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Urs Feller

Partner

Position: Partner
Practice Areas: Dispute Resolution , Private Clients , Real Estate & Construction , White Collar Crimes & Investigations
Field-Display: Dispute Resolution Maincontact , Private Clients Team , Real Estate & Construction Maincontact , White Collar Crimes & Investigations Maincontact

Dr Urs Feller is head of the Dispute Resolution Team. He acts in complex proceedings before Swiss courts, arbitration tribunals and administrative authorities, including criminal proceedings. He advises clients on contractual and commercial matters, particularly in the area of banking, insurance and compliance, and in administrative and judicial assistance. Urs Feller specializes in insolvency proceedings, restructuring and asset recovery as well as inheritance proceedings. He also advises clients in family and inheritance law matters, such as estate and succession planning, including the execution of wills. He conducts corresponding proceedings for private individuals, trustees and family offices.

E-Mail

+41 44 254 55 55

Linkedin

VCard

Admission to the Bar

Admitted in Switzerland (1999) and in England and Wales (2002, not practising)

Practice Areas

  • Dispute Resolution
  • White Collar Crimes & Investigations
  • Real Estate & Construction

Education

  • Registered Trust and Estate Practitioner STEP (2008)
  • College of Law, London (2001)
  • Universities of Fribourg and Zurich (Dr. iur., 1998; lic. iur., 1997)

Languages

  • German
  • English 
  • French

Memberships

  • Zurich and Swiss Bar Association 
  • International Bar Association
  • Swiss Arbitration Association 
  • The Law Society (England and Wales, not practising)
  • Society of Trust and Estate Practitioners (STEP)

Assistant

Karin Amstein
+41 44 254 55 33
karin.amstein@prager-dreifuss.com

„Skilled lawyer with great experience and sense for detail“ — Legal 500 2020 

„Pragmatic, thorough, experienced and responsive“ — Chambers 2020

„Prominent figure in the market with a top-notch asset recovery practice“ — Who's Who Legal 2020

„Vast experience in international civil and criminal proceedings“ — Who's Who Legal 2020

„Analyses tasks very quickly and efficiently, always focusing on essentials“ — Legal 500 2020

Publications

Subject: Loans / Covid 19
Autor: Urs Feller, Marcel Frey, Thierry Steib
Paper: PD Newsletter
Reading time: 5 Min

Corona exceptions in court or not?

The regulation had a first term of validity until September 30, 2020. Based on the COVID-19 Act of September 25, 2020, the Federal Council has now extended the validity of this regulation until December 31, 2021.

The October newsletter provides an overview of the current status of the temporarily valid provisions.

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Subject: Dispute Resolution
Autor: Urs Feller, Marcel Frey, Nina Lim
Paper: The Lawyer
Reading time: 5 Min

‘One for all’, or arbitration clauses with effect for unconcluded contracts?

Facts of the case

The claimant in the arbitration proceedings (and respondent of the appeal proceedings before the Federal Tribunal), a German manufacturer, sought damages from the South Korea-based defendant (and appellant) in connection with a tender offered dby the claimant for the delivery of thin-film mtransistors. After a lengthy negotiation phase, the defendant was awarded the contract. During the negotiations, the claimant and defendant had exchanged various communication papers, including a corporate agreement (CA), the claimant’s general terms of purchase (ToP) and a quality assurance agreement (QAA). 

While the parties eventually reached an agreement and signed the QAA, neither the CA nor the ToP were ever formally signed. All three contracts contained arbitration clauses in favour of ICC arbitration proceedings with the place of arbitration being in Zurich. After several attempts to reach an agreement on the remaining open issues, the defendant informed the claimant that it was abandoning the project and that the claimant would need to look for another supplier. The claimant refused to accept this, commenced the arbitration and filed dfor damages. In its partial award of June 2019, the tribunal  found that (i) it had jurisdiction and (ii) that the defendant was liable in principle.

Proceedings before the Federal Tribunal

The defendant lodged an appeal requesting the Federal Tribunal to set aside the award by the tribunal, arguing that the arbitral tribunal lacked jurisdiction to adjudicate the dispute. The question to be decided by the Federal Tribunal was whether the arbitration clause contained in the concluded QAA also captured disputes which had their origin in other agreements, which had not actually been signed.

Reasoning by the Federal Tribunal – interpretation of QAA clause

The Federal Tribunal held that when interpreting an arbitration clause, the court must take into account its legal nature. In particular, it needs to be considered that the waiver of recourse to state courts everely restricts the parties’ legal remedies. For this reason, such a waiver may not be assumed lightly. In instances of doubt, the courts must favour a restrictive interpretation of the clause. However, where an interpretation established that the parties’ intent was to exclude state jurisdiction, but there existed disagreement regarding the details of the arbitration procedure, the principle of utility needed to be applied; i.e. once it is established that the parties did agree to vest jurisdiction in an arbitral tribunal, there is no reason to interpret an arbitration clause narrowly.

The Federal Tribunal went on to find that the interpretation of an arbitration clause follows the generally applicable principles of interpretation governing private declarations of intent. Firstly, the common and actual intent of the parties had to be ascertained. Where an actual intent could not be ascertained, the arbitration clause had to be interpreted based on the principle of reliance; i.e. the presumed intent of the parties needed to be determined based on what could and should have been understood by the respective declarations in good faith under the prevailing circumstances.

In the case at hand, the arbitration clause in the QAA provided that “contract disputes” had to be submitted to arbitration. According to the Federal Tribunal, the term “contract disputes” did not mean that the parties only wanted to submit disputes arising directly from the QAA to arbitration, but that disputes concerning the actual obligation to deliver the transistors were also included. Even though the parties had also envisaged arbitration clauses in the CA and ToP, this did not mean that the parties intended to introduce separate dispute resolution mechanisms for each separate claim.

On the contrary, the Federal Tribunal found that from an objective point of view, the parties had intended to subject all issues arising out of the delivery relationship to arbitration. The appeal was therefore rejected.

Conclusion

Even if not all contracts within a larger contractual framework are actually signed, counsel should be aware that an arbitral tribunal may well find dthat it has jurisdiction over all disputes arising from the entire business relationship.

More...
Subject: Dispute Resolution
Autor: Urs Feller
Paper: IBA Litigation Newsletter

IBA Annual Conference report Seoul 2019 "Litigation crisis management"

Urs Feller provides a brief Conference report on the Litigation crisis management session which was held at the IBA Annual Conference 2019 in Seoul.

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Subject: Loans / Covid 19
Autor: Urs Feller, Marcel Frey, Thierry Steib
Paper: PD Newsletter

Consequences of coronavirus on Swiss civil proceedings

On the basis of its constitutional authority to legislate by issuing direct orders to maintain public order, the Swiss Federal Council on April 16, 2020 enacted a COVID-19 regulation affecting prevailing judiciary and procedural rules. The regulation sets out the possibilities and requirements for Swiss civil courts to make use of audio and video conferencing instead of the ordinary conduct of proceedings in person as ordinarily prescribed by the Swiss Code of Civil Procedure. These provisions came into effect on April 20, 2020 and are meant to stay in force until September 30, 2020.

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Subject: Dispute Resolution
Autor: Urs Feller, Marcel Frey
Paper: The Lawyer
Reading time: 5 Min

Admissible and Inadmissible complaints in Swiss Arbitration

Facts of the matter

A Turkish company (Respondent 2) had undertaken to supply 60 armoured vehicles to a department of the Turkish Interior Ministry. Respondent 2 appointed another Turkish company (Respondent 1) as its subcontractor. The latter in turn commissioned an Israel-based company, (the Claimant) to develop, manufacture and supply these vehicles. 

The agreement between Respondent 1 and the Claimant contained an arbitration clause and a choice of law in favour of Swiss law. Owing to a later amendment agreement, respondent 2 was joined to the contract as a further party. Thereafter, differences sof opinion arose about the performance of the contract and Claimant initiated arbitration proceedings against both Respondents. The Respondents and the Claimant brought the award before the Swiss Supreme Court.

Proceedings before the Supreme Court

The Claimant argued that the arbitral tribunal had made an award extra petita. It claimed that it had requested a declaratory judgment on whether the Respondents were jointly and severally liable for the damages resulting from alleged breaches of contract. Rather than issuing a declaratory award, the Claimant argued that the tribunal had awarded damages in the amount of $1.6m, although this had never been pleaded by the Claimant.

The Supreme Court differentiated dthat a decision was not ultra or extra petita where a tribunal merely assesses differently ythe claim being sued for, so long as the award remains covered by the pleas. At the same time, the arbitral tribunal was bound by a limitation made by a party in its request. A tribunal thus decides extra petita where it orders performance instead of issuing a declaratory award. The Claimant’s appeal was upheld in this regard.

The Claimant had also argued that it had requested a determination of the Respondents’ liability for damages resulting from the use of know-how in breach of the agreement. However, the tribunal had – in the view of the Claimant – gone beyond that plea by examining the existence of damages. The Claimant argued that the tribunal should have ended its examination after having found a breach of contract, since otherwise it would have assessed a claim for damages that had not been submitted.

In this regard, the Supreme Court found that the Claimant’s argument did not hold. It found that the award by the tribunal criticised by the Claimant, “the Tribunal declares that: […] the Respondents are not liable to compensate the Claimant in respect of such infringement of IP Rights and Know How related to the Vehicle”, could 
not be deemed to constitute an unsolicited performance award. Rather, the Supreme Court found that by issuing a negative declaratory decision, a competence not disputed by the Claimant, the tribunal was well within the plea of the Claimant. The court held that the Claimant had only criticized the reasoning of the arbitral award. This, however, did not amount to a violation of the principle “ne eat iudex ultra petita partium”.

Conclusion

Though occurring rarely (less than 10 per cent of the matters brought to the Supreme Court), this case is one of the few instances where the Supreme Court stepped in and set aside certain parts of a Swiss arbitration award. One should note that the grounds for the Supreme Court to intervene in arbitration matters are very limited: (i) incorrect constitution of tribunal, (ii) wrongful acceptance or refusal of jurisdiction, (iii) ruling on an issue not submitted, (iv) violation the principle of equal treatment of the parties, or (v) of international public policy. So once rendered, Swiss arbitration awards are tough to turn over – a certainty sought by many parties resorting to arbitration.
 

More...
Subject: Dispute Resolution
Autor: Urs Feller, Marcel Frey, Bernhard C. Lauterburg
Reading time: 30 Min
Paper: Thomson Reuters Practical Law

Litigation and enforcement in Switzerland: overview

Main dispute resolution methods

1. What are the main dispute resolution methods used in your jurisdiction to resolve large commercial disputes?

In Switzerland, large commercial disputes are usually brought before the ordinary courts or, particularly in international contexts, settled through arbitration.

Mediation is sought occasionally, however still to a lesser extent (see Question 30). The cantons of Zurich, Berne, Saint Gallen and Aargau have long-established, specialised, efficient and highly regarded commercial courts (Handelsgericht) which attain high settlement rates (see Question 3).

Ordinary proceedings before the Swiss courts are adversarial in nature. The court manages the timeline and the evidence procedure. It forms its opinion based on its free assessment of the evidence taken. As a rule, a claimant will succeed with its claim if it can fully convince the court of all factual requirements of its entitlement.

Before the state courts, there is no availability for online dispute resolution.

Court litigation

Limitation periods

2. What limitation periods apply to bringing a claim and what triggers a limitation period?

Limitation periods are a matter of substantive civil law, most of which are found in the Code of Obligations (CO).

Recently, the Federal Government made proposals to simplify and harmonise the limitation periods. Legislation has been amended accordingly (see also Question 35). The revised CO comes into effect at the beginning of 2020.

