The purpose of this article is to provide information on some developments in Switzerland with regard to the recognition of foreign ex parte interim measures under the Lugano Convention, excluding the application of the Federal Act on Private International Law. In addition, this article will attempt to present an overview of independent ex parte interim measures in Switzerland.
II. Recognition of English Mareva Injunctions under the Lugano Convention
On 22 September 1995, the Sole Judge of the District Court of Zurich rendered a decision regarding the recognition of an English Mareva Injunction under the Lugano Convention. As far as we know, this award - which has not been reported in an official court reporter but in a Swiss law journal (see Daniel Stoll, Schweizerische Juristenzeitung, No. 6, 15 March 1996, p. 104) - is the first judgement on this issue in Switzerland.
The main holding of the Sole Judge's decision is that an English Mareva Injunction is basically a recognisable judgement in the sense of Article 25 of the Lugano Convention. A closer look at the underlying reasoning reveals that the Sole Judge has based the decision on the background of the circumstance that the defendants had requested an amendment of the original order from the English judge. The English judge granted this request (at least in part) in an additional order after having heard the defendants. The Swiss judgement does not, therefore, add anything to the debated issue of whether ex parte interim measures can be recognised in another Lugano Convention State.
The leading decision in this respect is the Denilauler vs Couchet Freres case, which was decided by the European Court of Justice on 25 May 1980. In this decision, the European Court of Justice, which was relying on the opinions of England and the general attorney as opposed to the opinions of Italy and the Commission, came to the conclusion that ex parte interim measures cannot be enforced in another Convention State under Article 25 of the Brussels Convention.
The Denilauler vs Couchet Freres decision has been the object of approval but also of important criticism. This, however, is not the place to analyse them, nor to go into the reasoning of the European Court of Justice in detail.
III. Separate Interim Relief in Switzerland based on Civil Proceedings
In international litigation, the plaintiff's primary interest is often to have a simultaneous "surprise effect" in different jurisdiction. This applies especially in fraud cases where the damaged party is trying to recover its losses. As long as the Denilauler vs. Couchet Freres ruling stands, plaintiffs seeking to obtain interim relief in Switzerland are best advised to file for independent relief (Article 24 Lugano Convention).
If one assumes that the Plaintiff has already received a world-wide Mareva Injunction in an ex parte proceeding in England which encompasses (1) the prohibition of disposal of assets, (2) the disclosure of information with regard to assets of the defendants, and (3) the entry and search of premises and vehicles on the premises with the purpose of seizing relevant documents, the question is whether similar relief can be obtained with independent proceedings in Switzerland.
The legal basis for interim relief in Switzerland is twofold: On the one hand, the relevant law is the Swiss Federal Statute of Debt Collection and Bankruptcy (the "DCBL"), which is the exclusive basis for interim relief based on monetary claims. On the other hand, the basis for interim relief are the procedural laws of each of the 26 cantons of Switzerland. These procedural rules offer interim relief in other than monetary claims, i.e. mainly in cases concerning proprietary rights. In general terms, there are four requirements for granting interim relief based on cantonal procedural laws: (1) the likelihood that the claim in the pending main trial is justified, (2) the existence of an imminent and not easily reparable damage, if the relief is not granted, (3) the substantiation of the factual situation by prima facie evidence and (4) the requested provisional measures must not go any further than is necessary for the interim protection of the alleged claim, and the impact on the defendant must be in an adequate relation to the damages the petitioner would incur if he were to win the main trial, but be unable to enforce the judgement because he was not granted the provisional measures.
A. Prohibition of the Disposal of Assets
If a monetary claim is at stake, all the various assets belonging to the debtor and located in Switzerland can be attached based on the DCBL. A prohibition of the disposal of an asset can be obtained based on interim relief according to the procedural laws of the cantons if a proprietary claim, or any other non- monetary claim, is at stake. The judge can also order the defendants to deposit certain assets, or rule that the assets be seized.
B. Disclosure of Information
This type of relief is not intended to secure money claims. It would therefore have to be based on cantonal procedural law. For example, based on ä 231 of the Procedural Law of Zurich, the plaintiff can request the disclosure of documents and can, in this way, receive the information contained in the documents. The intention of this rule is the securing of evidence in a later proceeding on the merits of the case. The judge can, therefore, order the defendants to deliver the documents to the petitioner or to the judge only if it is accepted that they are required as evidence in a trial and that there is a danger of them being destroyed and thus no longer available at a later stage. Because the defendants are always formally ordered to hand the documents over (to the plaintiff or to the judge), the surprise effect cannot be achieved with this type of relief and there is no way of checking whether or not the defendant does indeed disclose the documents as requested.
C. Entry and Search of Premises and Vehicles on the Premises
Neither the DCBL nor the cantonal procedural law provide a way to obtain an order allowing a private party to enter and search premises.
IV. Conclusion
Apart from the attachment of assets under the DCBL, there is no way for a private party to obtain relief comparable to a Mareva Injunction (including disclosure of information and entry of the defendant's premises) in Switzerland with civil proceedings. This is an unsatisfactory situation, which - in the opinion of the author - can be moderated in two different ways.
The first, traditional, way is to involve the criminal authorities in Switzerland. This is possible if criminal acts are involved. The criminal authorities have a far-reaching arsenal of remedies (such as freezing of assets connected to a crime, searching of premises, formal questioning of the persons involved to obtain information) at their disposal. Such remedies will be ordered if a Swiss judge has (criminal) jurisdiction or if one of the involved states has formally requested criminal assistance. The main advantages of the use of criminal proceedings are:
- Contrary to the proceedings under the DCBL, in order to have assets frozen it is not necessary to prove (on the level of prima facie evidence) that the plaintiff has a valid civil cause against the defendant/debtor, nor that assets are located in Switzerland, nor that sufficient links to Switzerland exist;
- If the circumstances require immediate action, the Swiss criminal authorities are generally prepared to act quickly;
- Criminal freezing orders can also be obtained against defendants/debtors residing in Switzerland. Civil attachment orders can almost only be obtained against a debtor/defendant residing outside Switzerland;
- It is not necessary to post a bond, which for civil attachment proceedings is at the full discretion of the judge, but can generally be estimated to be about 10% of the amount claimed;
- Third parties in possession of assets on behalf of the defendant/debtor cannot be compelled to disclose information in attachment proceedings under the DCBL. Withholding information is not possible in criminal proceedings, and, for the banks in possession of assets, the banking secrecy is no defence.
- The only way to gain direct access to the defendant's premises or documents is with the help of the criminal authorities.
- Criminal relief offers de facto a way to search for assets. This is not possible under the DCBL.
- In practice, the damaged party, which will usually be able to provide the criminal authorities with information, will often obtain access to additional information through the criminal investigation.
Funds attached by criminal authorities must have been connected to a crime, and it is therefore up to the authorities to decide what is going to happen to them. Consequently, by involving the criminal authorities, the parties lose a degree of control over the attached funds which might jeopardise settlement agreements.
The need to achieve a surprise effect in situations where no criminal behaviour is involved leads to the second possible solution. This is to re-open the discussion in recognition proceedings in Brussels and Lugano Convention States as to whether or not it is possible or not to recognise ex parte decisions under article 25 of the Conventions. Would the European Court of Justice today come to the same conclusion as in Danilauer vs Couchet Freres, considering the well-founded criticism which has been, and still is, expressed against the decision and also the fact that England has wide-ranging - even world-wide - ex parte relief, which was not the case when the Denilauler vs Couchet FrSres decision was rendered? Unfortunately, in the first case in Switzerland, which is reported here, the Swiss judge did not have to answer this issue.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
