Globalisation reaches the Zurich Commercial Court

For many years, Switzerland has enjoyed an excellent reputation as a centre for the settlement of international private law disputes. These are often resolved in the form of arbitration proceedings - Geneva and Zurich are popular arbitration centres. However, many mostly medium-sized companies refrain from contractually providing for arbitration proceedings for potential disputes. They are wary of  the severely curtailed appeal possibilities, comparatively high costs, the need to choose arbitrators and also the extensive evidentiary proceedings. At the same time, the excellent framework conditions available in Switzerland would make it a favourable place of jurisdiction. Institutional stability, neutrality, legal expertise and experience in dealing with international clients can be found here.

The recently adopted amendment to the Swiss Code of Civil Procedure (CCP) enables Swiss companies with international trade relations to make use of the favourable Swiss framework conditions  for proceedings before state courts. The corresponding project of an international commercial court, the so-called "Zurich International Commercial Court", is supported by the Zurich Government Council and the judges at the Zurich Commercial Court.

Revision creates flexibility

The revision of the CCP, which adapts the code to practical requirements that have emerged since its inception, is due to come into force on 1 January 2025 after the referendum deadline expired unused. It creates the necessary legal basis for the introduction of state commercial courts with an international focus. Already hitherto, the cantons were able to establish commercial courts. In Zurich, St. Gallen, Bern and Aargau, such commercial courts have existed for many years. The cantons are now authorised to declare the cantonal commercial court competent in other instances. The prerequisites for this are an amount in dispute of over CHF 100,000, at least one party must be domiciled abroad, the business activity of one party must be affected and the parties must agree to the jurisdiction of the commercial court. The commercial court may then not refuse jurisdiction.

Such international civil proceedings are made even more attractive by the prospect of conducting the proceedings in English, which is also made possible by the CCP revision. The judgement itself can also be drafted in English. Many courts already consider it permissible for parties to submit enclosures to court submissions, such as English contracts or party correspondence, to the court without translation, provided that a translation is offered if found necessary. This demonstrates the familiarity of the courts and parties in litigating in English.

In addition, parties to such international disputes will now have the opportunity of lodging an appeal to the Federal Supreme Court in English, which has already been possible for appeals against arbitration decisions for some time. Only the judgement of the Federal Supreme Court in Lausanne will continue to be issued in an official language.

Switzerland is by no means alone in these endeavours. Singapore, Dubai, Amsterdam, Paris and London, for example, have established state courts that specialise in settling international commercial disputes. Switzerland, with its solid reputation and experience, seems predestined to take on a similarly leading role.

In the Canton of Zurich, litigants in commercial disputes have an efficient and professionally staffed specialised court in the Zurich Commercial Court. The specialised judges come from a wide range of professional fields in the production, services and trade sectors. They can therefore also take industry-specific aspects into account when settling disputes.

Faster to judgement

According to the report of the Zurich High Court for the year 2022, to which the Commercial Court is organisationally affiliated, 72% of all cases pending there are settled within less than a year. More than half of the cases, namely 54% are even settled within six months. In addition, when a commercial court judgement is referred to the Federal Supreme Court, these appeal proceedings are decided comparatively quickly: According to the Federal Supreme Court's report for 2022, almost 90% of all cases were decided within one year, 73% even within six months.

For companies based in Zurich, the Zurich Commercial Court already had jurisdiction for legal disputes. The fact that proceedings will be able to be conducted in English significantly expands its scope. In particular, domestic and foreign parties will be able to influence the language in which proceedings are to be conducted by selecting the appropriate court in their contractual agreements. This will further increase the attractiveness of Zurich as a centre of dispute resolution.