The revised CO provides for the following limitation periods:

  • A general statutory limitation period of ten years for all claims (unless federal law prescribes a different limitation period).
  • Five years for claims which by their nature require quick settlement, such as claims:
    • for rent, interest or other periodic payments;
    • by tradesmen, craftsmen and for medical treatment;
    • relating to the sale of foodstuffs and payments for board and lodging;
    • relating to the work of tradesmen and craftsmen but also legal counsel and notaries;
    • of employees.
  • Tort claims will become time-barred after three years calculated from the day on which the injured party has knowledge of the damage and the injuring party. A tort claim will become unenforceable owing to the statute of limitations after ten years from the date of injury. Where a criminal action coincides with the wrongful death and bodily injury, the latest time of assertion for a claim to be made is twenty years after the injury. Where a tort claim is derived from an offence for which the criminal law envisages a longer limitation period, the longer period is also applicable to the tort claim.
  • Claims based on unjust enrichment also become time-barred after three years after the date on which the injured party becomes aware of its claim, but in any event, ten years after the claim first arose.

Court structure

3. In which court are large commercial disputes usually brought? Are certain types of disputes allocated to particular divisions of this court?

The Code on Civil Procedure requires the cantons to provide a double instance system within their judiciary. All cantons must establish a higher court for first (full) appellate review of first instance cantonal judgments. First and second instance courts are usually comprised of a three-member bench. There are no trials by jury. Commercial disputes are usually brought before the commercial court (see below), if such a special court is established in the canton in which the defendant is resident.

The highest court in Switzerland is the Federal Supreme Court (Supreme Court), which can review, in law, final judgments of the cantonal high courts.

Exceptions to the principle of double instance at cantonal level apply in the following circumstances.

Commercial Court

Under the Code on Civil Procedure, the cantons are free to set-up a commercial court with sole jurisdiction for commercial disputes in their territory. Decisions by such commercial courts are appealable only to the Supreme Court. A dispute is deemed commercial if all the following conditions are satisfied:

  • The dispute concerns the commercial activity of at least one of the parties.
  • The decision is appealable to the Supreme Court owing to the amount in dispute, that is at least CHF30,000.
  • The parties are registered in the Swiss commercial register or a similar foreign registry. Where only the defendant is registered in the commercial register, a claimant can choose to lodge its suit either before the commercial court (where the canton has established one) or with the competent ordinary first instance court.

Sole cantonal instance

As a matter of federal law, the cantons must designate within their court system a court of exclusive first instance jurisdiction for disputes relating to certain specialised areas of law, such as:

  • Certain intellectual property rights.
  • Competition law and unfair competition.
  • The use of company names.
  • Claims against the federal government.
  • Claims relating to collective investment schemes.

Patent claims

The federal legislator has also established the Federal Patent Court to serve as a court of exclusive first instance jurisdiction for the whole of Switzerland in relation to patent infringement and patent validity matters.

The answers to the following questions relate to procedures that apply in the ordinary civil courts.

Rights of audience

4. Which types of lawyers have rights of audience to conduct cases in courts where large commercial disputes are usually brought? What requirements must they meet? Can foreign lawyers conduct cases in these courts?

Rights of audience/requirements

In principle, Swiss courts do not require a party to be represented by an attorney. However, owing to the complexity of procedural rules, most parties in commercial disputes seek professional counsel to assist them.

Attorneys registered with one of the cantonal attorney registers can appear before any Swiss court. To register, attorneys must be admitted to the bar in one of the Swiss cantons.

Foreign lawyers

Attorneys from an EU member state or the European Free Trade Association (EFTA), who have registered with an EU or EFTA attorney register, can appear before Swiss courts either:

  • Temporarily, based on the freedom to provide services. The EU or EFTA attorney is free to provide services without registration if done for 90 days per year or less in Switzerland. Professional activities lasting longer than 90 days require the EU or EFTA attorney to co-operate with a registered Swiss attorney.
  • Permanently, if they register with the attorney register at the place where they practise. The EU or EFTA attorney can then practice freely, provided he or she appears before the Swiss court under his or her original EU or EFTA title.
  • An EU or EFTA attorney can also register in one of the cantonal attorney registers and adopt the local title if he or she has practised in Switzerland for three years under his or her original title or has passed a qualification exam.

Fees and funding

5. What legal fee structures can be used? Are fees fixed by law?

Attorneys ' fees can be freely arranged between lawyers and their clients and hourly rates depending on the experience level are the norm. Contingency fees are not permitted. However, conditional fee arrangements providing for a bonus in the case of successful litigation are permitted if the base fee for the attorney provides a reasonable income. Moreover, such an agreement needs to be made at the very beginning of the matter or after the matter is concluded. Party costs and court fees are calculated according to cantonal statutory rules and depend on the value in dispute.

6. How is litigation usually funded? Can third parties fund it? Is insurance available for litigation costs?

Funding

Parties usually finance litigation privately. If successful, a party may recover costs from its opponent. Cost calculations are based on cantonal statutory tariffs and may not fully cover actual expenses.

A party can apply to the court to waive its court fees and to have a state-funded attorney assist it if it does not have sufficient funds to cover proceedings in addition to its basic needs, and the court does not view the matter as futile. A new application must be submitted for appeals proceedings.

There are a few third-party funding providers in Switzerland and their services are becoming increasingly popular. Their services usually involve handing over a share of the claimed amount in successful proceedings. Such services are permitted as long as the attorney remains independent and free from influence in the execution of his/her mandate. Furthermore, the lawyer is not allowed to participate in the funding. The Supreme Court has found that informing a client about the options of third-party funding can form part of the diligent performance of their mandate.

Insurance

Legal insurance is increasingly popular. Several large, and some specialised, insurance companies offer insurance for litigation costs.

Court proceedings

Confidentiality

7. Are court proceedings confidential or public? If public, are the proceedings or any information kept confidential in certain circumstances?

The Code on Civil Procedure requires civil law court proceedings and the delivery of judgments to be public. However, public interest in commercial cases is usually limited. Copies of judgments of the second instance courts and the Federal Tribunal can be requested by anyone and are frequently published online (in anonymised form). Briefs and documents filed by the parties and the court 's deliberations are kept confidential. The court is authorised to partially or entirely exclude the public from certain proceedings (such as family matters) if this is in the public interest or, on application by a party, in the protected interest of a concerned person (for example, trade secrets). Pre-trial conciliation hearings and judicial settlement hearings are not open to the public.

Pre-action conduct

8. Does the court impose any rules on the parties in relation to pre-action conduct? If yes, are there penalties for failing to comply?

There are no specific pre-action conduct rules, except that the parties must personally attend the conciliation hearing before the conciliation authority if both:

  • A conciliation hearing is required by statute.
  • Their place of residency or incorporation is in the same canton as the place where the conciliation hearing takes place.

Failure of the defendant to attend the conciliation hearing has no direct consequences but merely entitles the claimant to receive the authorisation to proceed and to bring its claim before the court. A party failing to institute compulsory conciliation proceedings will not be admitted by the court with its claim.

Main stages

9. What are the main stages of typical court proceedings?

Starting proceedings

Court proceedings normally start with a request for a conciliation hearing before the conciliation authority, causing lis pendens (suit pending). Whilst request by e-mail submission are possible using a specialised software by the post, most requests for conciliation are still submitted in hard copy.

A claimant must file the lawsuit directly with the competent court without first requesting a conciliation hearing, among other things, in cases where:

  • The dispute must be brought before a sole cantonal instance (see Question 3, Sole cantonal instance).
  • Divorce proceedings are at stake.
  • Proceedings concern certain actions filed under the Federal Debt Enforcement and Bankruptcy Act or in summary proceedings (applications for provisional measures such as the seizure of property and freezing of bank accounts).
  • A court has ordered a claim to be filed within a certain time period.

A claimant can also forego the conciliation proceedings if the defendant has a foreign domicile.

The conciliation request must include the name of the defendant, the remedy sought and a general description of the matter in dispute. If the parties fail to agree on a settlement, the conciliation authority will issue the authorisation to proceed permitting the claimant to bring the dispute before the competent district court within three months. Failure to submit the statement of claim within three months has no res judicata consequence. However, a claimant would have to go through the conciliation procedure again before he can take the matter to court.

Notice to the defendant and defence

Once the claimant has submitted the statement of claim, the court sends a copy of the statement to the defendant and usually orders the claimant to advance the court fees. After payment, the court orders the defendant to file a statement of defence within 20 days. Filing periods can be extended twice on reasoned application for further periods of 20 days depending on the complexity of the matter. Occasionally, the court will set one single long (unextendible) deadline.

If the defendant fails to submit a statement of defence in time, the court will either:

  • Grant a short extension to the defendant and, in the case of a repeated failure to submit a statement of defence, proceed to the main hearing.
  • If the matter is ready for decision, render its judgment.

Subsequent stages

The subsequent stages of proceedings normally take place by exchange of written, non-electronic filings as hard copy records are required by the courts.

A claimant has the right to reply to a statement of defence. The timing of reply and the method of presenting it depend on how the court intends to proceed in the matter. If the court deems it necessary, it can do one of the following:

  • Order the parties to file a written reply and rejoinder respectively.
  • Schedule a preparatory hearing where the parties submit their reply and rejoinder orally.
  • Directly proceed to the main hearing with the parties submitting their reply and rejoinder orally.

The parties can introduce new facts and evidence with their reply and rejoinder.

Litigants should be aware that pleading new facts and introducing additional evidence at the main hearing is only permitted under very limited circumstances if a second exchange of briefs or a preparatory hearing with oral reply and rejoinder preceded the main hearing.

In relation to contentious facts, the court allocates the burden of proof according to substantive law and specifies which means of evidence will be permitted (for example, party statements, documents, witness testimony and expert opinions). On closing of the evidence hearing, the parties submit their closing arguments including a single rebuttal, following which the court renders its decision. At any stage of the proceedings, the court can propose the parties to hold settlement talks. The Commercial Court of the Canton of Zurich has a standing practice of holding intense settlement talks after the first exchange of briefs and manages to settle about two-thirds of all cases coming before it.

Interim remedies

10. What steps can a party take for a case to be dismissed before a full trial? On what grounds can such applications be brought? What is the applicable procedure?

Conditions for trial

A court will only hear a dispute if it enjoys jurisdiction (both in relation to the subject matter and locality), which it examines ex officio. The court also examines at the outset whether the suit has been properly lodged (that is, following conciliation hearings) and whether the correct type of proceeding (ordinary, summary or simplified proceeding) has been chosen. If any of these conditions are not satisfied, the claimant is normally granted a short period of time to rectify any remediable mistakes and to re-file the claim. Otherwise, the case is not admitted.

Preliminary questions

The court can, on application and at its discretion, render a judgment on a contested preliminary question (for example, jurisdiction or the standing of a party) if this may result in substantive cost and time savings. Typically, such preliminary issues will turn on jurisdiction or prescription matters. These judgments must be appealed immediately.

11. Can a defendant apply for an order for the claimant to provide security for its costs? If yes, on what grounds?

Unless an applicable treaty provides otherwise, the defendant can apply to the court to order the claimant to provide security for its costs if one of the following applies:

  • The claimant has no domicile or registered office in Switzerland.
  • The claimant appears insolvent.
  • The claimant still owes court or party costs from a previous trial.
  • Other reasons exist indicating that defendant 's costs may be at risk.

International treaties may prohibit Swiss courts from requiring a claimant to secure costs. For example, the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 2007 does not permit the court to order security for the defendant 's costs if the claimant has no domicile or registered office in Switzerland.

12. What are the rules concerning interim injunctions granted before a full trial?

Availability and grounds

Interim relief can be sought before proceedings begin or at any later stage during the proceedings. If interim relief is sought before lis pendens, the court sets a deadline for the petitioner to file suit (no conciliation proceedings required). Swiss law distinguishes between interim relief measures aimed at securing monetary claims and measures dealing with non-monetary matters.

