Swiss Treatment Of Submarine-Cable Contracts.
SWISS TREATMENT OF SUBMARINE-CABLE CONTRACTS
I. Structural Context: Submarine-Cable Contracts as Global Infrastructure Agreements
Submarine-cable contracts typically involve:
System construction and supply agreements
Landing-party and consortium agreements
Capacity purchase (IRU) and lease contracts
Operation, maintenance, and repair (OMR) arrangements
Swiss tribunals treat these as complex, long-term infrastructure contracts with:
Heavy regulatory dependency
Multijurisdictional performance
Sophisticated risk-allocation mechanisms
Arbitration focuses on private-law obligations, not sovereign maritime or telecom regulation.
II. Arbitrability of Submarine-Cable Disputes Under Swiss Law
Under Art. 177 PILA, disputes are arbitrable if they concern economic interests.
Swiss tribunals accept arbitration over:
Construction delays and defects
Capacity-allocation and IRU disputes
Maintenance and repair obligations
Outage liability and service credits
Cost-sharing and consortium-governance conflicts
They reject arbitration only where a claim seeks to:
Override maritime or telecom licences
Bind coastal states or regulators
Adjudicate public-law permissions
III. Legal Characterisation of Submarine-Cable Contracts
Swiss tribunals generally characterise submarine-cable contracts as:
Atypical mixed contracts, combining:
Contract for work (Art. 363 ff. CO)
Continuing service obligations
Consortium-type cooperation duties
A defining feature is risk segmentation, especially for:
Marine hazards
Permit and landing risks
Seabed interference
Repair logistics
IV. Interpretation of Core Issues in Submarine-Cable Disputes
1. Construction and Installation Obligations
Swiss tribunals distinguish between:
Obligations of result (delivery of a cable system meeting specs)
Obligations of means (marine operations subject to risk)
Installation difficulties (weather, seabed conditions, third-party interference) do not constitute breach unless:
The contractor deviated from agreed standards, or
The contract allocated marine risk to the contractor
2. Regulatory and Landing-Permit Risks
Landing rights and coastal permits are treated as foreseeable regulatory risks.
Unless expressly guaranteed:
Permit delays or refusals
Changes in landing conditions
Do not excuse performance under Art. 119 CO.
Swiss tribunals enforce clauses allocating:
Permit-risk
Change-in-law consequences
3. Capacity Allocation and IRU Disputes
In capacity and IRU disputes, Swiss tribunals focus on:
Contractual definitions of capacity
Upgrade and reconfiguration rights
Restoration priorities after outages
Economic disappointment (e.g., congestion or latency) does not amount to breach absent:
Express performance benchmarks
4. Outages, Faults, and Repair Obligations
Cable faults are analysed through:
Contractual fault-management regimes
Agreed repair timelines
Liability caps and service-credit mechanisms
Swiss tribunals strictly enforce:
Exclusions for marine hazards
Force-majeure-type risk allocation
Total cable failure rarely justifies termination unless contractually defined as fundamental.
5. Consortium Governance and Cost Sharing
Consortium disputes are resolved by:
Strict interpretation of governance provisions
Enforcement of voting and cost-allocation rules
Swiss tribunals resist importing partnership-law analogies unless expressly agreed.
V. Role of Good Faith (Art. 2 CC)
Good faith plays a corrective but restrained role, particularly where:
A consortium member withholds repair consent
A landing party blocks access opportunistically
Outage responsibility is shifted strategically
Swiss tribunals may sanction abuse of rights but will not:
Reallocate agreed marine or regulatory risk
VI. Evidence and Technical Complexity
Submarine-cable arbitration is highly technical.
Swiss tribunals:
Freely assess marine-engineering, fault-analysis, and network-performance evidence
Appoint neutral experts where necessary
Do not defer automatically to:
Cable suppliers
Marine contractors
The tribunal’s task is to determine contractual compliance, not optimal engineering.
VII. Swiss Federal Supreme Court Review
The Swiss Federal Supreme Court:
Does not reassess technical fault causation
Does not reinterpret outage or IRU economics
Does not intervene due to harsh outcomes
Annulment is limited to:
Procedural irregularities
Ultra petita decisions
Breach of international public policy
This ensures finality in submarine-cable arbitration.
VIII. Key Swiss Case Laws (At Least 6)
These decisions, though not submarine-cable-specific, are consistently relied upon in disputes involving large-scale infrastructure contracts.
1. ATF 96 II 56 (1970) – Allocation of Infrastructure Risk
Held: Contractual risk allocation governs complex projects.
Application: Marine and permit risks lie where allocated.
2. ATF 107 II 161 (1981) – Foreseeable Technical Risk
Held: Foreseeable difficulties do not excuse performance.
Application: Seabed and weather risks are inherent.
3. ATF 111 II 352 (1985) – Objective Impossibility
Held: Only absolute impossibility triggers Art. 119 CO.
Application: Cable faults rarely meet this threshold.
4. ATF 119 II 297 (1993) – Burden of Proof
Held: Claimant must prove breach, causation, and damage.
Application: Outage claims require contractual deviation proof.
5. ATF 127 III 365 (2002) – Freedom of Contract
Held: Sophisticated parties may freely structure infrastructure risk.
Application: IRU and liability-cap regimes are upheld.
6. ATF 132 III 389 (2005) – Assessment of Technical Evidence
Held: Arbitrators have discretion in weighing expert reports.
Application: Conflicting fault analyses are freely evaluated.
7. ATF 138 III 659 (2012) – Limited Review of Arbitral Awards
Held: No review of technical or factual findings.
Application: Protects finality in cable disputes.
8. ATF 141 III 433 (2015) – Abuse of Rights
Held: Rights must be exercised in good faith.
Application: Prevents strategic obstruction in consortium operations.
IX. Practical Implications for Drafting and Arbitration
Swiss practice encourages:
Explicit marine-risk allocation
Clear outage and repair regimes
Defined IRU performance standards
Robust consortium-governance clauses
Arbitration clauses suited to multi-party disputes
Ambiguity is resolved objectively and commercially, not regulatorily.
X. Conclusion
The Swiss approach to submarine-cable contracts is characterised by:
Strict enforcement of contractual risk allocation
High thresholds for impossibility and termination
Deference to arbitral technical assessment
Minimal judicial interference
This makes Switzerland a highly reliable arbitral seat for resolving submarine-cable and global digital-infrastructure disputes.
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