New Swiss Federal Tribunal Precedent on the Impartiality of Arbitrators
On 15 January 2021, the Swiss Federal Tribunal (“SFT”), Switzerland’s highest court, published an interesting new precedent, to be included in the official publication of SFT precedents, in which the SFT ruled on a request to set aside an award of the Lausanne-based Tribunal Arbitral du Sport (“TAS”) regarding the Chinese swimmer Sun Yang (the “Athlete”) for an arbitrator’s alleged lack of impartiality. In this new precedent, the SFT makes interesting statements on the conditions under which arbitral awards rendered under chapter 12 of the Swiss Private International Law Act (the “Swiss Arbitration Act”) may be challenged before it if an arbitrator gives rise to objective doubts on his or her impartiality.
The aim of this paper is not to discuss the above-mentioned judgment from a doctrinal perspective, but to provide non-Swiss arbitration practitioners with a summary of and some thoughts on this judgment.
The new SFT precedent at issue, rendered on 22 December 2020, has the case reference 4A_318/2020. The TAS award that is the object of such precedent has been rendered on 28 February 2020 (case reference: CAS 2019/A/6148; the “TAS Award”).
In the TAS Award, a TAS arbitration panel (the “Panel”) of three arbitrators found the Athlete guilty of having violated certain anti-doping rules and sentenced him, because of such violation, with a suspension of eight years.
On 15 June 2020, the Athlete filed with the SFT an application for revision of the TAS Award, arguing, in essence, that in May 2020, i.e., after that the Panel had rendered the TAS Award, he detected certain information that would give rise to serious doubts about the Panel’s chairman’s impartiality, and that the Panel’s chairman should, therefore, have recused himself. The Athlete based his application on Art. 121(a) of the Swiss Federal Statue on the SFT, pursuant to which a SFT judgment is to be set aside upon request if the provisions on the composition of the SFT or on recusal have been violated.
2) Three Principal Points of Interest
Disregarding for the purposes of this article the details of the relevant background as well as the procedural history, the new SFT precedent discussed herein contains three key points of interest discussed below.
2.1) Revision of Arbitral Awards under the Swiss Arbitration Act
Until the end of last year (2020), the Swiss Arbitration Act did not contain any provision on the revision of arbitral awards issued by Swiss arbitral tribunals, i.e., tribunals having their seat in Switzerland, in international arbitrations. The SFT did have the opportunity in earlier decisions to examine, inter alia, whether despite this lacuna a request for revision of an arbitral award, which can no longer be challenged with a setting aside-request pursuant to Art. 190(2)-(4) of the Swiss Arbitration Act, should be possible in situations where information about an arbitrator’s possible lack of impartiality has been obtained after that the deadline of thirty days to file a request for setting aside the award has lapsed. While the SFT left this question open in earlier judgments, it now confirms in its new precedent that if and when the aggrieved party did not obtain such information until the end of the mentioned thirty-days’ period of Art. 190(4) of the Swiss Arbitration Act, and should, deploying the required diligence, not have done so during the arbitration, a request for revision against an arbitral award may be filed with the SFT (see judgment 4A_318/2020, at consideration 4.2). In practice, this finding of the SFT is not that relevant anymore since with the entry into force of the amended Swiss Arbitration Act on 1 January 2021 a provision on revision has been introduced into Swiss law, i.e., Art. 190a of the mentioned statute, which sets forth the conditions under which the revision of an award issued in a Swiss international arbitration may be requested. Particularly, Art. 190a(1)(c) of the Swiss Arbitration Act captures the scenario mentioned above, in other words, the impartiality issue. In an English translation, the new Art. 190a(1)(c) of the Swiss Arbitration Act reads as follows:
“A party may request the revision of an award if, despite having exercised due diligence, a ground for challenge under Article 180(1)(c) was not discovered until after the conclusion of the arbitration and no other remedy is available.”
