In the decision reported above, the Swiss Federal Supreme Court dealt with a clause inserted by two co-owners in the rules of administration relating to the building they owned. The clause provided for the appointment of a neutral in the event that the two owners could not reach a unanimous decision in matters relating to their co-ownership; in such event, the neutral’s decision was to stand in lieu of the co-owners’ resolution. Based on such clause, co-owner B initiated arbitration proceedings against co-owner A with regard to the former’s request that the co-ownership initiate court proceedings against the tenant of the building, a company E of which co-owner A was the controlling shareholder. Although the wording of the clause appears at first glance to be restricted to a neutral’s intervention in a function based on contract law similar to that of a third party mandated to amend or adapt the contents of the parties’ contract rather than as an arbitrator acting under the CPC or the PILS, the Federal Court ruled that the clause was to be understood in a broader sense, covering also the essential elements of an arbitration clause with respect to the legal dispute arisen between the two co-owners.
In addition, the Federal Court held that arbitration clauses in by-laws are not only binding on the original members of the legal entity, but also on successive members of the corporate body or the community of co-owners.ASA Bulletin