1. GENERAL ASPECTS OF CIVIL LITIGATION
Switzerland is a confederation composed of 26 states (cantons). This structure is decisive for many aspects of litigation in Switzerland.
1.1 Procedural Law
The Federal Constitution of the Swiss Confederation (hereinafter the "Constitution") vests legislative authority with respect to civil procedural law in principle, but not comprehensively, with the cantons (Article 64, paragraph 3). As a consequence, 26 different Cantonal Court Constitution Laws and Civil Procedural Laws apply. The Federal Code of Civil Procedure applies only to those few matters where the Federal Supreme Court has exclusive jurisdiction or where it has authority to decide appeals and complaints against cantonal decisions.
Federal legislation as well as the federal courts have increasingly encroached on cantonal procedural law in recent times. Since the Federal Act on Private International Law (hereinafter called "PIL"), the Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters of 16 September 1988 (hereinafter the "Lugano Convention"), and a number of Hague Conventions govern the areas of international procedural law and the enforcement of foreign judgments in Switzerland, increasingly, cantonal laws are more and more applicable only to domestic disputes.
1.2 Jurisdiction Within Switzerland
Generally, jurisdiction is based on the place of the defendant's domicile, registered seat, or permanent establishment. This rule is based on Article 59 of the Constitution, which guarantees that any claim brought against a solvent defendant domiciled in Switzerland concerning monetary matters must be brought at the place of that defendant's Swiss domicile. Under specific circumstances, such as when the domicile of the defendant is unknown, where the dispute relates to real property or to an inheritance, or in matters related to the attachment of assets, other places of jurisdiction may apply.
At present, a draft for a new "Federal Law on the Unification of Places of Jurisdiction in Civil Matters and Acknowledgement and Enforcement of Extra-cantonal Judgements in Civil Cases" has been submitted to Parliament; thus, in the future, there will be fewer differences among the cantons.
1.3 Court Organisation
Cantonal Courts
Each canton organises its courts independently. Both the systems and the names of the courts are, therefore, quite diverse. District courts are generally the courts of first instance. In most cantons, courts of appeal or superior courts act as appellate courts if the amount in dispute exceeds a certain threshold. In Zurich and a few other cantons, courts of cassation hear pleas in nullity against decisions of the trial courts (district courts, superior courts, or courts of appeal) to redress reversible errors in law.
Special Courts
In many cantons, special courts exist which have limited jurisdiction to deal with certain types of disputes, such as employment contracts (labour law courts), lease contracts (landlord-tenant courts), or commercial matters (commercial courts). This specialisation warrants a faster and more efficient handling of disputes.
Federal Courts
The Federal Supreme Court (hereinafter the "Supreme Court") and the Federal Insurance Court are judicial bodies which have jurisdiction as appellate courts to examine the decisions of the cantonal courts or by federal agencies and departments. The Supreme Court has original jurisdiction for disputes between the Confederation and the cantonal governments, disputes between cantons, claims by private individuals or corporations against the federal government, and for disputes where the parties agree that the claim should be heard solely by the Supreme Court.
1.4 Different Types Of Civil Procedure
Cantonal civil procedure rules distinguish between different types of procedure:
Standard Procedure
Standard procedure is always applied in situations where no other procedure is required. By far, the great majority of cases are dealt with under these rules.
Simplified and Rapid Procedure and Accelerated Procedure
A simplified and rapid procedure is required in a number of specific disputes, such as between landlords and tenants or employers and employees. In the simplified and rapid procedure, time limits are not delayed by court holidays, bail is not imposed, and the pleadings in the court of first instance are oral. Similarly, the accelerated procedure is applicable in specific cases, particularly in relation to debt collection and bankruptcy proceedings. This procedure is such that the parties are summoned at short notice and proceedings must be completed within a limited time. In general, pleadings are oral.
Summary Procedure
Summary procedure involves written or oral pleadings, but evidence is restricted. This restriction may result in the exclusion of certain types of evidence (e.g. no examination of witness) or a lower standard of proof than in ordinary proceedings (prima facie evidence). Summary procedure is also intended to be a rapid procedure.
1.5 Rules Of Procedure
Presenting Facts and Arguments
Before the litigation can begin, the plaintiff must, in most cases, first submit his claim to the justice of peace for conciliation proceedings. Failing conciliation, an action is filed by submitting the statement of claim, together with the certificate of the justice of peace, to the appropriate court. The action must contain both a statement of the facts and the plaintiff's prayers for relief. The facts must be explained in detail, and the plaintiff must list the available evidence.
Swiss law generally does not provide for pre-trial discovery in civil cases. Obtaining evidence before the exchange of oral or written pleadings is possible, however, if the evidence would otherwise be jeopardised (e.g. because of illness or incapacity of a witness, the risk of flight from Switzerland, or commercial reasons for assessing damage immediately). A party in a civil action may sometimes profit from evidence which is collected by the criminal authorities in a criminal investigation (see below).
In his answer, the defendant will present his view of the facts and list the corresponding evidence. The first exchange of briefs or oral pleadings, where applicable, may be followed by a reply and a rejoinder, either in written form or orally.
Presenting Evidence / Means of Proof
Evidence is taken on the main facts disputed and is based on the fundamental rule that the existence of a fact must be proven by the party deriving rights from that fact (Article 8 of the Swiss Civil Code).
Questioning of the parties, witnesses, documents, inspections of a locality or a site, and expert opinions are all admissible as evidence. Cross examination of witnesses is not possible. In practice, documents are the most important means of proof.
