Facts
Parties and facts:
The B. d.o.o. (applicant, respondent to the appeal), a Slovenian joint-stock company with its registered office in U., Slovenia, and the A. S.A. (respondent, appellant), a Swiss joint-stock company with its registered office in V., Canton of Aargau, disputed the validity of an arbitration agreement.
On 9 October 2009, the parties concluded a “Distribution Agreement” containing an arbitration clause in favour of the Slovenian Chamber of Commerce (arbitration agreement). It remained unclear who was the contracting party of the applicant. The arbitral tribunal ruled on 20 November 2017 that it had no jurisdiction, since the respondent was not a party to the arbitration agreement.
The applicant then brought an action before the Commercial Court of the Canton of Aargau, which ruled on 5 November 2018 under Art. II para. 3 NYÜ that it had no jurisdiction and referred the applicant to arbitration. The appeal against this decision was dismissed by the Federal Supreme Court (decision 4A_646/2018 of 17 April 2019).
Subsequently, the applicant filed an action before the District Court of Koper (Slovenia) and obtained a judgment of 21 March 2022 ordering the respondent to pay EUR 593,075.11 plus interest. This judgment was confirmed by the Higher Court in Koper on 19 August 2022.
The applicant enforced the judgment against the respondent with a payment order No. x of 20 May 2022 for a total amount of CHF 673,067.65 plus interest. After an objection to payment, the applicant requested definitive enforcement, which the District Court of Zofingen granted in its decision of 17 April 2023. The Higher Court of the Canton of Aargau dismissed the appeal against this decision in its ruling of 24 October 2023, stating that the Slovenian judgment was to be recognised and enforced under the new LugC, even if it had been rendered in disregard of the arbitration agreement.
The appellant applied to the Federal Supreme Court for the annulment of the Higher Court’s decision and the dismissal of the application for definitive enforcement.
Considerations
Legal binding effect of foreign arbitral awards:
The Federal Supreme Court examined whether Swiss state courts are bound by the negative jurisdiction decision of a foreign arbitral tribunal if this decision is recognised in Switzerland. Under Art. 34 no. 3 new LugC, recognition of a foreign judgment is excluded if it is incompatible with a domestic decision. The appellant argued that the Slovenian judgment was incompatible with the decision of the Commercial Court of the Canton of Aargau, since the latter had referred the applicant to arbitration. The Federal Supreme Court rejected this argument, stating that a negative jurisdiction decision of a Swiss state court only has res judicata effect to the extent that it establishes its own lack of jurisdiction. Such a decision does not bind the state courts to the finding of the validity of the arbitration agreement, in particular if the arbitral tribunal has already declared itself to have no jurisdiction.
Binding effect of arbitral tribunal decisions:
The Federal Supreme Court confirmed that a foreign arbitral tribunal seated abroad decides on its own jurisdiction (principle of competence-competence, Art. 186 para. 1 PILA). If such a decision is recognised in Switzerland, the state courts are bound by it. This also applies if the arbitral tribunal declares itself to have no jurisdiction on the grounds that a party is not covered by the arbitration agreement. A negative conflict of jurisdiction between state courts and arbitral tribunals is to be avoided. The appellant failed to show that the arbitral award was not recognised in Switzerland, which…