Art. 180(1)(c) of the Swiss Arbitration Act, referred to in the above-quoted Art. 190a(1)(c) of such act, reads as follows, in an English translation:
“An arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to that arbitrator’s independence or impartiality.”
In summary, in its new precedent discussed herein, based on the power vested in it pursuant to Art. 1(2)-(3) of the Swiss Civil Code (the “SCC”), the SFT decided to fill the lacuna described above, which in light of the new Art. 190a(1)(c) of the Swiss Arbitration Act is not surprising.
2.2) The Required Intensity of Examining an Arbitrator in Relation to Social Media
As mentioned above, the new Art. 190a(1)(c) of the Swiss Arbitration Act contains the condition that the aggrieved party did not discover the grounds for challenging the arbitrator’s independence or impartiality until the conclusion of the arbitration, despite having exercised the required due diligence. This condition is based on one of the fundamental principles of Swiss law, contained in Art. 2 of the SCC, that any person has to act in good faith when exercising his or her rights (see judgment 4A_318/2020, at consideration 6.1). In an official English translation, Art. 2 of the SCC reads:
“Every person must act in good faith in the exercise of his or her rights and in the performance of his or her obligations.
The manifest abuse of a right is not protected by law.”
A party to arbitration proceedings would obviously not act in good faith if it learned of information that would allow the challenge of an arbitrator’s independence or impartiality, but instead of immediately making such challenge would rather await the outcome of the arbitral proceedings in order to make the challenge only if and when the outcome is not satisfactory (see judgment 4A_318/2020, at consideration 6.1).
In the matter that led to the new precedent 4A_318/2020, one of the key issues that the SFT had to determine was whether or not the Athlete should have learned of the facts challenging the Panel’s chairman’s impartiality during the arbitral proceedings already and not, as asserted by him, only after the lapsing of the deadline for filing a setting aside-request pursuant to Art. 190(2)-(4) of the Swiss Arbitration Act (see judgment 4A_318/2020, at consideration 6).
It is consistent SFT case law that parties to arbitral proceedings have to do a certain amount of research to inquire into the background of an arbitrator to ensure that there are no indications of a lack of independence or impartiality (see judgment 4A_318/2020, at consideration 6.5). While this is clear, with what intensity such research has to be carried out is less clear. In this regard, no general rules can be established, since whether or not a party exercised the required amount of due diligence always depends on all the concrete circumstances of a given matter. Having said that, the new SFT precedent discussed herein contains a noteworthy and useful clarification that helps to further circumscribe the required intensity of the investigation to be carried out.
In the relevant matter, the Panel’s chairman had posted a number of problematic tweets on Twitter. While there is no doubt that a certain research on the internet forms part of a diligent checking of an arbitrator’s background, it is less clear whether or not an arbitrator’s social media presence and activity are to be scrutinized by a party. In this regard, the SFT provides helpful considerations in its new precedent. In summary, the SFT makes three statements in this regard: First, that it can, in general, not be expected that a party analyses an arbitrator’s tweets on his or her Twitter account. Second, that it cannot be required that a party, following an arbitrator’s nomination, continues to do searches on the internet regarding such arbitrator. And, thirdly, that it can a fortiori not be expected from a party to analyse an arbitrator’s tweets on his or her Twitter account following the arbitrator’s nomination. In the SFT’s words, these statements are contained in the following paragraph (see judgment 4A_318/2020, at consideration 6.5 in fine):
“Si on peut certes éventuellement admettre que l’intéressé aurait dû consulter, ne serait-ce que brièvement, le compte Twitter de l’arbitre en cause, on ne saurait en revanche considérer, en l’absence de toute autre circonstance l’alarmant sur l’existence d’un risque potentiel de partialité, que l’intéressé aurait failli à son devoir de curiosité, en ne décelant pas la présence de tweets publiés près de dix mois (28 mai 2018 et 3 juillet 2018) avant la nomination de l’arbitre (1er mai 2019), au surplus noyés dans la masse de messages d’un compte Twitter d’un arbitre, semble-t-il très actif sur le réseau social en question. En tout état de cause et à supposer qu’il faille retenir que le requérant aurait pu et dû découvrir les trois premiers tweets litigieux publiés par l’arbitre, tous antérieurs à la nomination de celui-ci, pareille conclusion ne s’imposerait pas en ce qui concerne les autres messages mis en ligne par l’arbitre. En effet, on ne saurait exiger d’une partie qu’elle poursuive ses recherches sur internet tout au long de la procédure arbitrale, ni, a fortiori, qu’elle scrute les messages publiés sur les réseaux sociaux par les arbitres au cours de l’instance arbitrale.”