1.6 The Appeals System
Whether or not a party may appeal a judgement depends largely upon the type of claim and, in disputes over pecuniary rights, on the value in dispute. Judgements rendered by courts of first instance up to a specified amount are regarded as final and cannot be appealed. Judgements involving higher amounts may be appealed to cantonal courts. Judgements in civil law disputes involving more than CHF 8'000 (including decisions of cantonal appellate courts) may be appealed to the Supreme Court.
For disputes which do not involve pecuniary rights, a cantonal appeal and an appeal to the Supreme Court are permissible in all cases without a limit on the value in dispute.
2. JURISDICTION OF SWISS COURTS IN INTERNATIONAL MATTERS
2.1 Rules Of Jurisdiction Under The Federal Act On Private International Law
Basic Principles
As a rule, Swiss judicial or administrative authorities located at the defendant's domicile also have exclusive jurisdiction over international matters. This principle is provided for in Article 2.
For companies, the registered office is equivalent to domicile. The registered office is deemed to be located at the place designated in the by-laws or in the articles of association of the company. Failing such a designation, a company's registered office is located at its de facto place of management (Article 21, PIL).
Special Rules of Jurisdiction
Besides the obvious possibility of a choice of forum by the parties (Article 5, PIL), the PIL contains some special rules for jurisdiction in addition to the basic principle that suit must be brought at the place of the domicile of the defendant. The most important of these jurisdictional rules are:
(i) an action to perfect an attachment obtained in Switzerland may be brought at the Swiss forum of the attachment (forum arresti) (Article 4, PIL);
(ii) the Swiss courts located at the domicile of the plaintiff will entertain an action for divorce or separation, provided that the plaintiff has been residing in Switzerland for at least a year or is a Swiss national (Article 59, PIL);
(iii) the courts at the place where real property is located in Switzerland have exclusive jurisdiction to entertain actions relating to personal property rights (Article 97, PIL);
(iv) in the absence of a domicile of the defendant in Switzerland (see Article 59 Constitution), actions pertaining to intellectual property matters may be brought at the place in Switzerland where the protection is sought (this provision does not apply to actions pertaining to the validity or registration of intellectual property rights in a foreign country) (Article 109, PIL);
(v) in the absence of a domicile of the defendant in Switzerland (see Article 59, Constitution), Swiss courts at the habitual residence of the defendant have jurisdiction to entertain actions arising out of a contract (Article 112, PIL) and unjust enrichment (Article 127, PIL);
(vi) if the disputed contractual obligation must be performed in Switzerland and the defendant has neither a domicile nor a habitual residence or place of business in Switzerland (see Article 59, Constitution), the action may be brought before the Swiss courts at the place of performance (Article 113, PIL). The question of whether an obligation must be performed in Switzerland will be answered in accordance with the proper law of the contract;
(vii) an action initiated by a consumer may be brought before the Swiss court at that consumer's domicile or habitual residence or at the domicile of a supplier, or, in the absence of such a domicile in Switzerland, at the habitual residence of the supplier (Article 114, PIL);
(viii) an action initiated by an employee may be brought before the court at the employee's domicile or habitual residence in Switzerland (Article 115 (2), PIL); and
(ix) actions in tort may be brought before the Swiss courts at the place where the act or the result of the act occurred when the defendant has neither a domicile nor a habitual residence or place of business in Switzerland (see Article 59, Constitution; Article 129, PIL).
2.2 Lugano Convention
The PIL does not affect the rules concerning the international jurisdiction of Swiss courts within the scope of international treaties. The most important treaty for determinating the jurisdiction of Swiss courts is the Lugano Convention. In Switzerland, the Lugano Convention entered into force on 1 January 1992. Meanwhile, the main purpose of the Lugano Convention is to extend the principles of the Brussels Convention of 27 September 1986 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the "Brussels Convention"), which is part of EU law, by establishing the Lugano Convention as a parallel treaty for non-EU members. It follows that the provisions of the Lugano Convention are largely identical to those of the Brussels Convention.
The Lugano Convention has priority over the PIL for the determination of the jurisdiction of the Swiss court whenever a defendant is domiciled in a contracting State (Article 2, Lugano Convention). It follows that, for the question of international jurisdiction, the PIL only applies outside the substantive scope of the Lugano Convention (in commercial matters) or if the defendant is not domiciled in Switzerland (or in another contracting State).
For the determination of international jurisdiction, the basic principles of the Lugano Convention are similar to the provisions of the PIL. The most important factor used to determine the jurisdiction of a contracting State is the defendant's domicile (Article 2, Lugano Convention), but in special circumstances, a person domiciled in a contracting State may be sued in another contracting State. These exceptions are listed in Article 5 of the Lugano Convention (for example, jurisdiction at the place of performance and at the place where the harmful event occurred).
As compared to the provisions of the PIL, two differences are noteworthy: the PIL does not provide for jurisdiction against a settlor, trustee, or beneficiary of a trust in the State where the trust is domiciled, whereas the Lugano Convention provides for such jurisdiction (Article 5, Section 6, Lugano Convention); and the PIL recognizes the forum arresti, whereas within the applicability of the Lugano Convention, Switzerland had to refrain from applying this jurisdiction (Article 3, Lugano Convention).
3. RECOGNITION AND ENFORCEMENT OF FOREIGN CIVIL JUDGMENTS IN SWITZERLAND
As a rule, Swiss courts must recognize and enforce foreign decisions without the possibility of reviewing the decisions on the merits, if the requirements provided for by the PIL or in treaties are met.
