<h4>I. Introduction</h4>
The Panel of Recognized International Market Experts in Finance has announced revisions to its Arbitration Rules, which entered into force on January 1, 2022 (the 2022 Rules). This Bulletin highlights the key changes introduced by the 2022 Rules.
<h4>II. Arbitrating Financial Disputes</h4>
Market participants in the financial sector are often confronted with complex, technical disputes. Despite the many advantages of international arbitration, the financial sector traditionally relied on state courts to adjudicate disputes.
Recently, there has, however, been an increased interest from the financial sector in alternative dispute resolution, mainly arbitration. Starting in 2013, the influential International Swaps and Derivatives Association (ISDA) published an arbitration guide, which included arbitration model clauses. Over the last couple of years, the major arbitral institutions have reported an increasing number of disputes from the financial sector.
The recent increase in financial services arbitrations can be explained, in particular, by the following factors:
<ul>
<li>Financial products are increasingly tailor-made to suit the specific needs of individual clients. The resolution of disputes arising out of such bespoke financial instruments requires a high level of technical understanding. Accordingly, parties have an interest to ensure that such disputes are adjudicated by subject-matter experts appointed by themselves.</li>
<li>International arbitration is also preferable for the purposes of enforcement. The wide scope of application of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) is especially important for parties located in emerging markets, which are becoming more and more important in banking and finance transactions.</li>
<li>International arbitration offers procedural benefits over domestic litigation for example with respect to procedural flexibility, confidentiality, and limited possibilities for appeal.</li>
<li>Parties from emerging economies are less prepared to accept the jurisdiction of the courts of England and Wales or the Southern District of New York, and are open to alternative resolution in a more neutral forum.</li>
</ul>
<h4>III. P.R.I.M.E. Finance</h4>
The Panel of Recognized International Market Experts in Finance (P.R.I.M.E. Finance) was established after the global financial crisis in 2008, with the aim of ensuring the resolution of complex financial disputes by renowned experts and fostering stability in global financial markets. Recognizing the need for a tailor-made forum and procedures, P.R.I.M.E. Finance launched the P.R.I.M.E. Arbitration Rules in 2012 (the Rules).
The Rules are based on the UNCITRAL Arbitration Rules but have been adapted to accommodate the specific needs of the adjudication of financial disputes, in particular disputes relating to matters such as derivative instruments, sovereign lending, investment and advisory banking, financing instruments, private equity, asset management, etc.
Because experience and expertise is key in resolving financial disputes, P.R.I.M.E. Finance offers access to a pool of more than 200 experts and arbitrators, who are intimately familiar with the relevant market practices, customs and usages. Since 2016, arbitrations under the Rules are administered by the Permanent Court of Arbitration at The Hague (PCA).
As of January 1, 2022, a revised set of P.R.I.M.E. Arbitration Rules (the 2022 Rules) entered into force.
<h4>IV. Key Changes of the 2022 Rules</h4>
The 2022 Rules respond to specific needs of parties intending to arbitrate disputes in the banking and finance area. They provide a sophisticated tool kit for navigating arbitration proceedings efficiently. These are the six most important changes you need to know about:
<ol>
<li> Light touch to full service administration by the PCA: By default, the PCA offers a light touch administration. It enjoys, however, the necessary tools to safeguard the integrity and the impartiality of the arbitration proceedings. The PCA can, for example, confirm arbitrators (Article 11), extend or shorten time limits (Article 4) and exercise limited scrutiny over the arbitral award (Article 39). The PCA therefore acts as a safety valve for the arbitration proceedings under the 2022 Rules.</li>
<li> Multi-party and multi-contract arbitrations: Complex banking and finance disputes often involve multiple parties and interests. The 2022 Rules introduce a clear and detailed framework with regard to issues of joinder, consolidation or coordination of arbitral proceedings (Articles 31─34). All parties are required to agree expressly to any joinder or consolidation. Under the 2022 Rules, the PCA may revoke appointments and appoint new or confirm the appointed arbitrators in case of a joinder (Article 31). The option to conduct a single arbitration under multiple contracts prevents the risk of conflicting awards (Article 33). New is also the possibility to coordinate interrelated parallel proceedings if consolidation is not an option (Article 34).</li>
<li> Time and cost efficiency: The 2022 Rules include provisions on expedited arbitration proceedings. They are applicable by default if the amount in dispute is below EUR 4 million. Alternatively, the parties can expressly opt in (Article 17). The drafting group intentionally set short time limits knowing that the PCA can – if necessary – adjust any time limit or declare the expedited provisions inapplicable if the disputed issues become too complex. A three-member tribunal has to render a final award within 90 days, a one-member tribunal within 60 days after the last hearing or substantive submission (Article 39). Finally, the arbitral tribunal is entitled under the 2022 Rules to facilitate settlement attempts without the risk that the parties can later challenge an award (Article 16).</li>
<li>Amicus Curiae: The drafting group included the possibility of amicus curiae submissions, in which industry experts may explain policy positions or industry practices to the arbitral tribunal, addressing the question: What is the relevance and the background of certain regulations and practices?</li>
<li> Early determination: The 2022 Rules allow the arbitral tribunal to render an award based on an early determination (Article 35). Once the parties have submitted their positions, the arbitral tribunal may decide that the claims are manifestly outside of its jurisdiction, inadmissible or without legal merit. Recently, other arbitration institutions have included similar provisions (e.g., Article 22(1)(viii) LCIA Rules; Article 43 HKIAC Rules; Article 26 SIAC Investment Rules).</li>
<li> Transparency: The two new elements relating to transparency are disclosure obligations of third parties and the possibility of a publication of arbitral awards. If a third party has a significant interest in the outcome of the dispute, its identity has to be revealed in the notice of arbitration (Article 5 para. 3 lit. g), the response to the notice of arbitration (Article 6 para. 2 lit. b) or the request for joinder (Article 31 para. 3 lit. e). This includes third-party funders. The publication of awards serves as a guideline for arbitrators and increases legal certainty for the parties. Each party may object to the publication of the award (Article 39).</li>
</ol>
While the key feature of arbitration under P.R.I.M.E. Finance Rules remains its expert panel with a selection of over 200 accomplished experts and arbitrators, the revisions implemented as of January 1, 2022 mean another important step for P.R.I.M.E. Finance to establish itself as an attractive mechanism to solve disputes in the banking and finance industry. We recommend considering arbitration under the 2022 Rules as a dispute resolution mechanism when entering into financial transactions.

