Set-Off Defenses In Arbitration – Conclusions From A Swiss Civil Law Perspective

Set-off situations are frequent in international arbitration and are treated differently in common law and civil law jurisdictions. The present article analyses set-off from a Swiss civil law perspective and offers recommendations to international arbitration practitioners. The key findings are: (i) Set-off declarations may lead to the irrevocable acknowledgment of a countervailing claim. To avoid such a legal consequence, set-off must only be declared as defense in legal proceedings together with an explicit statement that it is only made as a subsidiary submission. (ii) The highest Swiss Court acknowledges a growing trend in international arbitration to generally accept arbitral jurisdiction for set-off defenses. (iii) It appears to be reasonable to ask from a respondent, who relies on procedural advantages in connection with a subsidiary set-off defense, to comply with the applicable procedural requirements (e.g.to pay an