3.1 Requirements For Recognition
The basic requirements for recognition are set forth in Article 25, PIL, which provides that a foreign decision must be recognized in Switzerland if:
(i) the foreign court rendering the decision had jurisdiction;
(ii) the decision is final; and
(iii) there is no reason for refusal of the recognition under Article 27, PIL.
Jurisdiction of Foreign Court
With regard to the question of whether a foreign court rendering the decision had jurisdiction, the PIL contains specific provisions; therefore, it is not primarily relevant whether or not the court rendering the decision had proper jurisdiction according to its own rules of jurisdiction.
As a consequence of Article 59 of the Constitution, the general rule of the PIL is that courts at the place of the domicile of the defendant are presumed to have jurisdiction over the defendant (Article 26(a), PIL). Additionally, specific provisions extend jurisdiction in specific circumstances. However, as a rule, to safeguard Article 59 of the Constitution, the jurisdiction of foreign courts other than the jurisdiction at the place of domicile of the defendant will only be recognized if the defendant is not domiciled in Switzerland as, for example, in a case where the courts at the place of performance or at the place of a tortious act or its effects are granted jurisdiction (Article 149(2)(a) and (f), PIL; see Section 2.1 above).
In some rare instances, the PIL also accepts foreign jurisdiction independently of whether the domicile of the defendant is located in Switzerland and, by doing so, establishes exceptions to Article 59 of the Constitution. The most important exception occurs in cases of monetary claims before the court of the defendants habitual residence, if the claim is related to an activity conducted at the habitual residence (Article 149(1)(b), PIL).
Minimum contacts with a foreign jurisdiction sufficient for long-arm jurisdiction are not included as grounds for jurisdiction. Consequently, a U.S. judgment based on long-arm jurisdiction will generally not be enforced in Switzerland against a debtor domiciled in Switzerland, provided that the defendant did not plead on the merits without reservation.
Finality
A decision is final for Swiss enforcement purposes when the period for bringing an appeal in the ordinary way has expired without the taking of such an appeal or when no ordinary appeal is permissible. The PIL requires that finality be proven by the party requesting the recognition. To prove finality, that party must submit a statement certifying that the decision may no longer be appealed (Article 29(1) (a), PIL). It is generally assumed that such a statement must be provided by the court that rendered the judgment, but Swiss case law has recently held that other means of proof must be accepted by Swiss courts in jurisdictions where such a statement will not be issued by a court.
No Grounds for Denial
Finally, Article 27 of the PIL states the grounds for denial of the recognition in Switzerland. It distinguishes between denial based on substantive public policy reasons (Article 27(1), PIL), which is an exception to the principle that Swiss courts may not review decisions on the merits, and refusal based on the violation of formal public policy reasons (i.e. a violation of due process) such as proper notice, violation of fundamental principles pertaining to the Swiss conception of procedural law, and violation of the principles of lis pendens and res judicata (Article 27(2) PIL).
3.2 LUGANO CONVENTION
If the claimant seeks enforcement in Switzerland of a decision rendered in a State which is party to the Lugano Convention, the competent court in Switzerland will base its decision as to the recognition solely on the provisions of the Lugano Convention. The most important divergence from the PIL is that the Lugano Convention prevents the courts of the State where enforcement is sought from reviewing, under its own domestic standards, the jurisdiction of the court of the State where the judgment was rendered.
To protect the guarantee of Article 59 of the Constitution, Switzerland has made a reservation against the recognition of judgments which were rendered in a contracting State at the place of performance of a contract, based on Article 5(3) of the Lugano Convention, against those defendants domiciled in Switzerland who do not submit to such jurisdiction. However, this reservation will remain valid only until the end of 1999.
4. LEGAL ASSISTANCE IN CIVIL MATTERS
4.1 APPLICABLE LAWS AND TREATIES
Switzerland has ratified the 1954 Hague Convention on Civil Procedure, the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters and the 1965 Hague Convention on the Service Abroad of Judicial and Extra-Judicial Documents in Civil and Commercial Matters. In particular, the Hague Evidence Convention of 1970 facilitates considerably the taking of evidence, that is, the discovery process for foreign litigation in civil and commercial matters.
In the absence of any treaty provisions to the contrary, testimony or the disclosure of evidence in civil matters can be obtained in Switzerland through letters rogatory.
4.2 SERVICE OF FOREIGN JUDICIAL DOCUMENTS
The Hague Convention on the Service Abroad of Judicial and Extra-Judicial Documents in Civil and Commercial Matters of 15 November 1965 and the Hague Convention on Civil Procedure of 1 March 1954 are the two relevant multilateral international instruments applicable in this matter.
In all cases where these Conventions do not apply and where the service of judicial documents is not governed by a bilateral treaty, Switzerland applies for incoming requests the rules of the Hague Convention on Civil Procedure of 1 March 1954 by analogy. The use of traditional diplomatic channels remains of course also possible.
The Hague Convention of 15 November 1965
The Convention of 1965 designates central authorities for each Contracting State to simplify and expedite the procedure of transmitting foreign documents.
Switzerland allows service only through those official channels provided for in the 1965 Convention and to that purpose has formulated a reservation to Articles 8 and 10. The only exception accepted by Swiss authorities is service by a consul to its own nationals (Article 8, paragraph 2 of the 1965 Convention).
Service of judicial documents directly to individuals and corporations without the prior authorisation of the competent Swiss authority is forbidden and, if done by private persons, may even qualify as a criminal offence under Article 271 of the Swiss Criminal Code.