Claims for money may be secured by applying for an attachment order under the Federal Debt Enforcement and Bankruptcy Act (see Question 13, Availability and grounds). All other interim measures are governed by the Code on Civil Procedure. For the latter, the applicant must credibly show, but not prove, both that:

  • There is a realistic and imminent threat of, or actual injury, causing irreparable harm unless the injunction is granted.
  • The underlying cause of action is likely to prevail on the merits.

The court can order the applicant to post security.

Interim relief can take the form of mandatory or prohibitory interim injunctions, such as:

  • A cease and desist order.
  • An order to perform an action or rectify a situation.
  • An order prohibiting a person from disposing of certain items.
  • An order that certain entries be taken on record in a public registry.
  • An order to a bank that certain bank accounts be frozen.

Prior notice/same-day

Normally, a request for interim relief is followed by a hearing at which the court renders its decision. In urgent cases, interim relief may be ordered by the court in ex parte proceedings, usually within 24 hours. If such order is granted, it is followed by an oral hearing at a short notice.

Mandatory injunctions

Mandatory interim injunctions are available in addition to prohibitory interim injunctions (see above, Availability and grounds).

Right to vary or discharge order and appeals

Interim orders by a first instance court are subject to appeal to the cantonal high court. The defendant can request the discharge or modification of the order. A high court decision can be further appealed to the Federal Tribunal if either:

  • The appellant was otherwise to suffer harm, which would be difficult to rectify if the appeal was not granted.
  • The decision by the Federal Tribunal can immediately lead to a final decision, thereby avoiding long and costly evidence proceedings.

13. What are the rules relating to interim attachment orders to preserve assets pending judgment or a final order (or equivalent)?

Availability and grounds

To secure monetary claims before a trial or in debt enforcement proceedings, creditors can apply for the attachment of a debtor 's assets for the whole territory of Switzerland. Creditors must show to the court:

  • That they have outstanding debts against the debtor.
  • The existence of a statutory ground for attachment.
  • The existence of assets and their location.

There are six grounds on which attachment of assets can be sought:

  • The debtor has no permanent residence in Switzerland.
  • The debtor is attempting to conceal assets or is planning to leave Switzerland to evade the fulfilment of its obligations.
  • The debtor is travelling through Switzerland or conducts business on trade fairs, if the claim must be settled immediately.
  • The debtor does not reside in Switzerland and no other ground for attachment is available, if the claim has sufficient connection with Switzerland or is based on recognition of debt.
  • The creditor holds a provisional or definitive certificate of shortfall against the debtor.
  • The creditor holds a definitive enforceable title permitting him to have any objection by the debtor set aside (definitiver Rechtsöffnungstitel).

Unless the creditor has already commenced debt enforcement proceedings (Betreibung) or filed an action to obtain an enforceable title, he must do so within ten days of service of the copy of the attachment order. If the debtor objects to the summons to pay, the creditor must, within ten days of service of the objection, request the court to have the objection set aside or pursue his claim in ordinary court proceedings.

Prior notice/same-day

Attachment orders are granted by the court without notice to the other party. The other party must file an objection within ten days of learning of the attachment.

Main proceedings

In the main enforcement proceedings (Rechtsöffnungsverfahren), the applicant must demonstrate that their title, based on which they are seeking enforcement of their claim, is valid. The debtor 's challenges are limited to arguments that the claim has in the meantime been discharged, deferred or has lapsed.

If attachment is sought based on a decision rendered by a competent court of a Lugano Convention signatory state, the Swiss court seized with the request for attachment will in the same proceeding also render a decision on the enforceability of the foreign judgment without hearing the other party. The other party can then file an objection against:

  • The declaration of enforceability within 30 days (if resident in Switzerland) or 60 days (if resident in another Lugano Convention signatory state).
  • The attachment within ten days of learning of it.

Preferential right or lien

An applicant who has secured the attachment of assets does not enjoy preferential rights or lien in relation to the attached property. An applicant must follow the ordinary debt enforcement process like any other creditor. However, if another creditor demands seizure of the assets before the applicant is in a position to do so, the applicant automatically and provisionally takes part in the seizure of property.

Damages as a result

An applicant is liable for damages incurred by the debtor as a result of an unjust attachment order.

Security

The court can demand that the applicant post security.

14. Are any other interim remedies commonly available and obtained?

In principle, only those interim remedies described in Question 12 and Question 13 are available. In certain areas of law (for example, family law, trust and estates), further remedies are available.

Final remedies

15. What remedies are available at the full trial stage? Are damages only compensatory or can they also be punitive?

The final decision of the court can order the defendant to either:

  • Pay damages.
  • Perform specific actions or desist from certain actions.

A declaratory judgment is also possible.

The amount of damages awarded to a claimant must compensate his or her loss (including interest) and cannot be punitive in nature. However, the court can, under certain circumstances, award reparations that do not correspond to the actual damage suffered. These remedies are limited to disputes involving bodily harm and emotional distress.

The standard of proof for damages does not differ from the standard of proof applied in other areas of law. A claimant will need to demonstrate to the full conviction of the court the damages suffered in actual monetary terms. The court must be convinced, based on objective reasons, that the damages occurred in the claimed amount, and any doubts in this regard must be insignificant. In limited cases, where the damages cannot be quantified, the claimant may request the court to estimate the value of the loss or damage at its discretion. The court will estimate damages in such instances in the light of the normal course of events and the steps taken by the injured party.

Evidence

Document disclosure

16. What documents must the parties disclose to the other parties and/or the court? Are there any detailed rules governing this procedure?

Parties to the trial and third parties must assist the court with the discovery of the facts of the dispute. Legal entities are subject to the same rules applicable to individuals.

Evidence is produced either with a legal brief or on order by the court. Before initiating proceedings, the court may order a precautionary taking of evidence if the applicant shows prima facie evidence of an interest worthy of protection or has a statutory right to evidence. However, the applicant must pay for the court fees involved with the taking of evidence. There is no US style pre-trial discovery in Switzerland.

During trial, a party can request the court to order the other party or a third party to disclose certain specifically identified documents (written documents, drawings, plans, photographs) or electronic data in its possession. There is no distinction between documents held electronically or otherwise.

The court will grant such a request if it decides that the evidence is necessary to establish legally relevant facts of the case and will prescribe a deadline for the production of the requested evidence. General requests for document production are not permitted (no "fishing expeditions"). The burden of proof as to the concerned document 's authenticity lies with the party wishing to draw a legal conclusion from the facts alleged in the document.

Trial parties, third parties and witnesses do not need to testify and are entitled to withhold documents if they can invoke a statutory privilege (for example, attorney-client confidentiality (see Privileged documents)) or have a particularly close personal relationship to a party (for example, being directly related or married). A party refusing to disclose documents without justification cannot be sanctioned but may bear the consequences of adverse consideration of the evidence. Failure by a third party to co-operate with the court may be punishable by a fine.

Documents are normally submitted in hard copy and are sometimes supplemented by a set of electronic documents.

Privileged documents

17. Are any documents privileged? If privilege is not recognised, are there any other rules allowing a party not to disclose a document?

Privileged documents

Lawyer-client privilege only extends to lawyers registered in the cantonal lawyers register. There is no privilege for in-house counsel. However, all correspondence relating to, and prepared in the course of, a specific mandate to or from external professional counsel (including patent attorneys) is protected by privilege, irrespective of its location. This also applies to proceedings before the competition authorities and the Swiss Financial Supervisory Authority.

The notion of "without prejudice" is not a matter of statutory privilege, but a principle generally recognised by the courts when communication made in the context of genuine settlement negotiations is at issue (see below, Other non-disclosure situations).

Other non-disclosure situations

A party may be entitled to withhold documents if it has a particularly close relationship to the party to the proceedings (see Question 16).

During settlement discussions, parties frequently circulate proposals which they do not want to be used in subsequent court proceedings (without prejudice). Parties can maintain and need to indicate clearly that these documents are without prejudice to their position in later court proceedings if settlement negotiations fail. Courts respect the parties ' agreement, provided their intention is clearly expressed in their earlier correspondence.

Examination of witnesses

18. Do witnesses of fact give oral evidence or do they only submit written evidence? Is there a right to cross-examine witnesses of fact?

Oral evidence

Witnesses give oral evidence under the threat of criminal punishment if they give false testimony. If the witness fails to appear, he may be summoned or sanctioned with a fine. Witness statements are not common in Switzerland; however, in exceptional cases the court may admit a signed witness statement as a physical record. The court can obtain information in writing from a private person if it does not consider it necessary to examine this person as a witness.

Right to cross-examine

There is no specific right to cross-examine. However, following the initial interrogation by the judge, each party can put additional questions to the witness either:

  • Through the judge.
  • Directly to the witness, with authorisation by the judge.

However, these additional questions must not go beyond the issues on which the court heard testimony, and therefore solely serve to clarify the issues on which the court heard testimony. Questions that go beyond these issues, or repeat questions already asked by the judge, are not permitted.

The Code on Civil Procedure also allows a court to put witnesses against each other and against the parties.

Third party experts

19. What are the rules in relation to third-party experts?

Appointment procedure

Where the court concludes that expert knowledge or a technical assessment of factual evidence is required, it can appoint one or several experts, if requested to do so by a party or of its own accord. The parties can express their opinion on the court 's choice of an expert and make their own suggestions before the appointment, if requested to do so by the court. Any evidence, including where a party wants to rely on an expert witness, must be disclosed at the evidence stage at the latest.

Role of experts

Court-appointed experts act on behalf of the court and are subject to the same rules on conflicts of interest as judges. Specialist opinions given by experts at the request of the parties are considered by the court as party explanations and have no added weight.

Right of reply

The parties can comment on the questions posed to the expert and request other or further questions to be posed to the expert. The parties are entitled to comment on the expert 's conclusion and can under certain circumstances request the appointment of a new expert.

Fees

Costs for expert fees must be advanced by the party requesting the expert opinion. If both parties request an expert opinion, the advance may be split equally among the parties. The court takes into consideration the burden of proof when deciding which party must advance the costs. Expert fees are added to the court fees at the end of proceedings and are borne by the unsuccessful party (see Question 22). Alternatively, they can be split proportionally among the parties, reflecting the parties ' varying degrees of success.

Appeals

20. What are the rules concerning appeals of first instance judgments in large commercial disputes?

Which courts

Judgments rendered by a district court can be appealed to the higher cantonal court with the possibility of a further appeal to the Supreme Court if either:

  • The amount in dispute is at least CHF30,000.
  • A legal issue of major importance is at stake.

Judgments rendered by a commercial court (for the cantons that have established commercial court, see Question 1) can only be appealed to the Supreme Court.

Other than these requirements, there are no further conditions for bringing an appeal. In particular, the appellant does not need permission to bring an appeal.

Grounds for appeal

The higher cantonal court has full review competence on questions of law and of fact. The Supreme Court 's review is in general limited to breaches of federal law (see also Question 3).

Time limit

Judgments of district courts must be appealed within 30 days. Judgments of the higher cantonal courts and those of the commercial courts must also be brought before the Supreme Court within 30 days. In summary proceedings, the time limit for bringing an appeal is only ten days.

Class actions

21. Are there any mechanisms available for collective redress or class actions?

Typical class actions are not possible under Swiss law. Claims must be brought by individual claimants. An exception exists for associations and other organisations of national or regional importance that are authorised by their articles of association to protect the interests of a certain group of individuals (for example, certain organisations whose mandate is to protect nature and heritage, or consumer interests). These bring a group action (Verbandsklage) in their own name for a violation of the personal rights of the members of such group.

