Jurisdiction(s):
United Kingdom

Switzerland: Federal Supreme Court upholds award declining jurisdiction over non-signatory third-party beneficiary; court action not consent to arbitrate; equitable estoppel inapplicable; abuse of rights unproven.

Published on: 07 May 2025

Published by a LexisNexis Arbitration expert

Legal News

Article summary

What are the practical implications of this case?

This case underscores the Swiss courts’ hesitation to compel non-signatories to arbitrate, particularly where the proposed extension rests purely on their behaviour. According to current jurisprudence, an arbitration clause can capture non-signatories if, for instance, their conduct reveals a clear intention to be bound by it (see, eg 4A_528/2019). In this dispute, however, both the tribunal and the court discerned no such intention. Nor did the record reveal conduct that might reasonably be read as tacit assent to the arbitration clause by C. While the non-signatory invoked rights arising under the shareholders’ agreement, it pursued them solely before a Latvian court. The court refused to accept that issuing proceedings in a court evidences an intention to arbitrate. On comparable facts, courts in common law systems might have relied on equitable estoppel, a doctrine that prevents a non-signatory from shirking an agreement — including its arbitration provision — after having taken advantage of that agreement’s benefits. Swiss law, however, recognises no such doctrine. Consequently, the party resisting the award argued that C should be required to arbitrate because its course of conduct amounted to an abuse of rights...

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