- Competent Authorities
The requesting authority must be an authority or judicial officer competent under the law of the state in which the document originates (Article 3 of the 1965 Convention). Whether lawyers from countries, where personal service is possible, can request the service directly from the Swiss Central Authorities appears to differ from country to country. According to the guidelines of the Swiss Federal Office of Police, requests emanating from U.S. lawyers representing a party in the proceedings are acceptable. The situation with respect to requests by lawyers from England is, however, unclear.
With reference to Articles 2 and 18 of the 1965 Convention, Switzerland has designated 26 Central Authorities, one in each canton, as receiving authorities. Besides these 26 Cantonal Central Authorities, the Swiss Federal Office of Police is also competent to receive requests.
It should, however, be stressed that Switzerland has concluded a number of bilateral agreements within the meaning of Article 11 of the 1965 Convention allowing direct communication between judicial authorities. Thus, these types of agreements continue to apply notably for requests emanating from Germany, Belgium, Italy and Luxembourg.
- Methods of Service
Formal service may be performed either by following the method prescribed by the internal law of the requested State or according to a particular method requested by the applicant, unless such a method is incompatible with the law of the requested State (Article 5, paragraph 1, subparagraphs (a) and (b) ). Informal deliveries are always possible if the addressee accepts the service.
- Translations
The translation requirements for the request itself and the documents to be served are different: although the request can be in English, French, or in the official language of the requesting State, the documents to be formally served must be translated into the official language of the canton where they will be served. Documents which are not translated may be served only if the addressee accepts them voluntarily.
- Costs
In principle, no costs are incurred in connection with service through the Central Authority. However, the applicant must pay all costs resulting from the employment of a judicial officer or the use of a particular method of service.
The Hague Convention of 1 March 1954
Chapter One of the Hague Convention on Civil Procedure of 1 March 1954 (the 1954 Convention), governs the communication of judicial or extra-judicial acts between Switzerland and other contracting States. According to Article 1 of the 1954 Convention, the usual channel of transmission is through the consul of the requesting State who then sends the request to the competent authority of the requested State (in Switzerland, this is the Federal Office of Police).
Once again, special bilateral agreements, such as the one concluded with Austria, may deviate from 1954 Convention.
4.3 DISCOVERY AND COLLECTION OF EVIDENCE
General Rules and Restrictions
- Collection of Evidence as a Judicial Function
Switzerland considers the process of collecting evidence (in particular, the interrogation of witnesses) as a judicial function. Accordingly, the obtaining of evidence is controlled by the courts to a much larger extent than in common law countries. Collecting evidence for use in foreign proceedings by individuals, such as the deposition of witnesses by lawyers, may even violate Article 271 of the Swiss Criminal Code, thus subjecting such individuals to criminal sanctions. Discovery in Switzerland by private lawyers cannot, therefore, go beyond initial steps designed to assess the factual of the case and must be exercised with great care.
- Statutory Impediments
Some facts as well as the knowledge thereof are protected by mandatory provisions of Swiss law (in particular, with respect to bank secrecy, general business secrets, and other confidentiality obligations) which make the disclosure process difficult and sometimes impossible. An interesting question arises as to how one can overcome such statutory impediments and obtain access to the protected information.
The Hague Evidence Convention
Evidence in civil and commercial matters can under the provisions of the Hague Evidence Convention be obtained not only through the traditional letter rogatory process, but also by diplomatic officers, consular agents, or so-called commissioners (private individuals, usually attorneys) upon an application to the competent authority (Articles 15, et seq., Hague Evidence Convention). A limited group of persons, who are not Swiss officials, are thus permitted to gather evidence in Switzerland.
The application for permission to take evidence by a diplomatic official, consular agent or commissioner must be addressed to the cantonal authority (a list of the competent authorities has been submitted by Switzerland according to Article 35 of the Hague Evidence Convention) within the territory of which discovery is sought. The cantonal authority will transfer the application, together with any comments or objections it might have, to the Federal Justice and Police Department, which will then issue (or refuse to grant) the permission.
In cases where the taking of evidence is not available on a voluntary basis because a witness refuses to cooperate, diplomatic officials, consular agents, and commissioners cannot apply to local authorities for assistance. The party seeking discovery then needs to resort to letters rogatory. Unauthorised discovery remains a criminal offence.
Pursuant to a declaration filed by Switzerland in accord with Article 23 of the Hague Evidence Convention, pre-trial discovery of documents for foreign proceedings generally is limited, but not totally excluded. However, under the Hague Evidence Convention, discovery may be refused completely if interests of third parties worthy of protection are endangered by a discovery request.
4.4 FREEZING ASSETS
Civil Attachments
The applicable procedure and the requirements for attachments are discussed below in Section 5.
Freezing Assets in the Framework of a Swiss "Mini-bankruptcy"
The civil attachment remedy is not available to trustees in foreign bankruptcies to block assets which the insolvent debtor has transferred to Switzerland to conceal from his creditors. Article 168, PIL, however, provides the trustee in a foreign bankruptcy with an efficient tool for freezing Swiss assets. According to this provision, a judge may, as soon as an application for recognition of a foreign (final or provisional) bankruptcy decree has been filed, and upon the petition of the trustee in the foreign bankruptcy or of a creditor, order provisional measures, in particular, the freezing of accounts.
Recognition of Foreign Provisional, Including Protective Measures
Because the recognition and enforcement of foreign provisional measures is controversial, in many circumstances it is quicker and less costly to seek the appropriate relief from the local court at the place where the assets or documents are located, rather than file a requeest to enforce the foreign measure.
