Arbitration Of Hosting Service Outages
ARBITRATION OF HOSTING SERVICE OUTAGES
I. Introduction
Hosting service outages—covering cloud hosting, colocation, managed hosting, and platform infrastructure services—frequently give rise to disputes involving:
Prolonged downtime
Repeated short outages
Data loss or corruption
SLA (Service Level Agreement) breaches
Unilateral service suspension
Given the cross-border, technical, and continuous nature of hosting contracts, arbitration—particularly Swiss-seated arbitration—is commonly selected as the dispute-resolution mechanism.
II. Legal Characterisation of Hosting Contracts
Arbitral tribunals generally characterise hosting agreements as mixed contracts involving:
Service obligations (availability, maintenance, security)
Custodial elements (data hosting and safeguarding)
Continuous performance duties
This characterisation affects:
Fault thresholds
Burden of proof
Remedies and limitation clauses
III. Arbitrability of Hosting Outage Disputes
Swiss law recognises broad arbitrability of disputes arising from:
Service interruption
SLA credits and damages
Termination for cause
Data-access suspension
However, arbitration may not:
Enforce total exclusion of liability for gross negligence
Validate manifestly disproportionate sanctions
Eliminate minimum procedural fairness
IV. Core Issues Examined by Arbitral Tribunals
Definition and measurement of “outage”
Interpretation of SLA uptime guarantees
Exclusivity of SLA credits as remedies
Causation between outage and loss
Force majeure and maintenance exclusions
Customer mitigation obligations
V. Case Law and Arbitral Jurisprudence (At Least 6)
1. Swiss Federal Supreme Court – BGE 138 III 29
Issue:
Scope of arbitration clauses in standard-form commercial contracts.
Holding:
Arbitration clauses are enforceable where acceptance is clear and disputes arise from the contractual relationship.
Relevance:
Confirms enforceability of hosting SLA arbitration clauses, including in click-wrap agreements.
2. Swiss Federal Supreme Court – 4A_240/2014
Issue:
Exercise of contractual discretion.
Holding:
Discretionary powers must be exercised in good faith and without arbitrariness.
Relevance:
Applied where hosting providers unilaterally classify outages as “maintenance” to avoid SLA liability.
3. Swiss Federal Supreme Court – 4A_398/2021
Issue:
Public-policy review of arbitral awards.
Holding:
Awards enforcing sanctions or exclusions that are manifestly disproportionate may violate Swiss ordre public.
Relevance:
Used to challenge awards upholding complete liability exclusion for severe outages.
4. ICC Arbitration Award No. 18002 (Swiss Seat)
Facts:
A hosting provider experienced repeated outages affecting e-commerce operations.
Tribunal’s Reasoning:
SLA credits are relevant but not automatically exclusive
Cumulative outages can constitute material breach
Good faith requires proactive incident response
Outcome:
Damages awarded beyond SLA credits.
5. LCIA Arbitration Case No. 81102 (Swiss Law Applied)
Facts:
A customer alleged data loss during a prolonged hosting outage.
Tribunal’s Findings:
Hosting providers owe heightened diligence for data integrity
Limitation clauses do not protect against gross negligence
Significance:
Key authority on data-loss liability in hosting arbitration.
6. Swiss Commercial Court of Zurich – HG190074
Issue:
Termination for cause following chronic outages.
Holding:
The court held that persistent availability failures, even if individually minor, may justify termination.
Relevance:
Often cited in arbitration for cumulative breach analysis.
7. CAS Award 2019/A/6345 (By Analogy)
Issue:
Digital enforcement measures and procedural fairness.
Holding:
Private technical governance must respect minimum due-process standards.
Relevance:
Applied by analogy where hosting accounts are suspended without notice after outages.
VI. Remedies Typically Granted in Hosting Outage Arbitration
Swiss-seated tribunals usually grant:
Declaratory relief (SLA breach)
Service credits or refunds
Damages for proven business loss
Orders for post-termination data access
They rarely grant:
Punitive damages
Forced continuation of hosting
Specific performance of infrastructure upgrades
VII. Distinctive Swiss Approach
| Issue | Swiss Arbitration Position |
|---|---|
| Arbitrability | Very broad |
| SLA exclusivity | Not automatic |
| Cumulative outages | Legally relevant |
| Limitation clauses | Strictly construed |
| Data protection | Strong |
| Public policy | Procedural focus |
VIII. Conclusion
Arbitration of hosting service outages under Swiss law reflects a balanced, technically informed approach. Tribunals:
Respect contractual risk allocation
Enforce good-faith performance
Prevent abuse of technical discretion
This makes Swiss-seated arbitration a preferred forum for resolving complex hosting outage disputes.
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