In a tentative English translation by the author, the paragraph above reads as follows:
“While it may well be possible to admit that the person concerned should have consulted, even if only briefly, the Twitter account of the arbitrator in question, one cannot, however, in the absence of any other circumstances alarming him of the existence of a potential risk of bias, consider that the interested party failed in his duty of curiosity by not detecting the presence of tweets published nearly ten months (28 May 2018 and 3 July 2018) before the arbitrator’s appointment (1 May 2019), moreover drowned in the mass of messages from an arbitrator’s Twitter account, which appears to be very active on the social network in question. In any event, and assuming that the claimant could and should have discovered the first three disputed tweets published by the arbitrator, all prior to the arbitrator’s appointment, such a conclusion would not apply to the other messages posted online by the arbitrator. Indeed, a party cannot be required to continue its internet searches throughout the arbitration proceedings, nor, a fortiori, to scan the messages published on social networks by the arbitrators during the arbitration proceedings.”
2.3) When Does the Independence or Impartiality of an Arbitrator Appear to be Compromised?
Pursuant to consistent SFT case law, a party that challenges an arbitrator’s independence or impartiality does not have to prove that the arbitrator is indeed lacking the required degree of independence or impartiality, since proving such an inner state of mind is not possible or at least practically impossible. Therefore, it suffices to show that there are circumstances which objectively impose the conclusion that an arbitrator might not be independent or impartial (see judgment 4A_318/2020, at consideration 7.2):
“[La garantie constitutionnelle d’un tribunal indépendant et impartial] n’impose pas la récusation seulement lorsqu’une prévention effective du juge est établie, car une disposition relevant du for intérieur ne peut guère être prouvée; il suffit que les circonstances donnent l’apparence de la prévention et fassent redouter une activité partiale du magistrat. Cependant, seules les circonstances constatées objectivement doivent être prises en considération; les impressions purement individuelles d’une des parties au procès ne sont pas décisives […].”
In a tentative English translation by the author, the paragraph above reads as follows:
“The constitutional guarantee of an independent and impartial court does not require recusal only when effective bias of the judge is established, as an inner state of mind can hardly be proven; it is sufficient that the circumstances give the appearance of bias and give rise to fears of a partisan activity on the part of the magistrate. However, only objectively ascertained circumstances must be taken into consideration; the purely individual impressions of one of the parties to the proceedings are not decisive.”
The determination whether or not a given circumstance(s) does objectively give rise to fears of an arbitrator’s bias always depends on all the concrete circumstances of a given matter and also involves an important amount of discretion. Therefore, it is hardly possible to make general statements in this regard, which would cover any and all possible scenarios, although there exist helpful sources and indications, such as the IBA Guidelines on Conflicts of Interest in International Arbitration, to which the SFT makes reference in its new precedent (see judgment 4A_318/2020, at consideration 7.4). Still, apart from clear and obvious cases, the determination whether certain statements, acts, etc., reach the mentioned threshold of an objective bias-indication may be difficult and disputed. Against this backdrop, the new SFT precedent is helpful and valuable because it adds another piece of the puzzle to the existing case law in the present context, which can be taken into account in the future for relevant discretionary determinations.