5. CIVIL ATTACHMENT PROCEEDINGS
A creditor is often interested in attaching the debtor's assets located in Switzerland for alledged debts or for debts based on an enforceable judgment.
5.1 REQUESTS FOR ATTACHMENT
An order of attachment may be obtained, ex parte, upon petition by the creditor. Obtaining an order of attachment requires giving prima facie evidence to the court of the existence of the alleged claim and of the presence of assets belonging to the debtor in the jurisdiction of the court dealing with the petition (Article 272 of the revised version of the Swiss Debt Collection and Bankruptcy Act, which entered into force on 1 January 1997, hereinafter "DCBA").
An attachment is customarily obtained on the grounds that the debtor is not domiciled or (in the case of a company) not registered in Switzerland and that the debt has a "sufficient link" with Switzerland or that it is based on an enforceable judgment or a written acknowledgment of debt (Article 271, para. 4, DCBA).
A "sufficient link" with Switzerland is deemed to exist, for example, if the claim must be fulfilled in Switzerland or otherwise arises from doing business in this country, if the creditor is domiciled in Switzerland, or if the underlying contract is governed by Swiss law or provides for a Swiss place of jurisdiction or for arbitration in Switzerland. In any event, the mere fact that the debtor's assets are located in Switzerland does not, in itself, suffice to establish a "sufficient link" with Switzerland.
The petition must state, in particular:
(i) the amount of the creditor's claim converted into Swiss Francs;
(ii) a description of the dispute and the causes of action on which the claim is based, supported by such evidence as is necessary to establish that, prima facie, the creditor has a claim against the debtor and that the claim is due and payable;
(iii) the grounds for attachment, i.e. usually the debtor's domicile outside of Switzerland and a "sufficient link" with Switzerland, or an enforceable judgment, or a written acknowledgment of the debt; and
(iv) the names of the parties in whose hands assets of the debtor are held, such as a limited number of bank branches where the debtor is believed to have accounts, as well as a description of the property to be attached (e.g. any assets held by the debtor with specific banks). The creditor must establish prima facie, on a balance of probabilities, the existence of assets belonging to the debtor in the jurisdiction of the court dealing with the petition.
5.2 ATTACHMENT ORDERS
Ex Parte Proceedings
If the court, on the basis of a detailed request of attachment and the preliminary evidence exhibited, finds that the above conditions are prima facie established, it will grant the attachment. The processing time is usually one to three days. It must, however, be noted that the standards of the courts as to whether the conditions to grant an attachment are prima facie established, vary greatly from canton to canton. The District Court of Zurich, for instance, is notorious for its particularly restrictive approach to granting attachments, whereas courts of some other cantons tend to be rather liberal. In any event, the court will not notify the debtor if a request for attachment is rejected. The creditor may, therefore, appeal the negative court decision or bring a new or revised request for attachment at any time, without any warning to the debtor.
Bond
The court may request that the petitioner put up a bond as security for any losses that the debtor or third parties may suffer in the case that the attachment proves unjustified (Article 273, DCBA). Whereas the courts of some cantons (e.g. Geneva) routinely request such bonds prior to the granting of the attachment, the courts of other cantons request them only in a minority of the cases.
5.3 EXECUTION
The order of attachment is transmitted by the court or the creditor himself to the Debt Collection Office for execution (Article 274, DCBA). The latter immediately notifies the alleged asset holder(s) of the order and those holders are requested to indicate whether those assets have been successfully attached (Article 276, DCBA). In practice, however, because of bank secrecy, it is frequently not possible to force banks to comply with the disclosure requirement at this stage of the proceedings. Within 10-20 days after issuance of the order, the Debt Collection Office issues a notice of execution containing, as a rule, a list and an estimated value of the attached assets.
5.4 OPPOSITION TO THE ATTACHMENT
The debtor or any third party whose rights are affected by the attachment may, within 10 days from the date on which that party became aware of the attachment, file an opposition with the judge that issued the order (Article 278, DCBA).
The opposition procedure allows the debtor or a third party to dispute the finding that the conditions required for issuing of the attachment have been fulfilled. The judge, after having heard the parties' arguments, may reconsider his or her decision and lift the attachment.
The new court decision in the opposition procedure may be appealed within a period of 10 days after the decision to the court of appeal. Neither the opposition procedure nor any subsequent appeal suspends the effect of the attachment. If the debtor obtains a favorable decision, and provided that such decision is final, the attachment order ceases to be effective.
Moreover, the debtor or any third party in possession of the attached assets may lodge a complaint with the Supervisory Authority of the Debt Collection Office if that party considers the enforcement of the attachment to be irregular.
5.5 VALIDATION OF THE ATTACHMENT
The attachment must be "validated" through subsequent proceedings on the merits. To that purpose, the creditor must cause an official summons demanding payment (payment summons) to be served on the debtor within 10 days of receipt of the notice of execution of the attachment, unless that creditor, prior to the attachment, has already caused a payment summons to be served on the debtor or has already filed a suit on the merits with a court that has proper jurisdiction over the defendant.
In the event that the foreign debtor is not represented by a Swiss lawyer, service is made either based on the Hague Service Convention or other treaties (see Section 4.2) or through diplomatic channels. A copy of the notice of execution is also sent to the debtor at this time. Once the payment summons has been served on the debtor, the debtor can oppose it by sending a simple declaration addressed to the Debt Collection Office within 10 days of the date of service. If the debtor declares opposition, the creditor must, within 10 days, request its lifting (mainlev'e d'opposition) by means of court action (Article 279, DCBA).
