Decision of the Arbitral Tribunal on the Allocation of Costs and Expenses after Waiver of Arbitration

Facts

On 14 July 2014, X. SA and Y. SA (the claimants) initiated arbitration proceedings against A. AG and B. AG (the defendants). A three-member arbitral tribunal was constituted. The claimants made the required cost advances, but the defendants did not pay their share. On 1 June 2015, the claimants declared their waiver of the arbitration in accordance with Art. 378 para. 2 CPC.

On 23 June 2015, the arbitral tribunal closed the arbitration proceedings and ruled on the allocation of costs and expenses, placing each party responsible for half of the procedural costs. The defendants (the appellants) then filed a civil appeal against this decision.

Considerations

The Federal Tribunal upheld the appeal. It considered that the arbitral tribunal had violated the appellants' right to be heard by ruling on the allocation of costs and expenses without having previously given them the opportunity to express their views on this matter.

Indeed, when a party waives the arbitration in accordance with Art. 378 para. 2 CPC, the arbitral tribunal must close the proceedings and rule on the costs and expenses.…