Where an injury to these interests is alleged, the association can request that either:

  • The damage be prevented or removed.
  • The court acknowledges that the harm has occurred.

However, note that the group action (Verbandsklage) is not a widely used instrument and the Federal Supreme Court only recently dismissed a group action launched by a consumer association for lack of standing. Currently, discussions in Parliament are underway to revise and improve group action (Verbandsklage) (see Question 35).

Several claimants can file a suit against a single defendant. Depending on whether the claimants are required by law to proceed together or not, the Code on Civil Procedure contains differing provisions in relation to the effect of each claimant 's submissions on other claimants.

In addition, several claimants basing their claims on the same set of material facts can bring their suits before the court individually and request a stay in all but one of the proceedings until a lead judgment is rendered by the court.

Costs

22. Does the unsuccessful party have to pay the successful party 's costs and how does the court usually calculate any costs award? What factors does the court consider when awarding costs?

The losing party is ordered to compensate the successful party for the costs of representation. If a party is successful in part, a proportionate payment is ordered. Procedural costs include:

  • The court 's costs.
  • The winning party 's costs. This includes the necessary outlays (for example, travel expenses and, in some cases, expert reports), the costs for professional representation and, in justified cases, reasonable compensation for personal efforts if a party is not professionally represented.

Under the Code on Civil Procedure, the cantons have kept their competence to set the tariffs by which the cantonal courts calculate the court and party compensation fees. Therefore, court fees and party compensation fees may differ among the cantons. Litigants should be aware that the cantonal fee schedules:

  • May not necessarily be in line with lawyer 's fees.
  • Give courts a wide discretion in setting their own fees and awarding compensation for costs.

Therefore, in practice, successful litigants will often only be compensated partially.

The Code on Civil Procedure only contains a few general rules on the matter. It authorises courts to request advance payment of the expected court fees of a claim before starting proceedings. Additionally, the Code on Civil Procedure provides that the claimant may be ordered to post security (either in cash or in the form of a guarantee from a bank with a branch in Switzerland or from an insurance company authorised to operate in Switzerland) for the respondent 's party costs. This is particularly where the claimant has no residence or registered office in Switzerland, or a possible payment of compensation for the respondent 's party costs is at risk.

Accordingly, foreign claimants need to be aware that litigating in Switzerland normally requires payment of an advance of the expected court fees and posting of a security for the respondent 's party costs at the outset, provided there is no treaty in place between the place of residence of the claimant and Switzerland (for example, the 1954 or 1980 Hague Conventions on Civil Procedure or International Access to Justice, or a bilateral agreement, excluding such requirement by reason of their not being domiciled in Switzerland).

In relation to appeals proceedings before the Supreme Court, the cost award is calculated according to a regulation issued by the court itself. The following factors, among others, are considered in deciding the final cost award:

  • The claim amount.
  • The complexity of the matter.
  • The duration and stages of the proceedings (pleadings, hearings, evidence and settlement negotiations).

The courts rarely take pre-trial offers into account.

23. Is interest awarded on costs? If yes, how is it calculated?

If the unsuccessful party is ordered to pay a certain amount, the interest on that amount that has accrued up to that date is included in the cost order. From the date of the judgment, the successful party can also demand payment of interest at the statutory rate of 5% per year.

Enforcement of a local judgment

24. What are the procedures to enforce a judgment given by the courts in your jurisdiction in the local courts?

Enforcement procedures depend on whether a party has been ordered to pay damages or perform a specific act. Judgments ordering the payment of damages are enforced under the Federal Debt Enforcement and Bankruptcy Act. The party with the judgment in its favour can start summary enforcement proceedings by requesting the court to set aside the opposition the defendant raised against the payment summons and to order the continuation of enforcement through the attachment of goods (for natural persons) or bankruptcy proceedings (for legal persons).

Judgments for specific performance are enforced under the Code on Civil Procedure and must also be requested in summary proceedings with the enforcement court at the place of residency (for natural persons) or at the place of registered office (for legal persons). Enforcement requests can also be brought at the place where these measures are to be executed or where the original judgment was rendered.

The claimant must submit the documents showing that his claim is enforceable. The judge then orders the obliged party to effect performance under threat of penal consequences and payment of a fine if performance is refused. The judge can also authorise the requesting party to retain a third party to substitute performance. The claimant is entitled to have his claim for specific performance changed into a claim for damages if the defendant continues to resist enforcement.

Cross-border litigation

25. Do local courts respect the choice of governing law in a contract? If yes, are there any national laws or rules that may modify or restrict the application of the law chosen by the parties in their contract? What are the rules for determining what law will apply to non-contractual claims?

Contractual choice of law

In all commercial disputes, the parties can choose a foreign governing law. However, certain matters are excluded from this principle:

  • Contracts over immovable property, in relation to which Swiss courts always apply the law applicable at the property 's location.
  • Matters relating to consumers, employees and intellectual property rights are only subject to laws that have a connection to certain objective criteria (for example, the place of residency of the consumer, the place of employment, or the place of registration of the intellectual property rights).

A choice of law provision in a contract on the international sale of goods providing for Swiss law to apply may result in the application of the UN Convention on Contracts for the International Sale of Goods 1980 or similar treaties, unless those treaties have been specifically excluded by the parties.

No choice of law and non-contractual claims

Absent a choice of law, the law applicable to the contractual dispute is the law of the state with which it is most closely connected (the closest connection test).

With respect to non-contractual claims, the parties may choose any time after the event causing the damage that the law of the forum, that is Swiss law, shall apply. Absent a choice of law by the parties, the Swiss Private International Law Act determines the applicable law. Note that, in this context, if a tort violates an existing legal relationship between the tortfeasor and the injured party, the tort claim will be governed by the law applicable to the existing legal relationship.

26. Do local courts respect the choice of jurisdiction in a contract? Do local courts claim jurisdiction over a dispute in some circumstances, despite the choice of jurisdiction?

The courts generally respect the choice of forum clauses within the scope of the relevant statutes and treaties. These clauses must be in writing and can relate to an existing or future dispute. However, there are also certain specific rules, for example:

  • Disputes concerning consumers must generally be filed with the competent court at the consumer 's domicile, unless the consumer agrees for a specific judicial proceeding to a different jurisdiction (only after the dispute arose).
  • Disputes concerning employees are heard by the competent court at the employee 's domicile or at the place of employment; agreements on jurisdiction can only be entered into after the dispute arose.
  • Disputes concerning the rent of immovable property must be filed with the competent court at the place of the property in question.

International treaties take precedence over the statutory rules. The most important international treaty on jurisdiction is the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 2007. Under the Lugano Convention, the parties can either:

  • Conclude a jurisdiction agreement.
  • Include a jurisdiction clause in their contractual arrangements.

The local courts respect this practice, unless statutory law provides for a mandatory forum or declares it unlawful to waive the statutory forum before the dispute has arisen.

27. If a party wishes to serve foreign proceedings on a party in your jurisdiction, what is the procedure to effect service in your jurisdiction? Is your jurisdiction a party to any international agreements affecting this process?

International agreements

When serving foreign procedural notices to parties in Switzerland, a foreign party must comply with international treaties governing international civil procedure matters and must use the means of judicial assistance. Switzerland is party to two major multilateral treaties:

  • HCCH Convention on Civil Procedure 1954 (Hague Civil Procedure Convention).
  • HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965 (Hague Service Convention).

A number of bilateral agreements authorise direct contact between judicial authorities. There are also bilateral agreements that serve to complement the Hague Conventions. Where there is no international agreement, Switzerland automatically applies the Hague Civil Procedure Convention to the foreign requests that it receives.

Serving process

The Hague Civil Procedure Convention requires the requesting party or the locally competent authority to use the consular channels to send the documents to be served to the consular representation in Switzerland, which then approaches the Swiss Federal Office of Justice to effect service on the party resident in Switzerland.

The Hague Service Convention requires parties to request their local authorities to forward requests for service according to a model request to the competent central authority in Switzerland. Each canton has its own central authority, which serves process on persons domiciled in its territory. The central authority approaches the competent court, which then serves documents by qualified postal delivery. As far as the law applicable in the country of the party requesting service permits lawyers to serve documents, these persons are recognised as judicial officers and can also approach the central authority directly. As it can prove difficult for the requesting state to know which of the 26 central cantonal authorities has jurisdiction, the Federal Office of Justice is also designated to be a central authority and passes foreign requests to the competent cantonal authorities.

Switzerland declared that it is opposed to the use in its territory of direct service through diplomatic or consular agents and any other direct form of service; accordingly, any judicial document must be served through the competent central authority.

28. What is the procedure to take evidence from a witness in your jurisdiction for use in proceedings in another jurisdiction? Is your jurisdiction party to an international convention on this issue?

International agreements

To take evidence from a Swiss-domiciled witness, the rules of the multilateral treaties to which Switzerland is a member must be complied with, for example:

  • The HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence Convention).
  • The HCCH Convention on Civil Procedure 1954 (Hague Civil Procedure Convention).

A number of bilateral agreements authorise direct contact between judicial authorities. There are also bilateral agreements that serve to complement the Hague Conventions. Where there is no international agreement, Switzerland applies the Hague Civil Procedure Convention to the foreign requests that it receives.

Procedure

Under the Hague Evidence Convention, the procedure is as follows:

  • The competent judicial authority of the requesting state transmits its letter of request to the Federal Office of Justice or directly to the competent cantonal authority.
  • The competent cantonal authority then takes evidence at the witness 's place of domicile.

Under the Hague Civil Procedure Convention, the following procedure applies:

  • The competent authority of the state in which the request is made must transmit its request to its diplomatic representation in Switzerland.
  • The diplomatic representative of the requesting state in Switzerland then transmits the request to the Swiss Federal Office of Justice.
  • The Swiss Federal Office of Justice transmits the request to the competent local judicial authority in the canton where the witness is domiciled, which then takes the evidence.

The Hague Evidence Convention replaces Articles 8 to 16 of the Hague Civil Procedure Convention (Article 29, Hague Evidence Convention). Therefore, if a signatory state has concluded both treaties, the Hague Evidence Convention takes precedence.

Notably, the surrender of evidence located in Switzerland to foreign authorities or parties in violation of the applicable international conventions to which Switzerland is a party may constitute a violation of Articles 271 (prohibited acts for a foreign state) and 273 (economic intelligence service) of the Swiss Criminal Code or other special statutory provisions (such as banking regulation and data protection regulation). Switzerland made a reservation under the Hague Evidence Convention in relation to letters of request issued for the purpose of obtaining pre-trial discovery of documents as known in common law countries. Therefore, requests that are formulated in general terms and require the opposing party to indicate the documents in their possession with the aim of obtaining information that bears no relation to the case or in an attempt to discover evidence to substantiate a claim ("fishing expeditions") are rejected.

Switzerland also made a reservation with respect to the taking of evidence by diplomatic officers, consular agents and commissioners. This is only possible on authorisation by the Federal Government (but a lawyer does not require an authorisation when collecting evidence in Switzerland during ordinary case preparation).

Enforcement of a foreign judgment

29. What are the procedures to enforce a foreign judgment in your jurisdiction?

If the judgment was rendered by a court of a Lugano Convention signatory state, an enforcement application must be filed with the competent Swiss court, along with a copy of the judgment satisfying the conditions necessary to establish its authenticity and a certificate issued by the court that rendered the judgment (Annex V, Lugano Convention). The court must decide on such application in ex parte summary proceedings and declare the judgment enforceable immediately on satisfaction of the formalities under Annex V, without reviewing whether there are grounds to deny recognition and enforcement. The party against whom the enforcement is sought is not heard until the appeal stage.