The creditor may also validate the attachment by filing a lawsuit on the merits within the above-mentioned 10 day deadline without first resorting to collection proceedings. In such a case, the creditor must again validate the attachment by a request for collection proceedings within 10 days following notification of the judgment on the merits of the case.
5.6 SEIZURE AND SALE OF ASSETS
Once final judgment on the merits of the claim duly enforceable in Switzerland has been obtained, the creditor must file a petition to convert the attachment into a final seizure, so that the assets can be liquidated and the proceeds distributed to the creditor(s).
6. LEGAL ASSISTANCE IN CRIMINAL MATTERS
6.1 APPLICABLE LAWS AND TREATIES
Switzerland is party to two important mutual assistance conventions, the European Convention on Mutual Assistance in Criminal Matters and the Swiss-American Treaty on Mutual Assistance in Criminal Matters. Moreover, some other bilateral extradition treaties to which Switzerland is a party contain provisions which also deal with acts of assistance in criminal matters.
In addition, and partly to supplement these treaties, the main principles and regulations for judicial assistance in criminal matters are stated in the Federal Law on International Judicial Assistance in Criminal Matters (hereinafter "IJAC") of 1983, which was recently revised on 1 February 1997. The principal aim of the revision was the simplification and acceleration of the procedure of judicial assistance, for example, when a foreign State makes a request to the Swiss authorities to seize documents, freeze bank accounts, or question witnesses.
6.2 MAIN PRINCIPLES APPLICABLE TO JUDICIAL ASSISTANCE IN CRIMINAL MATTERS
Ordinary Criminal and Serious Offences
Judicial assistance is granted with respect to ordinary criminal offences and not to political, military, or tax offences or violations of exchange control regulations. In compliance with the principle of proportionality, assistance is, in practice, only granted where serious offences are involved.
Precondition of Criminal Prosecution Instigated by the Requesting State
Legal assistance may as a rule only be granted after criminal proceedings have been instigated in the requesting State.
Reciprocity
In general, judicial assistance is granted only if the requesting State affords reciprocity.
Principle of Speciality
Judicial assistance is granted by Switzerland only if the authorities of the requesting State undertake not to use any information obtained from the Swiss authorities in connection with investigations of offences other than those criminal proceedings for which judicial assistance is requested. In particular, the requesting State may not use the information or documents received from Switzerland for investigations relating to political, tax, or exchange control offences.
Principle of Double Criminality
Judicial assistance may enable the requesting State to require the Swiss authorities to take coercive measures, such as seizing or attaching documents or valuables, and the lifting of bank secrecy. If the execution of a foreign request for judicial assistance implies such coercive measures, the principle of double criminality is applicable, and the facts described in the request for judicial assistance must be punishable under the laws of the requesting State as well as under Swiss law.
6.3 COMPETENT AUTHORITIES AND PROCEDURE
The Foreign Request
In Switzerland, the competent authority to receive the foreign request is the Federal Office of Police (hereinafter "FOP"). Direct contact between courts and prosecutors is possible only in a limited number of states (Germany, Austria, Italy, France, and Liechtenstein) or in the case of an emergency. In those cases, any request for mutual assistance which has been transmitted directly must then be forwarded to the FOP through the usual diplomatic channels.
The request must be drafted in one of the three official languages of Switzerland (German, French, or Italian).
The request should specify its objects and grounds, designate the defendant to the foreign criminal proceedings as precisely as possible and contain a summary of the offence.
Decision on the Admissibility
After an initial examination of the minimum formal standards, the FOP transmits the request to the competent federal or cantonal executing authority, which will then execute the request once a decision on its admissibility has been granted. If the request is admitted, the authority must proceed with the execution of the act of judicial assistance in accordance with its own procedural rules.
After a decision on the admissibility is taken, the procedure of execution itself cannot be stayed by appeal except in very specific circumstances.
The Decision to Close the Procedure
Once a request is totally or partially executed, the competent authority will close the procedure by a decision in which it indicates the information, assets, or documents it intends to transmit to the requesting State. Nothing can be transmitted to the foreign authorities until this decision has been taken, except in straightforward cases, when interested parties, such as the holder of the documents, can authorise their immediate transmission to the requesting authority.
Legal Remedies
Under the revised IJAC, only the final decision to close the procedure may be subject to appeal. Objections against previous or intermediate decisions must be brought forward in an appeal against the final decision, unless seizures of objects and values would cause an immediate and irreparable prejudice.
Specific grounds for appeal are the violation of federal law and the illegitimate or clearly incorrect application of foreign law; grounds for appeal specified by cantonal procedural laws are reserved.
Appeals against a decision to close the procedure as well as appeals against decisions authorising the transfer of objects, values, or confidential information suspend their enforceability. For appeals against previous intermediate decisions, this suspensive effect is only granted if it is likely that an immediate and irreparable prejudice will occur.
7. ARBITRATION
7.1 GENERALLY
Switzerland has a long tradition of serving as a favourite location for international arbitration. According to a recent statistic of the International Chamber of Commerce (ICC) for the year 1996, Switzerland was the second most frequently chosen country as the place of arbitration under the auspices of the ICC (after France, the country in which the ICC has its seat). Additionally, Switzerland was found to be the leading nation with respect to the origin of arbitrators: more Swiss nationals were appointed to serve as arbitrators in ICC arbitration panels than nationals of any other country.
