## Facts

- X S.p.A. (X) and Y S.r.l. (Y) were Italian companies and direct competitors in the market for stay cables and prestressing cables used in major bridge works.
- On May 26, 1998, X and Y entered a cooperation agreement to submit joint bids for certain bridge works connected to the Milan–Naples high-speed rail line.
- The cooperation was exclusive: each party agreed not to submit independent bids for the covered tenders and not to enter separate arrangements with other firms for those tenders.
- The agreement was governed by Italian law and contained an ICC arbitration clause providing for arbitration seated in Lausanne, Switzerland.
- After the relationship deteriorated, Y initiated ICC arbitration on September 13, 2002, seeking damages (later quantified at roughly EUR 4.25 million) for X’s alleged breach of the cooperation agreement.
- X objected that the cooperation agreement was null and void under Italian and EU competition law and should not be enforced.
- By final award dated September 12, 2005, the ICC tribunal rejected X’s competition-law objections, found the agreement valid, and ordered X to pay Y EUR 488,258 plus interest (and related costs), concluding that X had seriously and intentionally breached its contractual obligations.
- X filed a public-law appeal (set-aside request) to the Swiss Federal Supreme Court, invoking Art. 190(2)(e) of the Swiss Private International Law Act (PILA) and alleging the award violated Swiss international public policy (ordre public) because it enforced an anticompetitive agreement.

## Issues

1. Whether an ICC award seated in Switzerland must be annulled under Art. 190(2)(e) PILA when the arbitral tribunal allegedly failed to apply, or misapplied, Italian and EU competition law.
2. Whether competition-law rules (Swiss, EU, or foreign) belong to the “essential and widely recognized values” protected by Swiss international public policy for purposes of annulment review.
3. Whether the Federal Supreme Court may reassess the arbitral tribunal’s factual and legal analysis of the competition-law objection under the guise of public-policy control.

## Decision

- The Swiss Federal Supreme Court dismissed X’s appeal and refused to set aside the award.
- The court held that alleged errors in applying competition law do not, as such, amount to a breach of Swiss international public policy under Art. 190(2)(e) PILA.
- The court found that competition-law norms, whatever their origin, are not generally part of the limited set of fundamental values protected as Swiss international public policy in annulment proceedings.
- The court reaffirmed that public-policy review is not an appeal on the merits; it does not permit re-litigation of the tribunal’s legal or factual determinations absent a result that is intolerable to the Swiss legal order.

## Legal Principles

- Swiss international public policy under Art. 190(2)(e) PILA is construed narrowly and targets only violations of fundamental legal and moral principles recognized as indispensable to the Swiss legal order in an international setting.
- Competition-law rules (including Italian or EU antitrust law) are not, in general, among those fundamental values; therefore, a tribunal’s alleged failure to apply such rules correctly is ordinarily insufficient to annul an award.
- Annulment review does not function as substantive appellate review: even a serious legal mistake is not enough unless the award’s outcome is manifestly incompatible with core principles protected by ordre public.
- A party invoking public policy must show more than disagreement with the tribunal’s reasoning; it must demonstrate an exceptional, intolerable conflict between the award’s result and the protected fundamental values.

## Conclusion

In *X S.p.A. v. Y S.r.l.*, BGE 132 III 389 (Mar. 8, 2006), the Swiss Federal Supreme Court upheld an ICC award rendered in Lausanne enforcing an exclusive joint-bidding cooperation agreement, rejecting the argument that the tribunal’s alleged misapplication of Italian and EU competition law violated Swiss international public policy; the decision confirms the restrictive nature of Art. 190(2)(e) PILA review and that competition-law errors, without an intolerable outcome, do not justify annulment.


X S.p.A. v. Y S.r.l., 132 Entscheidungen des Schweizerischen Bundesgerichts [BGE] III 389 (Switz. 2006).