Starting point – constitution of the arbitral tribunal:

Absent any agreement of the parties in the arbitration clause or an arbitration agreement, the arbitration rules chosen by the parties, such as the ICC Arbitration Rules, the Swiss Rules, the DIS, the LCIA or the SCC Rules define how the arbitral tribunal is selected and composed. They also provide for rules in case of a truncated tribunal or when an arbitrator needs to be replaced (e.g., Art. 8 to 15 Swiss Rules 2021 or Art. 12 to 15 ICC Rules 2021).

According to the Swiss Supreme Court decision 4A_27/2021 dated 7 May 2021, the procedural requirements, including the lawful composition and the jurisdiction of an arbitral tribunal, must (at the latest) be met when the arbitral award is issued (ibid., para. 4.3.2). Also, it is irrelevant whether an arbitral tribunal lacks jurisdiction over the original legal claims if they are subsequently adjusted by means of an amendment thereto (ibid., para. 4.3.1).

(Non-)Substitution of an arbitrator and the right to a properly constituted arbitral tribunal pursuant to Art. 190 para. 2 lit. a SPILA:

In its decision 4A_709/2014 of 21 May 2015, the Swiss Supreme Court reiterated that the arbitrator's mandate is ad personae, i.e. personal in nature (ibid., para. 3.3.2). An arbitrator is therefore appointed intuitu personae and cannot delegate his or her task to a third party, without risking the annulment of the award under Art. 190 para. 2 lit. a SPILA (ibid., para. 3.2.1). However, he may call upon third parties to assist him in some technical areas that exceed his competence. This also applies to the rather exceptional situation where the arbitrator is not a lawyer and needs legal advice. He or she is then entitled to retain the services of a legal advisor (ibid., para. 3.4). In this context, it is noteworthy that the appointment of a secretary to the arbitral tribunal does not constitute a delegation of the arbitrator's duties, because the secretary may only provide administrative and legal support and may not replace the arbitrator in making decisions (ibid., para. 3.2.2).

The substitution, but also the non-substitution, of an arbitrator which mandate has been terminated may collide with the parties’ right to a properly constituted arbitral tribunal pursuant to Art. 190 para. 2 lit. a SPILA. In its decision 4A_332/2020 of 1 April 2021, the Swiss Supreme Court ruled that if an arbitrator resigns, the parties cannot challenge the award rendered by the new arbitral tribunal (constituted of the two former arbitrators and the newly-appointed one) based on the argument that the replaced arbitrator was biased and that the newly constituted arbitral tribunal violated their right to an arbitral tribunal composed in accordance with the applicable arbitration rules pursuant to Art. 190 para. 2 lit. a SPILA by refusing to repeat certain steps of the arbitral proceedings. Although as a rule, an arbitrator who resigns or is removed from office must be replaced (see Girsberger/Voser, International Arbitration, Comparative and Swiss Perspectives 2021, N 797), in the above-cited case, the arbitral tribunal initially suggested that it could rule as a two-member tribunal. Indeed, in case of three-member arbitral tribunals, it is sometimes more efficient to allow the two remaining arbitrators to continue the proceedings without replacing the third arbitrator (ibid., N 792; so-called “truncated tribunal”). In the case at issue, because the hearing had been taken place before one of the co-arbitrators had resigned due to a bias challenge of the respondents, this might have been a viable option. This was all the more so because the respondents had challenged a co-arbitrator only after the hearing, whereupon the co-arbitrator had immediately resigned. The Court of Arbitration of the Swiss Chambers’ Arbitration Institution (newly titled “Swiss Arbitration Center”), though, decided otherwise and appointed a replacement arbitrator. The respondents then made an application requesting the entire arbitration proceeding to be repeated. The arbitral tribunal declined to repeat any of the previous procedural steps, including the evidentiary hearing, closed the arbitration and rendered the award. Since the award was essentially in favor of the claimants, the respondents appealed to the Swiss Supreme Court to set it aside, arguing that the arbitral tribunal should have repeated several procedural steps after appointing the new arbitrator.

The Swiss Supreme Court held that if an arbitrator is replaced, the challenge must be directed against the newly constituted arbitral tribunal (ibid., para. 2.3.2.). Insofar as the appellants (respondents) had claimed that the procedural steps should have been repeated when the SCAI’s Court replaced the previous arbitrator, the Swiss Supreme Court found that such a claim did not fall under Art. 190 para. 2 lit. a SPILA. It also held that the SCAI’s Court lacked jurisdiction to review the question of whether procedural steps should have been repeated or not. It rather held that any question about the conduct of the proceedings should be challenged under the right to a fair hearing or public policy (ibid., para. 2.3.4).

The Swiss Supreme Court also dismissed the appellants’ claim that by not re-scheduling the hearing, the arbitral tribunal had violated its right to be heard, holding that it was "unclear" how the presence of the co-arbitrator (who had resigned) during the hearings or in the proceedings should have affected the ability of the appellants to present their claims or assert their parties’ rights (ibid., para. 3.4).

Finally, the appellants argued that the non-repetition of parts of the proceedings violated public policy – to no avail. The Swiss Supreme Court noted that in the field of international arbitration, in terms of the repetition of procedural steps after the replacement of an arbitrator, the SPILA is silent and the law makers have left it to the courts to decide on the appropriateness of such a measure. The Swiss Supreme Court also noted that there does not appear to exist a general rule on this subject in the field of international arbitration (ibid., para. 4.2). The appeal was dismissed in its entirety and the award of the arbitral tribunal confirmed.

The challenge of an arbitral award for procedural reasons encounters further obstacles. In its decision 4A_136/2018 dated 30 April 2018, the Swiss Supreme Court dismissed the challenge of an arbitral award due to the alleged incorrect composition of the arbitral tribunal as being too late because an earlier procedural decision on this issue had not been challenged within 30 days from its issuance, as provided under Art. 190 para. 3 SPILA. In a concisely reasoned decision, the Swiss Supreme Court (re)qualified the arbitral tribunal's procedural order as an "interim decision" against which a specific appeal could be – and would have had to be – filed. The extent to which orders of arbitral institutions on the composition of the arbitral tribunal are subject to an appeal, however, was not clarified in this decision.

Conclusion:

In its recent case law, the Swiss Supreme Court not only confirmed the principle that arbitration proceedings seated in Switzerland cannot be delayed or even undermined by delaying or “guerilla” tactics, which may include the (late) challenge and resignation of an arbitrator, when certain rules are complied with, but also reaffirmed its well-established case law providing that procedural objections cannot be heard if they are not raised without delay. The (non-)substitution of an arbitrator and the right to a properly constituted arbitral tribunal can therefore be reconciled under Swiss law. This is certainly in the interest of efficient arbitration proceedings and the enforceability of arbitral awards.