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P.R.I.M.E. Finance launches revised Arbitration Rules

In a decision published this week and marked as a leading case, the Swiss Federal Tribunal (<a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?lang=de&amp;type=show_document&amp;highlight_docid=aza:%2F%2Faza:%2F%2F22-06-2021-1B_333-2020&amp;print=no" target="_blank" rel="noopener">DFT 1B_333/2020</a>) held that communications of persons with lawyers admitted to practice in jurisdictions outside of the EU, EFTA, and the UK are not protected from seizure by the attorney-client privilege unless the person is the target of the criminal investigation.
The case arose out of a criminal investigation involving allegations of bribing foreign officials and money laundering. During the investigation prosecutors seized documents from a third party. The seized documents included privileged correspondence between the third party and its attorneys, who were admitted to practice outside the EU, EFTA, and the UK.
The Swiss Federal Tribunal confirmed that the attorney-client communications of an accused party relating to legal advice and the representation in legal proceedings remain privileged and cannot be searched and seized during a criminal procedure regardless of where the accused&#8217;s lawyer is admitted to practice.
However, the Swiss Federal Tribunal ruled that documents and communications protected by attorney-client privilege and exchanged between a third party and his/her lawyers admitted to practice outside the EU, EFTA, and the UK may be searched and seized in criminal proceedings.
The decision is in line with the Swiss Federal Tribunal&#8217;s restrictive approach regarding the scope of the attorney-client privilege and of other confidentiality interests. Companies and individuals in Switzerland who retain lawyers from outside the EU, EFTA, or the UK should be mindful that their communications may be searched and seized in the course of criminal and regulatory proceedings. In relevant matters, companies and individuals may want to consider retaining lawyers not admitted to practice in Switzerland, the EU, EFTA, or the UK through an attorney allowed to practice in those countries.

Swiss Federal Tribunal rules on scope of privilege

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We are delighted that Lorenzo Togni has joined our partnership. Bénédict Thomann is strengthening our team as counsel. 