If the judgment was rendered by a court of a state not party to Lugano Convention, the enforcing party must file with the competent court:

  • A complete and authenticated copy of the decision.
  • A confirmation that no ordinary appeal can be lodged against the decision or that the appeal is final.
  • For judgments rendered by default, an official document establishing that the defaulting party was duly summoned and that it had the opportunity to enter a defence.

The other party is entitled to a hearing and to introduce evidence. The competent court dealing with the matter may, on a party 's request, order protective measures without hearing the other party. The court will deny recognition if:

  • It violates Swiss public policy.
  • Procedural guarantees considered to be fundamental in Switzerland were not adhered to in the foreign proceeding.

A judgment rendered in a state not party to the Lugano Convention is considered a final judgment within the meaning of the Federal Debt Enforcement and Bankruptcy Act. A local court can grant exequatur on a summary review of the matter.

Alternative dispute resolution

30. What are the main alternative dispute resolution (ADR) methods used in your jurisdiction to settle large commercial disputes? Is ADR used more in certain industries? What proportion of large commercial disputes is settled through ADR?

Large commercial disputes are usually settled through litigation or arbitration. Other ADR methods play a limited role, although mediation appears to have become more popular recently, as illustrated by an increasing number of organisations offering mediation services and training, or the adoption of the Swiss Rules on Commercial Mediation by the Swiss Chambers of Commerce and Industry in 2019 (www.swissarbitration.org/sm/en/rules.php).

Arbitration (but not necessarily other forms of ADR) is more common in international commercial disputes than in domestic disputes.

In contentious court proceedings, the court can recommend mediation to the parties at any time (see also Question 31). On joint application of the parties, the court may confirm a settlement reached through mediation during proceedings (Code on Civil Procedure). Such confirmation makes the mediation settlement equal to a court judgment. Settlements reached through mediation outside of court proceedings cannot be confirmed by the court.

31. Does ADR form part of court procedures or does it only apply if the parties agree? Can courts compel the use of ADR?

Apart from cases where conciliation proceedings are mandatory, ADR is not part of court procedures. Swiss courts cannot compel the use of ADR. However, courts are free to facilitate a settlement during court proceedings or to encourage parties to resort to mediation.

Where a conciliation hearing is mandatory under statutory provisions, the parties can jointly elect to use mediation instead. If a settlement cannot be reached, the conciliation authority will issue a writ permitting the claimant to proceed to the competent district court (see Question 9).

At all times during the court proceedings, parties can jointly elect to resort to mediation, thereby staying court proceedings.

To be enforceable in court, a multi-tier dispute resolution clause providing for pre-trial arbitration or conciliation or mediation should clearly set out the conditions (including time limits) for the arbitration or mediation proceedings. Non-compliance with pre-arbitral mediation under a multi-tier dispute resolution clause may result in an annulment of the arbitral award.

32. How is evidence given in ADR? Can documents produced or admissions made during (or for the purposes of) the ADR later be protected from disclosure by privilege? Is ADR confidential?

In mediation proceedings, the mediation agreement governs the procedural rules. The parties are free to choose any rules to govern the mediation process. In the absence of a provision relating to evidence, the mediator conducts the proceedings as he or she considers appropriate.

Mediation must be confidential, and statements and admissions of the parties cannot be used in court. The same applies in relation to evidence obtained during mediation. Mediators are entitled to refuse to testify on matters relating to the mediation proceedings.

In domestic arbitration, subject to the rules of the Code on Civil Procedure and international arbitration, the parties are free to agree on the procedural rules within the mandatory procedural limits (guarantees) prescribed by law.

33. How are costs dealt with in ADR?

Costs are borne by the parties, subject to their mediation agreement or the equivalent, or agreed on arbitration procedural rules (as applicable). For example, the Swiss Rules on International Arbitration, which can also be chosen for domestic arbitration, provide that the costs of the arbitration must in principle be borne by the unsuccessful party.

34. What are the main bodies that offer ADR services in your jurisdiction?

The following organisations, among others, offer ADR services in Switzerland:

  • Swiss Chambers ' Arbitration Institution, which adopted the Swiss Rules on Commercial Mediation in 2019 (see www.swissarbitration.org/Mediation/Mediation-rules) and the Swiss Rules on International Arbitration in 2004 (as revised in 2012; see www.swissarbitration.org/Arbitration/Arbitration-Rules-and-Laws), the latter of which can also be chosen for domestic arbitration.
  • WIPO Arbitration and Mediation Center, a branch of the World Intellectual Property Organization established in 1994. This centre offers institutional mediation services for private parties (see www.wipo.int/amc/en).

Proposals for reform

35. Are there any proposals for dispute resolution reform? If yes, when are they likely to come into force?

The Swiss Parliament adopted amendments to the Code of Obligations on 15 June 2018 concerning limitation periods (see Question 2).

The core elements of the revision are:

  • The extension of the limitation period from one year to three years in tort and enrichment matters. In future, aggrieved persons will therefore have three years from the time when they become aware of the damage and the person liable for compensation to assert their claim.
  • A new twenty-year absolute limitation period will apply to personal injuries.

The amended provisions will enter into force on 1 January 2020. Where the amended law provides for a longer statutory period than the previous law, the longer statutory period will apply to existing circumstances, provided that the limitation period did not expire at the time the amended law came into force. Accordingly, if a one year limitation period were to expire (according to the previous law) on 1 January 2020, potential litigants will have an additional two years to bring claims, subject to the absolute limitation period of 10 years.

The Swiss Parliament has referred a motion to the Federal Government to revise the current system of collective redress and to introduce class actions. The Federal Council then proposed to introduce a proceeding which allows for companies to find a collective solution for mass claims with effect for all damaged parties. The Federal Council also proposes to allow group actions not only for violation of personal rights (see above) but also for financial claims. These proposals were recently open for the public to give their opinion. Following the public consultation phase, the federal administration is currently analysing the comments.

Additionally, the Swiss Private International Law Act is currently undergoing a revision with respect to arbitration. Generally, the reform aims to amend the Act to reflect current practice of the Supreme Court (for example, with respect to the revision of arbitral awards). It also proposes to relax the formal requirements governing arbitration clauses. Finally, the reform allows appeals to the Supreme Court against an award to be filed in English (although the decision will still be handed down in one of the official languages). The Federal Council submitted its dispatch and the draft law on 24 October 2018 to the Parliament for discussion. The proposal is currently pending at committee level.

 

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Subject: Dispute Resolution
Autor: Urs Feller, Marcel Frey, Bernhard C. Lauterburg
Reading time: 30 Min
Paper: Thomson Reuters Practical Law

Arbitration procedures and practice in Switzerland: overview

Use of arbitration and recent trends

1. How is commercial arbitration used and what are the recent trends?

Use of commercial arbitration and recent trends

Arbitration is widely used to resolve commercial disputes in both domestic and international matters. From an international perspective, Switzerland is among the most preferred seats for arbitration, as was revealed in the 2018 arbitration survey by Queen Mary University and White & Case (2018 survey) (http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-Arbitration-Survey---The-Evolution-of-International-Arbitration-(2).PDF). According to the International Chamber of Commerce (ICC) Dispute Resolution Statistics 2018, 10% of ICC arbitral proceedings are seated in Switzerland, which makes Switzerland the third most chosen seat for ICC arbitration. The Swiss Chambers' Arbitration Institution (SCAI) received 83 new cases in 2018, of which the great majority were international cases. In addition, there are ad hoc arbitral proceedings, including investment arbitrations (for which statistics are difficult to find) and a high number of sports arbitrations.

To maintain its attractiveness for international arbitration, the Swiss federal government dispatched on 24 October 2018 to the Swiss Parliament a proposal for a reform of the 12th chapter of the Swiss Private International Law Act (PILA) containing Switzerland's legislative framework for international arbitration. The proposal aims at putting into law core aspects of the Federal Supreme Court's jurisprudence, making clarifications as well as enhancing usability, for example, by introducing the possibility to have appeals against arbitral awards filed in the English language.

Advantages/disadvantages

Although Switzerland has strong democratic structures and a well-equipped, reliable state court system to handle large and complex commercial cases in a reasonable time at reasonable costs, along with a reliable practice in recognising judgments handed down by foreign state courts, parties regularly chose arbitration for various reasons. According to the 2018 survey, users mention the enforceability of arbitral awards and the avoidance of specific legal systems/national courts as the most valuable characteristics of arbitration, followed by flexibility and the ability of the parties to select arbitrators.

As regards flexibility, there are no restrictions for attorneys not registered in Switzerland to act as party representatives in arbitral proceedings as opposed to state court proceedings. Also, the entire proceedings (excluding appeals) can be held in English or any other foreign language. Appeals to the Federal Supreme Court (which on average take about six months) can be fully or partially waived in express agreements by foreign parties.

Legislative framework

Applicable legislation

2. What legislation applies to arbitration? To what extent has your jurisdiction adopted the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law)?

The principal legislation applicable to international arbitration is the 12th chapter of the federal Private International Law Act (PILA). By election, the parties to an international dispute can also chose the third part of the Swiss Code on Civil Procedure (CCP) governing domestic arbitration to apply. In this article, we will limit our comments to the PILA, unless specific reference to the CCP is necessary for the full understanding of the Swiss provisions.

The 12th chapter of the PILA is not based on the UNCITRAL Model Law, however, there are no fundamental differences in substance between the two laws. The main difference between the PILA and the UNCITRAL Model Law is the degree of regulation. While the UNCITRAL Model Law contains a comprehensive set of provisions, the PILA only contains a few fundamental rules and instead largely leaves the set-up of the proceedings in the hands of the parties and the arbitral tribunal.

Mandatory legislative provisions

3. Are there any mandatory legislative provisions? What is their effect?

If the parties to an international arbitration seated in Switzerland do not chose to exclude the application of the PILA in favour of the CCP, the following provisions in the PILA must be observed:

  • Articles 177(1) and (2): arbitrability/restrictions on state entities to invoke national law to contest arbitrability or capacity to be subject to arbitration.
  • Articles 178(1) and (2): form and validity of the arbitration agreement.
  • Articles 180(1)(c) and 180(2): challenge of arbitrators on grounds of justifiable grounds on independence and restrictions on challenges of arbitrators by the nominating/appointing party.
  • Article 181: lis pendens.
  • Article 182(2): mandatory procedural rules (equal treatment to the parties and their right to be heard).
  • Article 185: further assistance by the state court.
  • Article 186(1): kompetenz-kompetenz to the extent that the parties cannot exclude it, however, they may enhance it, for example, by excluding appeals (to the extent permitted).
  • Article 190(2): grounds for setting aside an arbitral award, to the extent that the grounds for setting aside are exhaustive, although qualifying parties can waive an appeal on all or one or more of these grounds.

4. Does the law prohibit any types of dispute from being resolved through arbitration?

Any dispute of financial interest can be subject to arbitration (Article 177(1), PILA). The broad scope of arbitrability is limited only by substantive provisions considered mandatory as a matter of public policy which reserve jurisdiction exclusively to state courts (for example, certain claims under the Debt Enforcement and Bankruptcy Act (attachment proceedings) and family law status matters (in particular marriage, paternity, adoption, divorce, separation), although the financial consequences are arbitrable).

Limitation

5. Does the law of limitation apply to arbitration proceedings?

Under Swiss law, the statute of limitations is a matter of substantive law. Accordingly, if the law applicable to the matter in dispute is Swiss substantive law, the relevant limitation periods apply.

