and the Constitution), it is necessary that the inclusion in arbitration agreements is done with a sense of proportion. This is relatively easy in the case of legal successions, such as assignment or assumption of debt.

However, an arbitration clause can be extended even further. Thus, the Federal Supreme Court said: "A third party who interferes with the execution of a contract containing an arbitration clause is then also deemed to have consented to the arbitration clause by implied action (BGE 145 III 199 E. 2.4 p. 202; 134 III 565 E. 3.2 P. 568; 129 III 727 E. 5.3.2 P. 737)." E 3.3.1.

In case 4A_124/2020, the involved non-signatory party was a subcontractor. Suppliers are known to be involved in the execution of third party contracts to a certain extent, especially if core components are involved or maintenance services by the supplier on this component.

The complainants had successfully relied on the following facts in the arbitration proceedings

- Participation of the supplier in certain contract negotiations

- Identity of the warranty terms in the main contract and the supplier contract

- Dispatch of support personnel in case of problems with the component (in this case a diesel engine for a power plant)

- Coordination of payment terms in the contracts


The Federal Court correctly found that the identity of warranty terms and coordination of payment terms with each other were not sufficient to assume consent to the arbitration clause by implication. This is persuasive, because there is no justification for the principal supplier to give less or more warranties or performance to the contracting party than one receives. The same applies to payments, which are supposed to proceed without losses for the main supplier, if possible.

Again correctly, the Federal Court found that there was no sufficient interference, and thus implied consent, to the arbitration clause in the fact that the supplier's presence at the initial contract negotiations could be shown. A central component of contract negotiations is the performance of the core component as well as its cost and time availability. It is more in line with life experience that the delays caused by serial negotiations were efficiently avoided here.

The extension of the arbitration clause to the supplier on the basis of a "mixing of spheres" and not only by implied consent was rejected by the Federal Supreme Court. The respondent had successfully relied on the following facts in the arbitration proceedings:

- similar companies and a

- temporary overlap of the company managements.

However, since different company addresses, different locations and factories and similar factors were associated with these two overlaps, the Federal Supreme Court did not see any mixing of spheres.

Furthermore, the exercise of certain rights provided for in the main contract, such as the inspection and replacement of parts, was also not to be seen as "interference with the contract" but rather as a separate contractual obligation arising from the subcontractor/supplier contract.

Accordingly, involvement as a subcontractor or supplier to the extent stated is not sufficient to extend an arbitration agreement to the subcontractor.

This correct decision of the Federal Supreme Court serves to once again present the requirements for the extension of an arbitration clause to third parties in the area of contract performance and to make clear that an extension to third parties should only be made in a few clearly defined cases.




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