Precautionary taking of evidence despite pending arbitral proceedings?
Pursuant to Art. 158(1) of the Swiss Code of Civil Procedure (the CPC), the court may take evidence in summary proceedings at any time, including before ordinary proceedings have been initiated, if and when (a) the law expressly grants the right to do so, or (b) the applicant shows credibly that the evidence is at risk or that he or she has another legitimate interest in such precautionary taking of evidence.
This is an official English translation of Art. 158 of the CPC:
(Para. 1) The court shall take evidence at any time if: (a.) the law grants the right to do so; (b.) the applicant shows credibly that the evidence is at risk or that it has a legitimate interest. (Para. 2) The provisions regarding interim measures apply.
In a judgment dated 9 August 2018 (case number: HE180200-O), which dealt with an evidence taking request based on the above-mentioned Art. 158 of the CPC, the Commercial Court of the Canton of Zurich (the Zurich Commercial Court) had to deal with the following situation (in a simplified / summary version):
The parties to the relevant dispute, both active in the aviation industry, had deposited with an escrow agent in Zurich a remuneration agreement, pursuant to which the claimant is to be compensated for assisting the defendant in the latter’s efforts to sell airplanes. To prove its asserted remuneration claim of approximately USD 170m, the claimant strives to obtain the remuneration agreement held in escrow. For this purpose, the claimant initiated different legal proceedings against the defendant, among them (without success) an arbitration under the Swiss Chambers’ Arbitration Institution as well as (still pending) arbitral proceedings under the auspices of the International Chamber of Commerce (ICC). In the mentioned ICC arbitral proceedings in Geneva (ICC Case No 23197/GR), the production of the remuneration agreement held in escrow has, in essence, been requested by both parties to this arbitration.
Given that the issue of the production of the remuneration agreement will be dealt with in the near future in the above-mentioned ICC arbitral proceedings, the Zurich Commercial Court decided that it is justified to apply to the situation summarized above (i.e., a request for a precautionary taking of evidence pursuant to Art. 158 of the CPC, filed with a Swiss state court, during pending arbitral proceedings) the doctrine developed by Swiss legal scholars in relation to requests for the precautionary taking of evidence, submitted to state courts, in the event of already pending state court proceedings. Below is the relevant consideration of the Zurich Commercial Court (consideration 4.2, at page 4), in German and in a tentative English translation:
“Es rechtfertigt sich daher, die Lehre betreffend vorsorgliche Beweisführung während hängigem Hauptverfahren analog anzuwenden, zumal der Gesetzgeber von der Gleichwertigkeit der Staats- und Schiedsgerichtsbarkeit ausgeht (…).”
“It is therefore justified to apply the doctrine of the taking of precautionary evidence during pending main proceedings before a state court analogously, especially since the (Swiss) legislator assumes that state court and arbitral proceedings are equivalent (…).”
According to Swiss legal scholars, a precautionary taking of evidence in summary proceedings on the basis of Art. 158 of the CPC is, as a matter of principle, possible, even if ordinary state court proceedings are already pending. However, in such a scenario, the requesting party has to show a special interest worthy of protection, for instance, that the relevant means of evidence are endangered and that it is to be feared that it will not be possible to hear such evidence in the pending ordinary proceedings, which are slower than the summary proceedings in which, as mentioned, a request pursuant to Art. 158 of the CPC is to be dealt with. To give an example for illustration purposes, depending on the circumstances, a request for a precautionary evidence taking may be admissible if, despite already pending ordinary court proceedings in Geneva, a very ill witness, hospitalized in Zurich, has to be examined very quickly, to prevent the death of the witness without him or her being able to being examined in the (slower) ordinary Geneva proceedings.
The Zurich Commercial Court decided in its judgment HE180200-O that it is justified to apply the legal test summarized above to the situation before it, i.e., not involving a state court(s), but an arbitral tribunal on the one and a state court on the other hand. In this regard, the Zurich Commercial Court retained that the claimant did not show any special reasons or circumstances why it could not await the arbitral tribunal’s decision regarding the production of the remuneration agreement held in escrow. For this reason, the Zurich Commercial Court denied the claimant’s request based on Art. 158 of the CPC.
This is the relevant consideration of the Zurich Commercial Court (consideration 4.4, at pages 4-5), in German and in a tentative English translation:
“Dem ist auch im vorliegenden Entscheid mit seiner vergleichbaren Konstellation zu folgen. Besondere Gründe und Umstände im eben umschriebenen Sinn sind in casu aber weder ersichtlich noch dargetan worden. (…) Der Klägerin ist ohne Weiteres zuzumuten, den Entscheid des ICC-Schiedsgerichts betreffend Edition (des sich in Escrow befindenden Dokuments) abzuwarten. Mangels schutzwürdigen Interesses ist das klägerische Gesuch abzuweisen (…).”
“This must also be followed in the present decision with its comparable constellation. However, special reasons and circumstances in the sense described above are neither apparent nor demonstrated in casu. (…) The claimant can without further ado be expected to wait for the decision of the ICC arbitral tribunal regarding the production (of the document held in escrow). In the absence of an interest worthy of protection, the claimant’s request is to be dismissed (…).”
In my view, this judgment by the Zurich Commercial Court is to be welcomed. It shows once again that the state courts in Switzerland have a positive attitude towards private arbitration proceedings. And indeed, pursuant to the mentioned judgment, there do not seem to be any relevant reasons why the claimant in the matter at issue should not be able to await the decision of the arbitral tribunal on the document production requests already pending before such tribunal.
Philipp H. Haberbeck, Zurich; first published on LinkedIn on 12 February 2019 (www.haberbeck.ch)
The information contained in this post is for general informational purposes only and is not intended to constitute legal advice. Readers of this post should not take any actions or decisions without seeking specific legal advice.