There are a number of reasons why Switzerland is a popular venue for arbitration: its long-standing historical tradition of neutrality; its central geographical location; its multi-cultural and multi-lingual society; the reliability and high standards of public services and infrastructure; the sophistication of its legal system; the restraint of public courts concerning interference with private arbitration; and the enactment of one of the most modern and liberal laws in the world on international arbitration already since 1989.
Swiss legal recognition of arbitration as a means of dispute resolution dates back to the nineteenth century. As early as 1869, Zurich's Constitution contained a provision which plainly stated: "Arbitration by consent is permissible". In 1969, an intercantonal treaty on arbitration, the Concordat, was enacted, harmonising the various local rules on arbitration. Today, all domestic arbitration in Switzerland is governed by the Concordat.
7.2 THE SWISS ACT ON INTERNATIONAL PRIVATE LAW
In light of the increasing importance of international arbitration, in 1989, the Swiss legislation introduced as part of the Swiss Act on International Private Law (PIL) a new set of rules governing international arbitration in Switzerland.
Chapter 12 of the PIL applies to all international arbitration conducted in Switzerland, i.e. to all arbitration matters in which the arbitral tribunal has its seat in Switzerland and in which at least one of the parties has its seat or domicile abroad. At the same time, Chapter 12 of the PIL is the only Swiss law applicable to international arbitration. It contains a few fundamental rules concerning crucial issues, such as arbitrability, arbitration agreements, establishment of arbitral tribunals and challenges of arbitrators, arbitral procedure, jurisdiction, form and deposit of arbitral awards, and appeals of awards to the Swiss Federal Supreme Court. These rules are admiringly basic and summarise the bare bones of international arbitration. At the same time, they leave open the largest degree of flexibility possible so as to accommodate the various legal and procedural cultures of the parties involved.
Chapter 12 of the PIL applies both to institutional arbitration (i.e. arbitration conducted under the auspices of an institution, such as the various chambers of commerce and ICC) as well as to ad-hoc arbitration (i.e. arbitration in which the tribunal works without the involvement of an institution).
7.3 ARBITRABILITY AND ARBITRATION AGREEMENTS
Those subjects which may be resolved by arbitration, i.e. which are arbitrable, are defined by the PIL in the broadest possible manner. Article 177, PIL states simply that any dispute involving financial interests may be the subject of arbitration. This sweeping scope includes all kinds of monetary interests connected to contractual, quasi-contractual, commercial, civil, administrative, and public law matters, whether they arise under domestic, foreign, or international law.
With respect to the validity of arbitration agreements, Article 178 PIL requires only that the agreement be made in writing, by telegram, telex, fax, or any other means of communication which permits it to be evidenced by a text. Neither a signature nor an exchange of documents is required, as, for example in Article II (2) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958, ratified by Switzerland in 1965, (hereinafter the "New York Convention"). Furthermore, an arbitration agreement is deemed valid if it conforms to the law chosen by the parties, the law governing the subject matter of the dispute, or to Swiss law. This provision reflects the principle of in favorem validitatis, i.e. the policy of favouring the validity of an apparent agreement to arbitrate.
7.4 APPOINTMENT OF ARBITRATORS
Articles 179 and 180, PIL contain rules regarding the appointment and challenge of arbitrators. If a party does not cooperate in establishing the panel of arbitrators, the other party may request the assistance of the public court located at the seat of the tribunal. The same court may be called upon in the case of a dispute regarding the challenge of the arbitrator. It is, therefore, of great importance to designate the seat of the arbitral tribunal when drafting an arbitration clause of an agreement.
7.5 PROCEDURE
Articles 181 to 185, PIL deal with procedural matters such as lis pendens, due process of law, the taking of evidence, provisional and protective measures, and other judicial assistance. With respect to provisional and protective measures, it may be useful to know that, absent an agreement to the contrary between the parties, each party has the option to request such a measure either from the tribunal or from the competent state court.
The procedure for the taking of evidence is determined by the parties and the arbitrators. Depending on the nationality and experience of the parties and arbitrators, the evidence procedure may follow either the civil law (inquisitorial) or the common law (adversarial) tradition.
7.6 JURISDICTION AND APPLICABLE LAW
The arbitral tribunal's authority to make decisions regarding its own jurisdiction is stated in Article 186, PIL. Article 187, PIL establishes rules regarding the applicable substantive law. Again, the provision is exceptionally simple: "The arbitral tribunal shall decide the dispute according to the rules of law chosen by the parties or, in the absence of such a choice, according to the rules of law with which the case has the closest connection."
This provision is a conflict of laws rule in itself. In other words, to determine the applicable law in the absence of a choice of law by the parties, the arbitrator may not revert to Swiss (or other) conflict of laws rules but rather must apply the law "with which the case has the closest connection".
7.7 AWARDS AND APPEALS
Grounds and Procedure
Articles 188 to 189, PIL deal with partial awards as well as the form of awards, while Article 190 establishes the principle that arbitral awards are final and may be challenged only under considerably restrictive circumstances. The grounds for appeal are limited to questions concerning the appointment of arbitrators and the establishment of arbitral tribunals, issues of jurisdiction and due process of law, and the violation of public policy. Any appeal must be filed with the Supreme Court within 30 days of communication of the award. It must be emphasised that state courts in Switzerland are notoriously reluctant to interfere with arbitration, and thus appeals are hardly ever successful.
Enforcement
Articles 191 to 194, PIL treat various incidental matters, such as the possibility of excluding the application of Chapter 12 of the PIL (which is not recommended, and further, is admissible only if none of the parties has its seat in Switzerland), the deposit and certification of awards, and the enforcement of foreign arbitral awards in Switzerland (subject to the New York Convention).
