A decision ex aequo et bono without authority may be incompatible with public policy

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In a recently published French-language decision, the Swiss Supreme Court rejected a motion to set aside an ICC partial award made under article 190(2)(e) of the Swiss Private International Law Act (PILA), which allows parties to challenge awards that are incompatible with public policy.

The underlying dispute concerned a share purchase agreement (SPA) governed by Italian law made between three Italian limited companies (sellers and buyer) for the purchase of the share capital in another Italian limited company (target company) whose subsidiary ran various chemical production plants in Italy.

Contamination was subsequently observed under two of the target company’s facilities and surrounding areas. The buyer initiated ICC arbitration proceedings in Geneva alleging that the sellers had breached the SPA, in which the sellers had warranted that the target company and its subsidiary had complied with relevant environmental regulations.

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