A new partner and a new counsel strengthen our firm

We are delighted that <a href="https://www.homburger.ch/en/team/lorenzo-togni/">Lorenzo Togni </a>has joined our partnership. <a href="https://www.homburger.ch/en/team/benedict-thomann/">Bénédict Thomann</a> is strengthening our team as counsel. Find out more <a href="https://www.homburger.ch/en/home/welcome/">here</a>.

Fresh momentum and new perspectives

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Roche

On November 4, 2021, Roche Holding AG (Roche), the world&#8217;s largest biotech company, with a market capitalisation of around CHF 320 bn, announced that it agreed with Novartis to repurchase 53.3 m Roche shares from Novartis Holding AG for an aggregate consideration of approx. CHF 19 bn. The transaction is conditional upon the approval of a capital reduction by cancellation of the repurchased shares and the approval of interim financial statements prepared for the purpose of the transaction by an extraordinary general meeting of Roche.
Homburger acted as legal counsel to Roche. The Homburger team was led by partners Heinz Schärer and David Oser and included partner Daniel Häusermann, counsel Micha Fankhauser, associates Sarah Chevalley and Jasmin Künzle (all Corporate / M&amp;A), partners Reto Heuberger and Dieter Grünblatt and associates Laetitia Fracheboud and Kevin Müller (all Tax), partner Jürg Frick, counsels Lee Saladino and Eduard De Zordi and associate Stefan Bindschedler (all Finance), partner Balz Gross, counsel Bénédict Thomann and associates Luca Angstmann and Sebastian Wyler (all Dispute Resolution).

Homburger advises Roche Holding AG on the repurchase of the Novartis stake in Roche Holding AG and the financing of the transaction 

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In a decision published this week and marked as a leading case, the Swiss Federal Tribunal (<a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?lang=de&amp;type=show_document&amp;highlight_docid=aza:%2F%2Faza:%2F%2F22-06-2021-1B_333-2020&amp;print=no" target="_blank" rel="noopener">DFT 1B_333/2020</a>) held that communications of persons with lawyers admitted to practice in jurisdictions outside of the EU, EFTA, and the UK are not protected from seizure by the attorney-client privilege unless the person is the target of the criminal investigation.
The case arose out of a criminal investigation involving allegations of bribing foreign officials and money laundering. During the investigation prosecutors seized documents from a third party. The seized documents included privileged correspondence between the third party and its attorneys, who were admitted to practice outside the EU, EFTA, and the UK.
The Swiss Federal Tribunal confirmed that the attorney-client communications of an accused party relating to legal advice and the representation in legal proceedings remain privileged and cannot be searched and seized during a criminal procedure regardless of where the accused&#8217;s lawyer is admitted to practice.
However, the Swiss Federal Tribunal ruled that documents and communications protected by attorney-client privilege and exchanged between a third party and his/her lawyers admitted to practice outside the EU, EFTA, and the UK may be searched and seized in criminal proceedings.
The decision is in line with the Swiss Federal Tribunal&#8217;s restrictive approach regarding the scope of the attorney-client privilege and of other confidentiality interests. Companies and individuals in Switzerland who retain lawyers from outside the EU, EFTA, or the UK should be mindful that their communications may be searched and seized in the course of criminal and regulatory proceedings. In relevant matters, companies and individuals may want to consider retaining lawyers not admitted to practice in Switzerland, the EU, EFTA, or the UK through an attorney allowed to practice in those countries.

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Fresh momentum and new perspectives

Homburger advises Roche Holding AG on the repurchase of the Novartis stake in Roche Holding AG and the financing of the transaction

Swiss Federal Tribunal denies legal privilege protection to correspondence with non-EU/EFTA/UK lawyers

P.R.I.M.E. Finance launches revised Arbitration Rules

Swiss Federal Tribunal rules on scope of privilege

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Fresh momentum and new perspectives

Homburger advises Roche Holding AG on the repurchase of the Novartis stake in Roche Holding AG and the financing of the transaction

Swiss Federal Tribunal denies legal privilege protection to correspondence with non-EU/EFTA/UK lawyers

P.R.I.M.E. Finance launches revised Arbitration Rules

Swiss Federal Tribunal rules on scope of privilege

Join the Team

Bénédict Thomann

Career

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Bar Registration

Teams

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