7.8 ARBITRATION RULES OF CHAMBERS OF COMMERCE
Most of the larger Swiss cities have a local chamber of commerce which issue arbitration rules and provide administrative services to facilitate arbitration. Such arbitration rules have been issued by the chambers of commerce of Basel, Bern, Geneva, Lugano, and Zurich. Among these rules, those of the Zurich Chamber of Commerce ("ZCC") and the Geneva Chamber of Commerce and Industry ("CCIG") are the most widely used. Both Chambers offer all necessary assistance for the organisation and the conduct of arbitral proceedings. The involvement of these Chambers is particularly useful in connection with the appointment of arbitrators. Also, institutional arbitration under the auspices of these Chambers serves as a guarantee for fair, impartial, and proper proceedings.
Both Chambers publish a fee schedule according to which the arbitration costs may be determined. The costs are computed on the basis of the difficulty of the case, the time spent by the arbitrators, and the amount in dispute. As an example, the maximum fee for an amount in dispute of CHF 1 million is, in Geneva, 6% for a sole arbitrator and 10% for a panel of three arbitrators. In Zurich, the figures for the same amount in dispute may run up to 3% for a sole arbitrator and up to 7.5% for a panel of three arbitrators.
Arbitration rules as well as the wording for the standard arbitration clauses of these Chambers can be ordered at:
Zurich Chamber of Commerce, Bleicherweg 5, P.O. Box 4031, CH-8022 Zurich, Tel. +41 1 221 07 37, Fax. + 41 1 211 76 15;
and:
Chamber of Commerce and Industry of Geneva, P.O. Box 5039, CH-1204 Geneva, Tel. +41 22 819 91 11, Fax. +41 22 819 91 00.
7.9 SWISS ARBITRATION ASSOCIATION
The Swiss Arbitration Association (ASA) is an association of professionals interested and involved in arbitration. Its members are lawyers, legal scholars, judges, engineers and other technical experts, business people, companies and business organisations. Its principal activities are the furthering of arbitral developments, the fostering and maintaining of relationships with domestic and foreign arbitration organisations, the organisation of seminars and meetings on arbitration, the appointing of arbitrators, and, above all, the publication of a quarterly bulletin containing the latest information, treaties, and jurisprudence on arbitration. The ASA has its seat in Basel and may be contacted at the following address:
Swiss Arbitration Association, St. Alban-Graben 8, CH-4001 Basle, Switzerland, Tel. +41 61 272 18 88, Fax: +41 61 272 80 60.
8. ENFORCEMENT OF FOREIGN ARBITRAL AWARDS
8.1 APPLICABLE LAW
The enforcement of a foreign arbitral award in Switzerland is, generally, governed by the New York Convention. Switzerland has also ratified a number of bilateral treaties regarding the enforcement of arbitral awards. Where these bilateral treaties are more favourable to the enforcement of arbitral awards than the New York Convention, the bilateral treaties prevail over the Convention (Article VII of the Convention). Such treaties have been concluded with France, Spain, Italy, Germany, Belgium, Czech Republic, Slovak Republic, Austria and Liechtenstein.
For awards that order the payment of a sum of money or the posting of security, enforcement procedures follow the rules of the Swiss Code on Debt Collection and Bankruptcy (CDCB) (Article III of the New York Convention).
The enforcement of non-money awards must be sought before the cantonal court or authority that has jurisdiction to grant leave to enforce the award (exequatur).
8.2 REQUEST FOR ENFORCEMENT
With respect to a monetary award, the creditor must first apply to the Debt Collection Office at the place where the registered seat or domicile of the debtor is located and request the issuance of a payment order to the debtor. Through this order, the debtor receives notice that either the debt must be paid within 20 days or opposition must be raised within 10 days upon receipt of the payment order.
In a case where the debtor raises opposition against the payment order, the creditor must seek recognition and enforcement of the arbitral award in summary court proceedings. Under Article IV of the New York Convention, the party applying for recognition and enforcement must produce the original or a certified true copy of the arbitration agreement and of the award. These documents must evidence an agreement to arbitrate in accordance with Article II of the Convention. If these documents are not in one of the three Swiss official languages, a certified translation must also be supplied.
Swiss embassies and consulates are authorised to authenticate the signatures of the arbitrators. The certification of translations can either be done in Switzerland or in the country where the award has been rendered.
8.3 OBJECTIONS BY THE DEBTOR
Since enforcement of the award is mandated by treaty, the debtor must assert and argue any objections based on the New York Convention in summary court proceedings. Recognition and enforcement must be denied by the court on its own motion if the award violates public policy or if the dispute is not arbitrable.
The debtor may raise the following objections to enforcement:
(i) invalidity of the agreement to arbitrate;
(ii) lack of proper service of process;
(iii) encroachment of the award beyond the scope of the submission to arbitrate;
(iv) non-compliance with arbitral procedure;
(v) the award has not yet become binding, has been set aside or has been suspended;
(vi) the subject matter was not arbitrable;
(vii) the award violates Swiss public policy;
(vi) payment or prescription of the claim, or the granting of a payment moratorium by the creditor (Art. 81 CDCB).
8.4 APPEAL
Cantonal decisions as to enforcement may be appealed to the Supreme Court by way of a public law appeal. The appeal is limited to issues of enforcement. The only admissible ground for appeal is the alleged violation of an international treaty by the lower court, i.e. a violation of the New York Convention. The Supreme Court may fully review the enforcement decision, but not the merits of the arbitral award.
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.