Switzerland: Litigation And Dispute Resolution 2018

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has your jurisdiction got? Are there any rules that govern civil procedure in your jurisdiction?

Switzerland is a civil law jurisdiction. Accordingly, the primary sources of legal authority are written codes and statutes, whereas case law is of less importance than in common law jurisdictions.

Civil procedure in Switzerland is primarily governed by the Swiss Code of Civil Procedure ("SCCP"). The SCCP comprehensively governs civil procedure in Switzerland and domestic arbitration proceedings. Further important sources of civil procedure are the Swiss Federal Act on Private International Law ("PILA") and the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 30 October 2007 ("Lugano Convention") dealing with the question of jurisdiction in cross-border matters. The PILA, moreover, regulates international arbitrations with a seat in Switzerland.

1.2 How is the civil court system in your jurisdiction structured? What are the various levels of appeal and are there any specialist courts?

Generally speaking, the Swiss court system consists of three layers of instances: the courts of first instance (at a cantonal level); the upper courts (second instance; also at a cantonal level); and the Swiss Federal Supreme Court as the third and last instance. In exceptional cases, however, a single instance (e.g. the upper court or a specialist court) decides a dispute on the cantonal level (with the possibility to appeal to the Federal Supreme Court). The structure of the (first and second instance) civil court system varies from canton to canton.

In general, cantonal courts have jurisdiction in all areas of the law, including federal law. Cantons are, however, free to have specialist courts such as a court for labour law matters, a court for landlords and tenants, and specialised commercial courts. While most cantons have specialist courts for labour and tenant law matters, only Zurich, Bern, St. Gallen and Aargau have a commercial court. In addition, the Federal Patent Court decides all civil law disputes concerning patents on a first instance level.

The Federal Supreme Court, as Switzerland's highest court, safeguards the application of federal and constitutional law. Proceedings before the Swiss Federal Supreme Court are governed by the Swiss Federal Tribunal Act.

1.3 What are the main stages in civil proceedings in your jurisdiction? What is their underlying timeframe (please include a brief description of any expedited trial procedures)?

The SCCP provides for three types of proceedings: (i) ordinary proceedings; (ii) simplified proceedings; and (iii) summary proceedings. Each of the three types of proceedings can be divided into the following stages before a court of first instance:

  1. the assertion stage, where the parties must plead their arguments and offer evidence available to them;
  2. the evidentiary stage;
  3. the post-hearing stage, where the parties may comment on the result of the evidentiary phase; and
  4. issuance of the judgment.

Simplified proceedings apply to small cases (where the value in dispute is below CHF 30,000), as well as to cases before special courts for labour law, landlord and tenant matters and consumer disputes and are, compared to ordinary proceedings, less formal, favour oral submissions, and give a more active role to courts. Summary proceedings, which apply to urgent requests and requests for provisional measures, to so called 'clear-cut cases', to specific proceedings under the Federal Debt Collection and Bankruptcy Act ("DEBA"), and to numerous other matters explicitly listed in the SCCP, go even further in terms of simplification and expediency. A specificity of summary proceedings is that the evidence available is limited to documents. Other means of evidence are only admissible if the taking of such evidence does not delay the proceedings, or is indispensable for the purpose of the proceedings, or if the court has to establish the facts ex officio.

The average length of proceedings before first instance courts is between one and two years in commercial cases, and approximately up to one year in smaller and simpler cases as well as cases before specialist courts for labour law and for landlord and tenant matters. In complex cases, the duration of the proceedings may be longer.

1.4 What is your jurisdiction's local judiciary's approach to exclusive jurisdiction clauses?

Domestic and foreign parties may agree on the court that shall have jurisdiction ratione loci over an existing or future pecuniary dispute ("vermögensrechtliche Streitigkeit") arising from a particular legal relationship. Unless the parties' agreement provides otherwise, the agreed court's jurisdiction is exclusive. The parties' freedom to agree on the court competent ratione loci is excluded or limited in a few instances only.

The designated Swiss court must honour an exclusive jurisdiction clause, unless none of the parties is domiciled in a Member State of the Lugano Convention and the law applicable to the merits of the case is not Swiss law.

1.5 What are the costs of civil court proceedings in your jurisdiction? Who bears these costs? Are there any rules on costs budgeting?

Court fees and attorneys'fees are regulated by the cantons individually. In Switzerland, litigation costs are generally reasonable. In pecuniary disputes, the court and attorneys' fees mainly depend on the amount in dispute. Other factors, such as the type and course of the proceedings and the complexity of the case, are also taken into consideration. Swiss courts may order a claimant to make an advance payment up to the amount of the expected court costs.

In general, all expenses arising from the litigation are to be borne by the losing party. If no party fully prevails, the court will divide the costs proportionally between the parties.

There are no rules on costs budgeting.

1.6 Are there any particular rules about funding litigation in your jurisdiction? Are contingency fee/conditional fee arrangements permissible?

Agreements on contingency fees are not permissible for proceedings before Swiss courts. On the other hand, incentive payments can be agreed as long as the hourly fee covers the attorney's costs.

As regards security for costs, in certain cases and upon the respondent's request, Swiss courts may order the claimant to provide security for the respondent's attorneys' fees. This may be the case if the claimant has no residence in Switzerland, appears to be insolvent or owes costs from previous proceedings. To the extent, however, the Hague Convention of 1954 on Civil Procedure or of 1980 on International Access to Justice or other treaties apply which forbid security for costs for the sole reason of a claimant's foreign domicile, Swiss courts cannot order a claimant to provide security for costs on that ground.

1.7 Are there any constraints to assigning a claim or cause of action in your jurisdiction? Is it permissible for a non-party to litigation proceedings to finance those proceedings?

In general, the assignment of a claim is permitted and valid, unless one of the following exceptions apply:

  • In few instances, the law forbids the assignment (mainly with regard to employment contracts, claims of the borrower or tenant regarding the usage of the leased item or claims connected to a person's status as heir).
  • The parties agreed that a claim shall not be assigned.
  • Moreover, an assignment is prohibited if a claim is so closely connected to the person of the assignor that an assignment would significantly alter the existence, the content or the purpose of the claim.

The Swiss Federal Supreme Court in principle allowed litigation funding through a third party. It is important to note, however, that litigation funding must not unduly interfere in the client-attorney relationship. The attorney's independence needs to be ensured at all times.

1.8 Can a party obtain security for/a guarantee over its legal costs?

For the preconditions to obtain security for/a guarantee over legal costs, see question 1.6.

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