## Facts

- A. AG and B. N.V. entered an exclusive distributorship agreement in 1992.
- The agreement included an arbitration clause referring to the Zurich Chamber of Commerce rules, the UNCITRAL Arbitration Rules, and the ICC as appointing authority, with a three-arbitrator tribunal.
- In 2002, B. N.V. commenced arbitration in Zurich under the clause; the Zurich institution appointed the chair, and the tribunal was constituted.
- The tribunal issued an order confirming its constitution and setting procedural steps.
- A. AG sought additional time to respond while reserving its position on jurisdiction and then filed a plea of lack of jurisdiction, arguing the tribunal was not constituted in accordance with the clause.
- The arbitral tribunal issued a preliminary ruling affirming its jurisdiction.
- A. AG appealed to the Swiss Federal Tribunal seeking annulment of the preliminary jurisdiction ruling; B. N.V. sought dismissal.

## Issues

1. Whether an arbitration clause becomes invalid when the parties’ agreed mechanism for appointing arbitrators is partially impossible or internally inconsistent.
2. Whether objections to arbitral jurisdiction or tribunal composition are forfeited if not asserted promptly and in good faith.

## Decision

- The Swiss Federal Tribunal dismissed A. AG’s appeal and upheld the arbitral tribunal’s preliminary ruling on jurisdiction.
- The court held that an arbitration clause is not invalid solely because the agreed appointment mechanism cannot be implemented as written, where the parties’ intent to arbitrate is clear.
- The court held that challenges concerning tribunal organization, including composition and appointment, must be raised without delay; untimely objections are forfeited.

## Legal Principles

- A clearly expressed agreement to submit disputes to private arbitration remains effective even if parts of the agreed appointment procedure are unworkable; defective appointment terms may be treated as severable and corrected through applicable law or arbitral rules.
- In Swiss-seated international arbitration, statutory fallback mechanisms may supply a workable method of constituting the tribunal when the parties’ method fails.
- Objections to arbitral jurisdiction and to the tribunal’s constitution must be asserted as early as possible and without delay, consistent with good faith; otherwise, the objecting party may be barred from later relying on those objections in set-aside proceedings.

## Conclusion

The court preserved the parties’ agreement to arbitrate despite defects in the clause’s appointment mechanics and enforced a strict timeliness requirement for challenges to arbitral jurisdiction and tribunal composition.


A. AG v. B. N.V. (In re Arbitral Tribunal of the Zurich Chamber of Commerce), 130 BGE III 66 (Switz. Fed. Trib. 2003)