## Facts

- A. SA, a state-owned road entity, and B. SA, a French roadworks company, entered into two construction contracts in 2006 for rehabilitation works on a national road segment.
- The contracts incorporated FIDIC Conditions of Contract for Construction (1999), including Clause 20 establishing a multi-step dispute process: Dispute Adjudication Board (DAB) decision, attempted amicable settlement, then international arbitration.
- The DAB contemplated by the contracts was ad hoc and required party agreement on appointment and member remuneration; the parties never successfully constituted the DAB.
- After completion of at least two contracts, B. SA sought to constitute a DAB in 2011; efforts failed due to lack of agreement and cooperation.
- About fifteen months later, B. SA commenced ICC arbitration seated in Geneva under the 2012 ICC Rules.
- A. SA objected that arbitration was barred because the dispute had not first been referred to a DAB and no DAB decision existed.
- The arbitral tribunal issued a partial award in January 2014 rejecting the objection and affirming jurisdiction.
- A. SA sought to set aside the partial award before the Swiss Federal Supreme Court under Swiss PILA Article 190(2)(b).

## Issues

1. Whether the arbitral tribunal wrongly accepted jurisdiction because the parties did not complete the contractual pre-arbitral DAB step required by FIDIC Clause 20.
2. Whether non-compliance with a multi-tier dispute clause is a jurisdictional defect or an admissibility/procedural matter under Swiss law.
3. Whether an arbitral tribunal may proceed where an ad hoc DAB mechanism becomes inoperable due to the parties’ inability to constitute it.

## Decision

- The court dismissed A. SA’s appeal and upheld the partial award affirming jurisdiction.
- The court held that the absence of a constituted DAB and DAB decision did not deprive the tribunal of jurisdiction reviewable under PILA Article 190(2)(b).
- The court accepted that, where the DAB stage is practically impossible to implement, insisting on it as an absolute bar would risk denying access to binding dispute resolution.

## Legal Principles

- Under Swiss arbitration law, failure to follow pre-arbitral steps in a multi-tier clause generally concerns admissibility (timing/regularity of claims), not the existence of arbitral jurisdiction, unless the clause clearly makes completion a condition to jurisdiction.
- PILA Article 190(2)(b) permits annulment only for incorrect acceptance or denial of jurisdiction in the strict sense; it does not extend to ordinary admissibility disputes framed as jurisdictional objections.
- Multi-tier clauses should be interpreted in good faith to ensure effective dispute resolution; they should not be applied to paralyze arbitration where a preliminary step is structurally or practically inoperable.
- Where an ad hoc DAB cannot be constituted due to lack of agreement on essential elements (including remuneration), an arbitral tribunal may proceed to avoid leaving a party without an effective remedy.

## Conclusion

The Swiss Federal Supreme Court confirmed that a frustrated FIDIC DAB step did not negate the arbitral tribunal’s jurisdiction, treating the pre-arbitral tier as generally admissibility-related and allowing arbitration to proceed when the DAB mechanism could not be implemented.


A. SA v. B. SA, 4A_124/2014 (Switz. July 7, 2014)