The Swiss Code of Obligations (as of 1 January 2020) provides for the following limitation periods:

  • A general statutory limitation period of ten years for all claims (unless federal law prescribes a different limitation period).
  • Five years for claims which by their nature require quick settlement, such as claims:
    • for rent, interest or other periodic payments;
    • by tradesmen, craftsmen and for medical treatment;
    • relating to the sale of foodstuffs and payments for board and lodging;
    • relating to the work of tradesmen and craftsmen but also legal counsel and notaries;
    • of employees.
  • Tort claims will become time-barred after three years from the day on which the injured party has knowledge of the damage and the injuring party. A tort claim will become unenforceable owing to the statute of limitations after ten years from the date of injury. Where a criminal action coincides with the wrongful death and bodily injuries, the latest time of assertion will be 20 years after the injury. Where a tort claim is derived from an offence for which the criminal law envisages a longer limitation period, the longer period is also applicable to tort claims.
  • Claims based on unjust enrichment also become time-barred three years after the date on which the injured party becomes aware of its claim, but in any event, ten years after the claim first arose.

Arbitration institutions

6. Which arbitration institutions are commonly used to resolve large commercial disputes?

The main arbitration institutions used in Switzerland are the:

  • ICC International Court of Arbitration.
  • Swiss Chambers' Arbitration Institution.
  • WIPO Arbitration and Mediation Center.
  • Court of Arbitration for Sport (600 cases in 2016).

Jurisdictional issues

7. What remedies are available where one party denies that the tribunal has jurisdiction to determine the dispute(s)? Does your jurisdiction recognise the concept of kompetenz-kompetenz? Does the tribunal or the local court determine issues of jurisdiction?

The arbitral tribunal must rule on its own jurisdiction (see Question 3), which it either does in the form of an interim award on jurisdiction or in the final award. Decisions by the arbitral tribunal on its jurisdiction are subject to an appeal to the Federal Supreme Court, provided that eligible parties did not waive such an appeal (see Question 1, Question 3 and Question 28). An interim award on jurisdiction must be separately appealed and an appeal together with the final award would be untimely. The concept of kompetenz-kompetenz is governed by PILA.

Arbitration agreements

Validity requirements

8. What are the requirements for an arbitration agreement to be enforceable?

Substantive/formal requirements

An arbitration agreement is valid if it is made in writing, by telegram, telex, telecopier, or any other means of communication which permits it to be evidenced by a text (Article 178(1), PILA). PILA does not require the arbitration agreement to be signed by all the parties. For example, the Federal Supreme Court upheld an arbitration clause that was never signed by the parties but remained unchanged throughout the exchange of several drafts of a framework contract.

Also, arbitration agreements by reference, such as in the bye-laws of a corporate body or in general terms and conditions, are generally valid. However, in relation to sport arbitration, the Federal Supreme Court drew a line and considered arbitration agreements by reference invalid if the content and scope thereof need not be reasonably expected under the given circumstances.

With respect to the substance, the arbitration agreement is valid if it conforms to the law chosen by the parties, the law governing the subject matter of the contract or Swiss law (Article 178(2), PILA).

Generally, to be valid on substance, the exclusion of state jurisdiction (and therefore the consensus to arbitrate) must be crystal clear under the law governing the conclusion and construction of contracts (strict approach by the Federal Supreme Court). Once this exclusion is clear, the construction of the content and scope of the arbitration clause follows a less restrictive approach.

Further possible reasons for an arbitration agreement to be invalid are:

  • Lack of legal capacity.
  • Lack of capacity to act.
  • Agency without authority.
  • A plea of defect in consent.

Separate arbitration agreement

Under Swiss law, a separate arbitration agreement is not necessary and it suffices that the arbitration clause is contained in the main contract. As stated above, arbitration agreements by reference are generally considered valid, save for very limited exceptions.

Unilateral or optional clauses

9. Are unilateral or optional clauses, where one party has the right to choose arbitration, enforceable?

Yes, such clauses are enforceable.

Third parties

10. In what circumstances can a party that is not a party to an arbitration agreement be joined to the arbitration proceedings?

Unlike in the CCP governing domestic arbitration, there is no statutory rule in the PILA for joining third parties to arbitration proceedings. However, the parties to an arbitration agreement are free to agree on such rules which they typically do when choosing institutional arbitration (for example, ICC or SCAI arbitration). The arbitration rules of many arbitral institutions contain rules on joining third parties, for example, Article 7 of the ICC Arbitration Rules or Article 4(2) of the Swiss Rules of International Arbitration.

Contractual obligations generally only bind the contracting parties. It is, however, recognised that an arbitration agreement can, under certain circumstances, also bind third parties, for example where:

  • Claims were assigned.
  • A third party assumed a contractual obligation.
  • A contract was transferred to a third party.
  • The parties entered into a contract in favour of a third party.

In some cases, the arbitration agreement can be extended to third parties. This may be the case, for example, if a third party intervened in the conclusion of or performs work under a contract in a manner creating legitimate grounds to assume that the third party intends to be bound by the contract and the arbitration agreement.

Whether an arbitration clause also extends to a third party is a matter of substance and must be determined in accordance with Article 178(2) of the PILA.

Also, in some cases, the corporate veil can be pierced and the separate legal status of a company disregarded in favour of the underlying economic realities, for example, under an alter ego theory where the court finds a corporation lacks a separate identity from an individual or corporate shareholder.

11. In what circumstances can a party that is not a party to an arbitration agreement compel a party to the arbitration agreement to arbitrate disputes under the arbitration agreement?

There is no statutory rule in the PILA providing that a third party can compel a party to an arbitration agreement to arbitrate a dispute under that arbitration agreement. Whether a third party can have such a right is a matter to be determined by the arbitral tribunal or the competent courts.

Separability

12. Does the applicable law recognise the separability of arbitration agreements?

Yes. Article 178(3) of the PILA expressly provides that the validity of an arbitration agreement cannot be contested on the grounds that the principal contract is invalid.

Breach of an arbitration agreement

13. What remedies are available where a party starts court proceedings in breach of an arbitration agreement or initiates arbitration in breach of a valid jurisdiction clause?

Court proceedings in breach of an arbitration agreement

A Swiss court must decline jurisdiction, unless the:

  • Defendant proceeded to the merits or the matter without objecting to the state court's jurisdictions.
  • State court finds that the arbitration agreement is null and void, inoperative or incapable of being performed.
  • Arbitral tribunal cannot be constituted for reasons for which the defendant is manifestly responsible.

(Article 7, PILA.)

Conversely, if arbitration is initiated in breach of a valid jurisdiction clause, the arbitral tribunal, deciding on its own jurisdiction (Article 186(1), PILA) (see Question 7) and must decline jurisdiction.

Arbitration in breach of a valid jurisdiction clause

14. Will the local courts grant an injunction to restrain proceedings started overseas in breach of an arbitration agreement?

No, Swiss courts would deny motions for an anti-suit injunction. Moreover, anti-suit injunctions would be contrary to the concept of kompetenz-kompetenz, which Swiss law recognises (see Question 7).

Arbitrators

Number and qualifications/characteristics

15. Are there any legal requirements relating to the number, qualifications and characteristics of arbitrators? Must an arbitrator be a national of, or licensed to practice in your jurisdiction to serve as an arbitrator there?

There is no rule in the PILA about the number, qualifications or characteristics of arbitrators apart from the requirements that the arbitral tribunal must be appointed in accordance with the arbitration agreement (Article 179(1), PILA) and the independence and impartiality of each arbitrator. Subject to this, any person with full legal capacity whom a party considers suitable to resolve a dispute can be appointed as arbitrator. Arbitrators need not be licensed to practice as attorneys in Switzerland (or elsewhere).

The Federal Supreme Court considers the IBA Guidelines on Conflict of Interest (although without any statutory value) a valuable instrument capable of harmonising and unifying international arbitration standards to dispose of conflict of interests that should not fail to influence the practice of arbitral institutions and tribunals (Supreme Court Decision No. 4A_506/2007, consid. 3.3.2.2).

Independence/impartiality

16. Are there any requirements relating to arbitrators' independence and/or impartiality?

Yes, see Question 15.

Appointment/removal

17. Does the law contain default provisions relating to the appointment and/or removal of arbitrators?

If there is no agreement by the parties on the appointment of arbitrators, the matter can be brought before the court at the seat of the arbitral tribunal. That court must apply by analogy the provisions in the CCP (Article 179(2), PILA) and in accordance with Article 360(1) of the CCP appoint a three-member arbitral tribunal. However, neither the PILA nor the CCP contain provisions for the basis of this appointment.

The PILA does not contain a rule on the removal of arbitrators, apart from Article 180(1) which sets out grounds on which an arbitrator can be challenged. Such rules typically emerge from the parties' arbitration agreement (for example, as a matter of reference to institutional rules, such as Article 12 of the Swiss Rules of International Arbitration or Article 15 of the ICC Arbitration Rules).

An arbitrator can be challenged:

  • If he/she does not possess the qualification agreed upon by the parties.
  • On the grounds for challenge in the rules of arbitration adopted by the parties.
  • If the circumstances permit legitimate doubt about his/her independence.

(Article 180(1), PILA.)

Where there is no agreed procedure by the parties on the removal of arbitrators, the court at the seat of the arbitral tribunal must rule on the removal. The court will apply Article 180(1) of the PILA and its procedural law.

Procedure

Commencement of arbitral proceedings

18. Does the law provide default rules governing the commencement of arbitral proceedings?

No, such rules typically emerge from the parties' agreement to apply certain arbitration rules. The PILA only defines when lis pendens occurs, that is, at the moment one of the parties files a claim before the sole arbitrator of the arbitrators designated in the arbitration agreement or, in the absence of such designation, if one of the parties institutes the procedure for the appointment of the arbitral tribunal (Article 181, PILA).

Applicable rules and powers

19. What procedural rules are arbitrators bound by? Can the parties determine the procedural rules that apply? Does the law provide any default rules governing procedure?

Applicable procedural rules

Chapter 12 of the PILA is premised on the principle of party autonomy. The parties can, in the arbitration agreement or by reference to a set of institutional arbitration rules, determine the arbitral procedure applicable to their dispute (Article 182(1), PILA). They can also submit the arbitral procedure to a procedural law of their choice.

Only if the parties have failed do so, the arbitral tribunal has to determine it to the extent necessary, either directly or by reference to a law or to arbitration rules (Article 182(2), PILA).

In Switzerland, regardless of the procedural rules chosen, the arbitral tribunal must ensure the equal treatment of the parties and the right of the parties to be heard in adversarial proceedings (Article 182(3), PILA) (see also Question 3).

Evidence and disclosure

20. If there is no express agreement, can the arbitrator order disclosure of documents and attendance of witnesses (factual or expert)?

The rules on the taking of evidence form part of the arbitral procedure, which is normally determined by the parties. In the absence of an agreement between the parties on issues of evidence, the arbitral tribunal must determine the procedure to the extent necessary (Article 182(2), PILA).

In any event, the arbitral tribunal has the duty to conduct the taking of evidence (Article 184(1), PILA). If the arbitral tribunal orders measures of evidence which are not complied with by the burdened party, the question of enforcement arises. Unlike state courts, arbitral tribunals themselves have no sovereign powers and cannot order coercive measures against parties not complying with evidentiary orders. Thus, in instances where a party refuses to cooperate with the tribunal, the assistance of Swiss state judicial authorities can be sought. Assistance can be requested from the state court at the seat of the arbitral tribunal. The Swiss court then applies its own domestic (Swiss) procedural law, that is, the CCP (Article 184(2), PILA).

The practical significance of state judicial assistance in the taking of evidence is limited, since where a party refuses to comply with an arbitral order, the tribunal can draw negative inferences from such behaviour.

Evidence

21. What documents must the parties disclose to the other parties and/or the arbitrator? How, in practice, does the scope of disclosure in arbitrations compare with disclosure in domestic court litigation? Can the parties set the rules on disclosure by agreement?

