Profiting From Political Instability: Switzerland as a “Neutral” Hub for International Commercial Arbitration in the Age of Decolonization (1967-1987)

At the end of the 1960s, the international private arbitration market witnessed a considerable expansion and a growing participation of firms coming from the Global South. This expansion found its origins in the decolonization process and the numerous commercial tensions arising from nationalization attempts. As the use of arbitration became more widespread, the Third World movement criticized this instrument regarded as produced and controlled by Western jurists, as well as bypassing local courts and domestic law. Despite attempts to reclaim this justice through the development of arbitration centers in the Global South, European arbitration centers still dominated the market in the 1970s and 1980s. In this context, Switzerland took real advantage of its “neutral” international reputation to position itself as a very attractive forum to settle North-South commercial disputes. Thanks to original archives from the International Chamber of Commerce and a database of disputes handled by Switzerland (1967-1987), this contribution aims to show how Switzerland managed to occupy this pole position. Among the large volume of disputes between MENA and Western companies settled in Switzerland, Algerian oil-related disputes are a striking example. Between 1967 and 1987, the Algerian state-owned oil company SONATRACH used Swiss arbitration services 27 times for commercial conflicts against Western European and North American firms. For these highly sensitive (post-colonial relationship, energy issues, state-controlled firms), often technical (multiparty arbitration, several substantive applicable laws) and high value disputes (over one hundred million USD), Switzerland was perceived as the perfect choice. Indeed, the Swiss private arbitration forum inherited its reputation of political impartiality from the 1920s and the inter-state arbitration services provided by Swiss jurists following the Treaty of Versailles. More specifically, the active mediation role assured by the Swiss diplomacy during the Algerian independence of 1962 significantly helped the Swiss private arbitration forum to attract these Algerian oil disputes, described as “quasi-mythical ”.