Why the Swiss are natural-born arbitrators

Recently, I came across an article written by a German journalist about how she experienced life in the Swiss city of Zurich (see: https://www.travelbook.de/news/travelbook-redakteurin-zuerich-ist-wunderschoen-aber-ich-moechte-nie-wieder-dort-leben). The quintessence of her experience can be summarized as “Zurich is beautiful, but life there is unbearable”, namely because she could not get used to the typical reserve of the Swiss people in Zurich. I have heard this complaint often, in the sense of “I have never known people so reserved than the Swiss in Zurich”, so I would assume that this generalization is not completely off the mark. In any event, this thought about certain characteristics of Swiss people gave me the idea that there are, pursuant to my hypothesis, certain traits of Swiss people that make them good arbitrators in international arbitrations. Because, if you think of it, the notorious success of Switzerland in the realm of international arbitrations is quite astonishing, if you take into account (i) how small, compared to other players in this market, the Swiss population is, (ii) that Switzerland does not have the advantage of having exported its legal system into former colonies (Switzerland did not have any), and (iii) that Swiss people do not have the advantage of speaking the modern lingua franca English as their mother tongue. There are, of course, several factors that are responsible for Switzerland’s success in the area of international arbitrations, not the least of them being the excellent arbitration-friendly jurisprudence of Switzerland’s highest court, the Swiss Federal Tribunal. That said, as mentioned, pursuant to my hypothesis, one factor of success are certain traits of Swiss people that make them good arbitrators in international arbitrations. Below I discuss such traits, in random order.

(i) Swiss people generally are discrete, what comes naturally to them. It is therefore no surprise that the famous Swiss banking secrecy is still in force today, not in the international fiscal context, but still on a national Swiss level. Confidentiality in arbitrations hence meets a natural trait of Swiss people, who are used to and who appreciate confidentiality in business dealings.

(ii) Corruption is low in Switzerland, which is shown, for example, by the corruption perceptions index of Transparency International for 2020, where Switzerland is rated the third least corrupt state out of 180 countries (see: https://www.transparency.org/en/cpi/2020/index/che). As far as, in particular, the Swiss judicial system is concerned, there is, if any at all, only a very low risk of corruption (see, for example: https://www.ganintegrity.com/portal/country-profiles/switzerland/). Accepting bribes in exchange for rendering a certain judgment or award is something that goes against Swiss tradition and culture and is, at least pursuant to my knowledge, unheard of. Switzerland has known peace and stability for a long time, with generally highly regarded institutions, and since the second world war, Switzerland has also known prosperity. These are factors that have made corruption quasi inexistent in the Swiss legal system and which generally created an environment in which independence and integrity are possible and rewarded. I would suggest that this framework provides parties with a high confidence that Swiss lawyers are fully impartial when acting as arbitrators.

(iii) Switzerland is a very small country. Just the US-state of California, for example and illustration purposes, is almost 10 times bigger than Switzerland (see: https://www.mylifeelsewhere.com/country-size-comparison/california-usa/switzerland). However, despite its small size, Switzerland is very diverse, since it is not only composed of principally three different lingual and cultural regions, i.e., the French-, Italian- and German-speaking parts of Switzerland, but also because it has cities in which an important percentage of the populations has a so-called migration background. In Zurich, around 40% of the population has a so-called migration background, i.e., people who have immigrated into Switzerland themselves or have at least one parent who immigrated into Switzerland (see, for example: https://www.zh.ch/de/soziales/bevoelkerungszahlen/zuwanderung-auslaendische-bevoelkerung.html#-745558533). And in Geneva, even over 60% of the population have a migration background (see: https://de.statista.com/statistik/daten/studie/711809/umfrage/bevoelkerungsanteil-mit-migrationshintergrund-in-der-schweiz-nach-kantonen/). Because of the small size and diversity of their country, Swiss people are used to interact with different cultures. It is something that they learn and get used to as children already, for example, when in the Swiss trains official announcements are made in German, French, Italian, and today often in English also. Or, to give another example for illustration purposes, when Swiss men do their military service together with Swiss citizens from other language regions. The pronounced outward orientation of Switzerland is also illustrated by the high proportion of international organizations that have their headquarters in Switzerland, not only the well-known headquarters of the United Nations (UN) and the World Trade Organization (WTO) in Geneva, the International Olympic Committee (IOC) in Lausanne and the international football association (FIFA) in Zurich, but also, to cite further examples, the Court of Arbitration for Sport (CAS) in Lausanne, the World International Property Organization (WIPO) in Geneva, the Bank for International Settlement (BIS) in Basel, etc., etc. As far as, particularly, the Swiss legal profession is concerned, looking beyond the Swiss jurisdiction is a necessity, given Switzerland’s geographical position (small and surrounded by different countries), its dependence on international trade, its important foreign immigration, etc. For these reasons, it comes naturally to Swiss law practitioners to handle international issues, in different languages, with people from different cultural backgrounds, which are all important aspects in international arbitrations.

(iv) Switzerland is a land-locked country with no significant natural resources, such as gas or oil. Its notorious economic success is therefore not based on the exploitation of natural resources, but on its striving for quality and the innovative force of its economy. For example, Switzerland holds the top spot in the WIPO’s Global Innovation Index 2021 (see: https://de.statista.com/statistik/daten/studie/711809/umfrage/bevoelkerungsanteil-mit-migrationshintergrund-in-der-schweiz-nach-kantonen/). To be competitive as a small country without natural resources, but with a strong and expensive currency, the Swiss economy had to develop a tradition and culture of high quality, including a high attention to detail, perfectly illustrated by Switzerland’s famous watch industry. This tradition and culture of high quality with an attention to detail permeated various economic sectors in Switzerland, including the legal sector, in which an attention to detail comes in handy, obviously.

International arbitration as a dispute resolution mechanism has notoriously known a huge success in the past 25 years, since I started my professional legal training. This success has drawn new players to the table and increased competition, also among jurisdictions that offer and wish to host arbitral proceedings. I would hope that the Swiss jurisdiction and the lawyers practicing therein will keep their traditionally important position in this market, as reflected, for example, by the latest ICC dispute resolution statistics (to be found here: https://iccwbo.org/publication/icc-dispute-resolution-statistics-2020/), among other reasons thanks to the circumstances and character traits described above.

Philipp H. Haberbeck, Zurich, 28 September 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: Allgemeines Vertragsrecht