Scope of disclosure

The procedure on the taking of evidence such as disclosure of documents forms part of the arbitral procedure, which is determined by the parties or, in the absence of an agreement, by the arbitral tribunal (Article 182(2), PILA). The admissibility of evidence is therefore assessed in accordance with the applicable procedural law. If agreed by the parties, arbitrators in Switzerland frequently seek guidance from the IBA Rules on the Taking of Evidence.

When compared to common law discovery proceedings, Swiss arbitrators frequently opt for more limited disclosure. Communication that can be considered legally privileged (trade secrets, correspondence with attorneys) will be exempt from production.

Despite this, requests for other documents that are deemed relevant for the determination of the dispute will normally be admitted by the tribunal. Arbitrators frequently manage document production by means of a "Redfern Schedule" (a collaborative document prepared by the parties and the tribunal containing the requests for disclosure, the arguments for the requests and the tribunal's decisions on each).

Compared to disclosure obligations under Swiss domestic proceedings, the latter are more limited, with more stringent rules on identification and demonstrating necessity of production.

Validity of parties' agreement as to rules of disclosure

As noted, the parties can enter into special agreements concerning the taking of evidence such as production of documents.

Confidentiality

22. Is arbitration confidential? If so, what is the scope of that confidentiality and who is subject to the obligation (parties, arbitrators, institutions and so on)?

In principle, the parties are free to agree that the fact of their dispute, the resorting to arbitration and the proceedings and outcome will remain confidential. There are no statutory rules in Swiss law that provide for confidentiality, though the Supreme Court has confirmed that Swiss arbitral proceedings are, as a rule, not open to the public, thus giving an indication that it considers such proceedings to be of a confidential nature.

However, confidentiality can only be deemed applicable for the actual arbitration proceedings themselves and not in any related state proceedings regarding injunctive relief sought by the parties (Article 54(1), CCP). Equally, appeal proceedings to the Supreme Court are generally open to the public (Article 59(1), Supreme Court Act).

However, scholarly opinions diverge on the issue of whether the parties themselves are bound by confidentiality in the absence of an express obligation to that effect.

Courts and arbitration

23. Will the local courts intervene to assist arbitration proceedings seated in their jurisdiction?

As noted in Question 20, Swiss state courts may be involved in arbitration proceedings to the extent that sovereign power is needed to compel parties in matters of evidence or with regard to interim measures not complied with by parties.

Swiss law is also supportive of arbitration proceedings to the extent that Article 179(2) of the PILA provides that where an arbitration agreement is mute on the nomination and election of arbitrators, a party can approach the local state court judge at the agreed seat of the arbitration requesting the appointment of arbitrators (see Question 17). The Swiss court is required to refer to the CCP on the appointment of arbitrators in domestic arbitration proceedings when doing so (Article 361 et seq, CCP).

24. What is the risk of a local court intervening to frustrate an arbitration seated in its jurisdiction? Can a party delay proceedings by frequent court applications?

Risk of court intervention

In principle, a Swiss court will not intervene or frustrate validly commenced arbitration proceedings located in Switzerland from itself, as long as the dispute matter can validly be subjected to arbitration. Even then, a party will need to invoke the existence of an arbitration agreement.

Delaying proceedings

As noted in Question 20, parties to arbitration proceedings seated in Switzerland have recourse to state courts for interim measures not complied with or for other coercive orders.

Further, a party may try to delay the outcome of the arbitration by challenging the appointment of arbitrators or the jurisdiction of the tribunal itself.

The final arbitral award itself can be brought before the state Supreme Court in limited cases with an appeal. Invoking such measures may have a delaying effect on proceedings.

Insolvency

25. What is the effect on the arbitration of pending insolvency of one or more of the parties to the arbitration?

According to Swiss jurisprudence, the commencement of bankruptcy proceedings does not automatically lead to a transfer of rights and obligations of the debtor to the bankruptcy estate. However, previously concluded arbitration agreements remain binding on the bankruptcy estate, whether the estate is a claimant or a defending party.

Remedies

26. What interim remedies are available from the tribunal?

Interim remedies

Unless the parties have agreed otherwise, the arbitral tribunal can, on application by a party, order interim measures (Article 183(1), PILA). Generally, three types of interim measures are commonly encountered, though this list is not exhaustive:

  • Safeguarding measures: aiming to secure the subsequent enforcement of the disputed claim, maintaining or restoring the status quo for the duration of the proceedings.
  • Regulatory measures: serving to regulate and/or stabilise provisionally the relationship between the parties.
  • Executory measures: characterised by the fact that they include a temporary enforcement of the alleged claim.

Ex parte/without notice applications

The arbitral tribunal has, in accordance with the prevailing opinion, the power to grant interim remedies without notice to the other party provided that both:

  • There is a particular urgency or that a hearing of the opposing party would impair the effectiveness of the measure.
  • The arbitral tribunal reviews its decision promptly after issuing the measure and after hearing both parties.

Security

Chapter 12 of the PILA contains no rules on the posting of security. As far as the applicable arbitration rules allow such a provision, Swiss arbitrators will regularly make such an order. The Swiss Rules on International Arbitration authorise arbitrators to require such a payment.

Swiss domestic arbitration rules also have provision on the awarding of security if the claimant appears to be insolvent (Article 379, CCP). In addition, the defendant must establish that its future costs claim, if any, would be frustrated or significantly jeopardised by the appearance of the claimant's insolvency if not immediately secured.

27. What final remedies are available from the tribunal?

The type of final remedy issued by a Swiss based tribunal will be determined by the material law applicable to the dispute and available to the parties under that governing law. As a rule, for arbitrations taking place in Switzerland a final award can order a party to:

  • Pay damages.
  • Perform specific actions or desist from certain actions.

Awards that would be considered to be contrary to the Swiss understanding of ordre public (such as awarding high punitive damages) will face the risk of unenforceability in Switzerland and a party can appeal such an award to the Supreme Court for transgression of public policy (Article 190(2)(e), PILA). Further, as noted in Question 3, Question 4 and Question 24), areas of law that are considered out of the scope of arbitration cannot be enforced in Switzerland (certain family law matters) as they are not considered to subject to arbitration.

Appeals

28. Can arbitration proceedings and awards be appealed or challenged in the local courts? What are the grounds and procedure? Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitral clause itself)?

Rights of appeal/challenge

In matters of international arbitration, an appeal can only be brought to the Swiss Supreme Court (Article 191, PILA).

Grounds and procedure

There are very limited grounds for appeal which are if the:

  • Sole arbitrator was not properly appointed or if the arbitral tribunal was not properly constituted.
  • Arbitral tribunal wrongly accepted or declined jurisdiction.
  • Arbitral tribunal's decision went beyond the claims submitted to it or failed to decide one of the items of the claim.
  • Principle of equal treatment of the parties or the right of the parties to be heard was violated.
  • Award is incompatible with public policy.

(Article 190(2), PILA.)

A party considering bringing an appeal against a Swiss arbitration award must lodge its appeal within 30 days from receipt of the award and must invoke one of the setting aside reasons of Article 190(2) of the PILA.

Though not technically an appeal, it has been standing practice by the Supreme Court to admit applications for the revision of an international arbitration award. Such applications have been accepted where it becomes apparent after the rendering of the award that such decision was made as a consequence of criminal activity influencing its outcome or where significant facts or decisive evidence become available only at a later stage and which were not accessible to the party bringing the revision during the actual arbitration phase (Supreme Court Decision No. 4A 662/2018).

The currently debated revision of Chapter 12 of the PILA includes a specific statutory provision that would codify this jurisprudence.

Waiving rights of appeal

If none of the parties has their domicile, habitual residence or a business establishment in Switzerland, they can, by an express statement in the arbitration agreement or by a subsequent written agreement, waive fully their entitlement to bring an appeal against the award (Article 192, PILA). At the same time, they are also free to bilaterally limit the reasons for an appeal to one or several of the grounds listed in Article 190(2).

29. What is the limitation period applicable to actions to vacate or challenge an international arbitration award rendered inside your jurisdiction?

As mentioned in Question 28, setting aside proceedings before the Swiss Supreme Court must be brought within the appeal period of 30 days since the proceedings are governed by Article 77 of the Supreme Court Act, which provides that (all) appeals to the highest Swiss court are subject to a 30-day deadline (Article 100(1), Supreme Court Act). The limitation period begins with the notification of the award to the parties and is not extendable.

Costs

30. What legal fee structures can be used? Are fees fixed by law?

Attorneys' fees can be freely arranged between lawyers and their clients and hourly rates depending on the experience level are the norm. Contingency fees are not permitted. However, conditional fee arrangements providing for a bonus in the case of successful litigation are permitted if the base fee for the attorney provides a reasonable income. Moreover, such an agreement needs to be made at the start of the matter or after the matter is concluded. Party costs and court fees are calculated according to cantonal statutory rules and depend on the value in dispute.

Parties usually finance litigation privately. If successful, a party can recover costs from its opponent. Cost calculations are based on cantonal statutory tariffs and may not fully cover actual expenses.

There are a few third-party funding providers in Switzerland and their services are becoming increasingly popular. Their services usually involve handing over a share of the claimed amount in successful proceedings. Such services are permitted as long as the attorney remains independent and free from influence in the execution of his/her mandate. Further, the lawyer is not allowed to participate in the funding. The Supreme Court has found that informing a client about the options of third-party funding can form part of the diligent performance of their mandate.

31. Does the unsuccessful party have to pay the successful party's costs? How does the tribunal usually calculate any costs award and what factors does it consider?

Cost allocation

Since the parties are free to choose a set of arbitration rules to govern the resolution of their conflict, typically the arbitration rules will contain rules on the allocation of costs. The Swiss Rules for instance provide that the costs of the arbitration shall in principle be borne by the unsuccessful party. However, the arbitral tribunal can apportion any of the costs of the arbitration among the parties if it determines that such apportionment is reasonable, taking into account the circumstances of the case (Article 40(1), Swiss Rules).

Under the Swiss Rules, the costs for a party's legal counsel will be reimbursed in the final award to the extent such costs were claimed during the arbitral proceedings, and to the degree the arbitral tribunal deems the amount to be reasonable

Cost calculation and factors considered

Tribunals will frequently take into account the claim amount, the complexity of the matter and the duration and stages of the proceedings (submissions, hearings, evidence procedure) when determining costs.

Enforcement of an award

Domestic awards

32. To what extent is an arbitration award made in your jurisdiction enforceable in the local courts?

Arbitral awards rendered by tribunals seated in Switzerland are enforced in the same way as judgments of Swiss state courts, meaning that they are automatically enforced and no additional exequatur (recognition procedure) is necessary.

Foreign awards

33. Is your jurisdiction party to international treaties relating to recognition and enforcement of foreign arbitration awards, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)?

Foreign arbitral awards rendered by arbitral tribunals not seated in Switzerland will be recognised pursuant to the rules of the New York Convention (Article 194, PILA) or by another applicable treaty if that treaty is more favourable than the New York Convention (favor recognitionis). One such treaty is the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID).

34. To what extent is a foreign arbitration award enforceable?

In principle, all foreign arbitration awards are enforceable in Switzerland as long as their content is not contrary to public policy and the other safeguarding provisions of the New York Convention (Article V, New York Convention) have been adhered to.

The enforcement procedure is governed by the CCP and summary in nature, adjudged by the court at the place of residence or incorporation of the defendant, the place where the award shall be enforced or where it was issued, which would not be applicable in instances of foreign awards.

35. What is the limitation period applicable to actions to enforce international arbitration awards rendered outside your jurisdiction?

How long a party can wait with lodging its enforcement application in Switzerland is primarily an issue of the substantive law applicable to the dispute and the validity that such law gives to an arbitral award. Under Swiss law, an arbitration award is considered equivalent to a state court judgment. As such, Swiss law provides that obligations cast in a court judgment maintain their validity for ten years from their rendering.