In the matter in question, the Panel’s chairman had disseminated various strongly-worded tweets in which he denounced certain practices apparently carried out in China. For the SFT, the red line would appear to have been crossed by the circumstance that certain tweets could be indicative of racist prejudices, and that the Panel’s chairman continued to disseminate further problematic tweets after that he had been appointed as the chairman in the relevant arbitration (see judgment 4A_318/2020, at consideration 7.9):
“[…] [L]’arbitre n’a pas hésité à utiliser des termes extrêmement violents, de façon répétée, et plusieurs messages ont été publiés alors même que la présente affaire était en cours d’instruction devant le TAS. Il a notamment usé des termes suivants: ‘those bastard sadic chinese who brutally killed dogs and cats in Yulin’, ‘This yellow face chinese monster smiling while torturing a small dog,deserves the worst of the hell’, ‘those horrible sadics are CHINESE!’, ‘Old yellow-face sadic trying to kill and torture a small dog’, ‘Torturing innocent animal is a flag of chinese!Sadics, inhumans’. […] De tels qualificatifs [surtout : yellow face], quand bien même ils ont été employés dans un contexte particulier, n’ont strictement rien à voir avec les actes de cruauté reprochés à certains ressortissants chinois et sont, quel que soit le contexte, inadmissibles. Si l’on ajoute à cela le fait que l’arbitre a tenu de tels propos, non seulement à deux reprises, mais aussi après sa désignation en tant que président d’une Formation appelée à statuer sur l’appel interjeté par un ressortissant chinois, alors même que la procédure était pendante, il y a lieu d’admettre que les appréhensions du requérant quant à l’éventuelle partialité de l’arbitre mis en cause peuvent passer pour objectivement justifiées.”
In a tentative English translation by the author, the paragraph above reads as follows:
“[…] [T]he arbitrator did not hesitate to use extremely violent language, repeatedly, and several messages were published while the present case was being heard before the TAS. In particular, he used the following terms: ’Those bastard sadic chinese who brutally killed dogs and cats in Yulin’, ‘This yellow face chinese monster smiling while torturing a small dog,deserves the worst of the hell’, ‘those horrible sadics are CHINESE!’, ‘Old yellow-face sadic trying to kill and torture a small dog’, ‘Torturing innocent animal is a flag of chinese!Sadics, inhumans’. […] Such qualifiers [especially: yellow face], even if they were used in a particular context, have nothing whatsoever to do with the acts of cruelty of which some Chinese nationals are accused and are, whatever the context, inadmissible. If we add to this the fact that the arbitrator made such statements, not only on two occasions but also after he had been appointed chairman of a panel called upon to rule on an appeal lodged by a Chinese national, even though the proceedings were pending, it must be accepted that the appellant’s apprehensions as to the possible bias of the arbitrator in question may be regarded as objectively justified.”
The SFT’s new precedent 4A_318/2020 discussed herein is interesting in that it – summarized in a very compressed fashion – contains three basic guidelines for practitioners and the resolution of possible similar cases in the future, being: (i) Parties are expected to duly investigate, prior to his or her nomination, a potential arbitrator’s background for possible issues regarding his or her independence or impartiality, which includes a search on the internet, but does not require scrutinizing an arbitrator’s activity on social media, namely on Twitter; (ii) During the course of arbitral proceedings, the parties are not expected to continue monitoring an arbitrator’s presence on the internet or social media; (iii) Strongly worded statements on social media, namely on Twitter, that contain language that could be indicative of racist prejudices may, depending on the circumstances, objectively call into question an arbitrator’s impartiality.
Philipp H. Haberbeck, Zurich, 20 January 2021 (www.haberbeck.ch)
The information contained in this article is for general informational purposes only and is not intended to constitute legal advice. Readers of this article should not take any actions or decisions without seeking specific legal advice. Any mandate is subject to the full execution of an engagement letter.
Rechtsgebiete: Personenrecht (Persönlichkeitsrechte, Namensrecht etc.)