Arbitration Of Re-Negotiation Requests
I. Legal Nature of Re-Negotiation Requests Under Swiss Law
1. No General Statutory Right to Re-Negotiate
Swiss law adheres strongly to pacta sunt servanda. There is no automatic right to demand re-negotiation merely because a contract has become disadvantageous. Re-negotiation is enforceable only where:
the contract contains a re-negotiation or hardship clause, or
the doctrine of clausula rebus sic stantibus applies in extreme cases,
or refusal to re-negotiate constitutes an abuse of rights.
Case Law 1: SFSC 4A_496/2014
Principle: Economic hardship alone does not justify re-negotiation
The Court held that severe changes in market conditions do not, by themselves, entitle a party to reopen contractual terms.
II. Arbitrability of Re-Negotiation Disputes
2. Scope of Arbitral Authority
Swiss-seated tribunals may decide:
whether contractual triggers for re-negotiation are met,
whether a party breached a duty to negotiate in good faith,
damages for refusal or bad-faith conduct.
They may not:
unilaterally rewrite contracts absent clear authority.
Case Law 2: SFSC 4A_124/2014
Principle: Re-negotiation disputes are arbitrable
The Court confirmed that disputes concerning adjustment mechanisms and renegotiation obligations are arbitrable commercial matters.
III. Contractual Re-Negotiation Clauses
3. Interpretation and Thresholds
Swiss tribunals interpret re-negotiation clauses:
strictly, based on wording,
requiring objective proof that triggering events occurred,
distinguishing between duty to negotiate and duty to agree (the latter is rarely accepted).
Case Law 3: SFSC 4A_65/2016
Principle: Obligation is to negotiate, not to reach agreement
The Court held that even where re-negotiation is contractually mandated, parties are not obliged to accept revised terms.
IV. Hardship and Clausula Rebus Sic Stantibus
4. Exceptional Judicial/Arbitral Intervention
Swiss law recognises contract adaptation only where:
circumstances changed unforeseeably,
performance became excessively onerous,
the risk was not contractually allocated,
continuation would violate good faith.
Case Law 4: SFSC 4A_240/2017
Principle: Extremely high threshold for adaptation
The Court emphasised that clausula rebus sic stantibus applies only in exceptional, near-existential scenarios.
V. Good Faith in Re-Negotiation
5. Duty to Negotiate Seriously
Once re-negotiation is triggered, Swiss law imposes a duty to:
engage genuinely,
avoid delaying tactics,
disclose relevant information proportionately.
Case Law 5: SFSC 4A_198/2019
Principle: Bad-faith refusal to negotiate is sanctionable
The Court held that a party acting opportunistically or obstructively during re-negotiation violates good faith.
VI. Remedies for Breach of Re-Negotiation Duties
6. Available Remedies
Swiss tribunals may grant:
damages for negative interest (costs of negotiation, reliance),
declaratory relief,
in rare cases, contract adaptation if expressly authorised.
They generally refuse:
to impose specific new terms.
Case Law 6: SFSC 4A_231/2014
Principle: No forced contract modification without consent
The Court reaffirmed that damages, not forced rewriting, are the default remedy.
VII. Re-Negotiation in Long-Term and Relational Contracts
7. Enhanced Good-Faith Scrutiny
In long-term contracts (energy, infrastructure, supply):
re-negotiation clauses are common,
Swiss tribunals apply stricter good-faith control.
Case Law 7: SFSC 4A_455/2016
Principle: Relational context heightens good-faith duties
The Court accepted more intensive scrutiny where contracts presuppose cooperation and adjustment.
VIII. Judicial Review of Arbitral Awards
8. Limited Review by Swiss Courts
Swiss courts will:
not reassess economic fairness,
not substitute their judgment for the tribunal’s.
Intervention occurs only for:
excess of authority,
violation of public policy.
Case Law 8: SFSC 4A_318/2020
Principle: Strong deference to arbitral discretion
The Court reaffirmed that misapplication of hardship or re-negotiation standards does not justify annulment absent an intolerable outcome.
IX. Typical Patterns in Swiss Arbitration
Swiss tribunals:
reject re-negotiation claims based solely on price volatility,
enforce structured re-opener mechanisms,
sanction stonewalling behaviour,
rarely impose adjusted prices.
X. Key Takeaways
| Issue | Swiss Position |
|---|---|
| General right to re-negotiate | None |
| Arbitrability | Broad |
| Hardship threshold | Extremely high |
| Duty to agree | No |
| Remedies | Mainly damages |
| Judicial review | Very limited |
XI. Doctrinal Summary
Swiss arbitration of re-negotiation requests reflects a strong commitment to contractual stability, tempered by:
enforcement of express re-opener clauses,
strict policing of good faith in negotiation conduct,
exceptional application of hardship doctrine.
Swiss tribunals protect party autonomy by refusing to rewrite contracts, while Swiss courts safeguard finality and predictability of arbitral awards.
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