Length of enforcement proceedings

36. How long do enforcement proceedings in the local court take, from the date of filing the application to the date when the first instance court makes its final order? Is there an expedited procedure?

As noted, enforcement proceedings are reasonably quick and uniform. Once seized with an application request for enforcement, the court will notify the counterparty about the pending request and set the respondent a short deadline to lodge a submission on the admissibility.

The arguments that the counterparty can bring against the enforcement are limited to reasons that can halt the enforcement such as payment, an agreed deferment of enforcement, lapsing of the obligation owing the statute of limitations or forfeiture of the right to due performance. Deferment and statute of limitation arguments must be supported by documentary evidence.

Reform

37. Are any changes to the law currently under consideration or being proposed?

Draft proposals for the additions to Chapter 12 of the PILA (see Question 2) primarily aim to codify existing Swiss jurisprudence in international arbitration and to make the regime even more arbitration-friendly while maintaining the main rules and leaving most of the content to the parties discretion.

The proposal includes the following features:

  • The option for parties to approach the state court directly for the granting of interim measures, without needing to approach the tribunal first.
  • Permitting appeals to be formulated in English.
  • An obligation by the arbitrators to make transparent any reasons that might question their objectivity and independence.
  • A formal requirement on parties to invoke breaches of the arbitration rules immediately on becoming aware of such transgressions (and not saving them for later). The deadline for an appeal will be included in an express provision, thus avoiding the need for foreign parties to consult other domestic sources of law for this information.
  • The inclusion of an instrument of revision of an arbitral award. The additions will also include the right of a party to request a revision if it comes across circumstances at a later stage that give rise to valid reasons to decline an arbitrator that acted in the arbitration.
  • More detailed provisions on the procedure applicable to the challenges and removals of arbitrators.
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Commentary on Swiss Civil Procedure Code, Art. 11, 12, 19 and 32 – 34, by Dr. Urs Feller/Dr. Jürg Bloch

Urs Feller together with Jürg Bloch comments in the standard commentary by Sutter-Somm/Hasenböhler/Leuenberger (Hrsg.), Kommentar zur Schweizerischen Zivilprozessordnung (ZPO), 3. Auflage, 2016, on provisions on jurisdiction.

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Autor: Urs Feller, Marcel Frey
Paper: The Lawyer

Disclosure of bank details: who has the right to object

Dr. Urs Feller and Marcel Frey discuss the implications of a recent Federal Tribunal decision pertaining to the issue of standing of account holders and beneficial owners in proceedings concering mutual legal assistance requests requesting the disclosure of bank client data.

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Autor: Urs Feller, Danielle Wenger
Paper: PD Newsletter

Prager Dreifuss Newsletter – März 2016: Administrative Assistance in Tax Matters – Group Requests

Dr. Urs Feller, Danielle Wenger and Michaela Lemke discuss the procedure and legal issues with regard to administrative assistance in tax matters based on the recent group request by the Netherlands.

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Autor: Urs Feller, Marcel Frey
Paper: Practical Law Country Guide

Enforcement of judgments in Switzerland: Overview

Dr. Urs Feller, Marcel Frey and Michaela Lemke provide an overview of what to expect and which steps need to be followed when enforcing foreign state court judgments in Switzerland

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Autor: Urs Feller, Marcel Frey
Paper: Practical Law Country Guide

Enforcement of arbitral awards in Switzerland: Overview

Dr. Urs Feller, Marcel Frey and Michaela Lemke discuss which steps need to be undertaken and what to expect when enforcing foreign arbitral awards in Switzerland.

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Autor: Urs Feller, Marcel Frey
Paper: IFLR

Enforcing foreign judgments and awards

Dr. Urs Feller und Marcel Frey discuss the practical and procedural steps to be undertaken when enforcing a foreign state court judgment or foreign arbitral award in Switzerland.

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Autor: Urs Feller, Marcel Frey
Paper: IBA Litigation Committe Compendium

Multi-Tiered Dispute Resolution Clauses

Article on the development of jurisprudence in Switzerland with regard to multi-tiered dispute resolution clauses.

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Autor: Urs Feller, Marcel Frey, Bernhard C. Lauterburg
Paper: Practical Law Country Guide

Litigation and enforcement in Switzerland: overview – Practical Law multi-jurisdictional guide 2015 / 2016

Article on the main principles of dispute resolution in Switzerland (litigation and arbitration) in civil matters in Q&A format.

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Autor: Urs Feller, Mark Meili
Paper: SJZ

Swiss Request for Conciliation in Euro-International Relations

The authors discuss a judgement by the London High Court of Justice dated August 6, 2014 and the question, if a Swiss request for conciliation may generate a lis pendens situation within the scope of the Lugano Convention.

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Autor: Urs Feller, Marcel Frey
Paper: The Lawyer

Assessing the risks – Pre-trial costs in Switzerland

Uncertainty about the outcome of civil trials frequently deters potential litigants from commencing court proceedings. In the article, the authors discuss the recent Federal Tribunal jurisprudence in Switzerland dealing with the allocation of costs involved in the precautionary taking of evidence before the beginning of proceedings.

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Autor: Urs Feller, Bernhard C. Lauterburg
Paper: IFLR

Preliminary Judicial Protection

The authors discuss in this article, which was reprinted in IFLR Switzerland Guide 2015 (originally printed in the IFLR – Dispute Resolution Guide 2014), interim relief in recent Swiss jurisprudence in several areas of law (contracts, bankruptcy, IP and competition) and highlight areas where it pays to be prudent.

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Autor: Urs Feller

Interview mit Stephanie Baumgartner über Best Master Arbeit

Interview mit Frau Stephanie Baumgartner über ihre Master Arbeit mit dem Titel “Organtransplantantion – Zustimmungs- oder Widerspruchslösung” mit welcher sie den “Best Master” Wettbewerb von NZZ Campus / MakingScienceNews gewonnen hat. Der erste Preis wurde von Prager Dreifuss AG gesponsert.

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Autor: Urs Feller
Paper: Financier Worldwide

Annual Review: Litigation & Alternative Dispute Resolution 2014

Q&A format interview on current market challenges in commercial disputes, effective dispute resolution strategies and ADR options as well as arbitration in Switzerland and practical challenges in litigating multinational disputes.

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Autor: Urs Feller, Bernhard C. Lauterburg
Paper: IFLR

Preliminary judicial protection

The authors discuss in this article, which was published in IFLR – Dispute Resolution Guide 2014, interim relief in recent Swiss jurisprudence in several areas of law (contracts, bankruptcy, IP and competition) and highlight areas where it pays to be prudent.

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Autor: Urs Feller, Marcel Frey
Paper: Newsletter of the International Bar Association, Criminal Law Section News

Money laundering by omission – a landmark decision by the Swiss Federal Tribunal

Review of a decision by the Swiss Federal Tribunal that money laundering according to the Swiss Criminal Code can be committed by omission if the perpetrator is under a special duty of care

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Autor: Urs Feller
Paper: The American Lawyer, Focus Europe an ALM Supplement

Administrative Assistance in tax matters – focus on UBS

Q & A on various aspects of the administrative assistance procedure in tax matters, highlighting the situation of UBS-clients and the respective treaty between US and Switzerland.

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Autor: Urs Feller, Marcel Frey, Bernhard C. Lauterburg
Paper: Practical Law Company Dispute Resolution Handbook 2011/2012

Dispute Resolution Country Q&A Switzerland

Article on the main principles of dispute resolution in Switzerland (litigation and arbitration) in civil matters under the new Code of Civil Procedure in Q&A Format.

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Autor: Urs Feller, Philippe Nordmann, Maurice Courvoisier
Paper: IBA International Litigation News

Session report: Inside counsel perspectives on management of complex litigation

Report on the panel discussion focusing on the challenges and experiences in connection with complex litigation such as staffing, communication, budgeting, interaction with several law firms and e-discovery.

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Autor: Urs Feller, Marcel Frey
Paper: IBA International Litigation News

Recent decision by the Federal Tribunal of Switzerland: Place of performance – limiting forum shopping

Assessment of the Federal Tribunal’s recent decision denying a Swiss reinsurer jurisdiction in Switzerland based on a claim of invalidity of contract because of dissent of a material contractual duty.

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Autor: Urs Feller, Marcel Frey
Paper: IBA International Litigation News

Lawsuits by foreigners in Switzerland based on the Lugano Convention

Review of a court decision by the Federal Supreme Court on the topic of jurisdiction in Switzerland for foreign based claimants against Swiss banks based on the Lugano Convention.

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Autor: Urs Feller
Paper: IBA Litigation Newsletter

The future of international litigation in Europe: proposed amendments to Council Regulation (EC) 44/2001

Report on the conference of the IBA Litigation Committee held in June 2009 in Vienna covering the session regarding the proposed amendments to the Council Regulation (EC) 44/2001 which emerged from the Brussels Convention, being one of the most important pieces of legislation for cross border litigation in Europe."

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Autor: Urs Feller
Paper: IBA International Litigation News

International Comparative Review of Subrogation Law – Switzerland

Content: Examination of Swiss insurance law with a view to the recognition of subrogation rights, requirements for their assertion and their extent, duties of the insured and the bearing of costs.

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Autor: Urs Feller
Paper: AJP/PJA

Offenlegung von Management-Transaktionen im europäischen Umfeld

Anwendbare Regeln im Zuge der Marktmissbrauchsrichtlinie zur Bekanntgabe von Transaktionen an der SWX Europe Ltd. durch Führungspersonen.

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Autor: Urs Feller
Paper: AJP/PJA

Vergleich der Regeln zur Ad-hoc-Publizität für Emittenten, deren Aktien an der SWX und an der SWX Europe gehandelt werden

Urs Feller compares the practice regarding ad-hoc-publication obligations in Switzerland and in the United Kingdom with a view to companies whose shares are also listed on the SWX Europe Ltd. and thus must comply with European disclosure rules.

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Autor: Hans-Ulrich Brunner, Urs Feller

Haftung des Motorfahrzeughalters für Versorgerschäden seiner Familienangehörigen

Diskussionsbeitrag zur Haftung für Versorgerschaden; Ablehnung einer Haftungserweiterung, insbesondere auch im Kontext der Motorfahrzeughaftpflicht mit direktem Forderungsrecht gegen den Versicherer.

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Autor: Urs Feller
Paper: NZZ

Neue Bestimmungen im Schweizer Stiftungsrecht

Übersicht über die geplanten Neuerung im Stiftungsrecht und deren Auswirkungen auf den Stiftungsstandort Schweiz und die steuerliche Abzugsfähigkeit von Zuwendungen an gemeinnützige Stiftungen.

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Autor: Urs Feller
Paper: Stiftung juristische Weiterbildung Zürich

Licences in the bankruptcy of the licensor

Urs Feller analyzes the nature of licenses and the transferability and realization of licences in the bankruptcy of the licensor.

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Autor: Urs Feller
Paper: AJP/PJA

Summary of Swiss Banking Law

Overview of Swiss banking law, authorities, supervisory requirements, requirements for foreign banks, equity and liquidity rules, accounting and audit standards, sanctions and investor protection measures.

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Autor: Urs Feller
Paper: AJP/PJA

Innovation im englischen Zivilprozessrecht – anwendbar auch in der Schweiz?

Untersuchung zum zivilprozessualen Instrument der Vertragsofferte der neuen englischen Civil Procedure Rules und zur Frage deren Übertragung ins schweizerische Zivilprozessrecht.

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Autor: Urs Feller
Paper: Recht 1998

Zugang zu Netzen und anderen Einrichtungen

Urs Feller analyses a German court decision by the High Court of Düsseldorf in the area of mobile communication and its potential implications for Swiss competetion law (essential facility doctrine).

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