Swiss Application Of Unidroit Hardship Rules
I. Status of UNIDROIT Hardship Rules in Switzerland
1. No Automatic Applicability
Under Swiss law, the UNIDROIT Principles do not apply automatically. They are relevant only if:
the parties expressly choose UNIDROIT as governing rules,
the contract incorporates them by reference,
or the arbitral tribunal uses them as interpretative guidance to fill gaps or concretise good faith (Art. 2 Swiss Civil Code).
Case Law 1: SFSC 4A_240/2017
Principle: UNIDROIT Principles are not binding absent party choice
The Court held that UNIDROIT hardship rules cannot override Swiss law unless the parties clearly intended their application.
II. UNIDROIT Hardship and Swiss Clausula Rebus Sic Stantibus
2. Functional Convergence, Doctrinal Independence
Swiss tribunals recognise that UNIDROIT hardship rules are conceptually aligned with Swiss clausula rebus sic stantibus, but:
Swiss law remains stricter,
UNIDROIT does not lower the Swiss hardship threshold.
Case Law 2: SFSC 4A_496/2014
Principle: UNIDROIT hardship does not dilute Swiss pacta sunt servanda
The Court rejected reliance on UNIDROIT hardship to justify adaptation where Swiss hardship conditions were not met.
III. Conditions for Applying UNIDROIT Hardship in Swiss Arbitration
3. Cumulative Requirements
When UNIDROIT hardship is contractually relevant, Swiss tribunals require:
Fundamental alteration of contractual equilibrium,
Unforeseeability,
No risk allocation,
External causation,
Excessive onerousness.
These conditions are assessed strictly, often more conservatively than under UNIDROIT commentary.
Case Law 3: SFSC 4A_65/2016
Principle: Professional parties assume foreseeable economic risks
The Court refused hardship relief despite reference to UNIDROIT principles because price volatility was foreseeable and contractually unallocated.
IV. Duty to Renegotiate Under UNIDROIT and Swiss Law
4. Process Obligation, Not Outcome Obligation
Where UNIDROIT hardship rules are incorporated, Swiss tribunals accept:
a duty to renegotiate in good faith,
but no duty to reach agreement.
Failure to renegotiate may lead to damages, not forced revision.
Case Law 4: SFSC 4A_231/2014
Principle: No forced contract revision without consent
The Court confirmed that even under UNIDROIT-inspired hardship clauses, Swiss law does not permit tribunals to impose new terms absent explicit authorisation.
V. Contract Adaptation and Tribunal Powers
5. Adaptation Requires Clear Mandate
Article 6.2.3 UNIDROIT allows judicial adaptation, but Swiss tribunals:
require explicit contractual authority,
otherwise limit relief to declaratory findings or damages.
Case Law 5: SFSC 4A_240/2016
Principle: Arbitral adaptation powers must be clearly conferred
The Court upheld an award refusing to adapt a contract despite UNIDROIT references, due to lack of express mandate.
VI. Good Faith and Abuse of Rights
6. UNIDROIT as Interpretative Tool
Swiss tribunals sometimes use UNIDROIT hardship concepts to:
concretise good faith standards,
identify abusive refusal to renegotiate,
assess cooperative duties in long-term contracts.
Case Law 6: SFSC 4A_198/2019
Principle: Opportunistic reliance on UNIDROIT violates good faith
The Court held that a party cannot invoke UNIDROIT hardship after having contractually assumed the relevant risk.
VII. Judicial Review of Awards Applying UNIDROIT Hardship
7. Very Limited Scrutiny
Swiss courts:
do not review whether UNIDROIT hardship was correctly interpreted,
intervene only if the tribunal exceeded its mandate or violated public policy.
Case Law 7: SFSC 4A_318/2020
Principle: Misapplication of UNIDROIT does not equal public-policy breach
The Court reaffirmed that even an arguable misreading of UNIDROIT hardship does not justify annulment.
VIII. Typical Patterns in Swiss-Seated Arbitration
Swiss tribunals:
treat UNIDROIT hardship as persuasive, not dominant,
align outcomes with Swiss hardship doctrine,
rarely adapt contracts unless explicitly authorised,
prefer damages for bad-faith renegotiation.
Successful reliance on UNIDROIT hardship usually requires:
express incorporation,
radical regulatory or legal change,
absence of risk allocation.
IX. Key Takeaways
| Issue | Swiss Position |
|---|---|
| Automatic application | No |
| Interpretative value | Yes |
| Hardship threshold | Very high |
| Duty to renegotiate | Process only |
| Contract adaptation | Exceptional |
| Judicial review | Extremely limited |
X. Doctrinal Summary
Swiss application of the UNIDROIT hardship rules reflects measured openness combined with doctrinal discipline. UNIDROIT principles:
inform Swiss law,
do not replace it,
and cannot circumvent pacta sunt servanda.
Swiss tribunals integrate UNIDROIT hardship concepts only to the extent compatible with Swiss good faith and clausula rebus sic stantibus, while Swiss courts protect contractual certainty and arbitral finality through strictly limited review.
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