There is no legal definition of ‘litigation funding’ in Switzerland. We would define it very simply as the practice whereby a third party, unrelated to the proceedings, provides capital to a claimant in order to finance the costs of litigation in return for a share of the proceeds from the lawsuit.
Although this activity is not defined in Swiss law, litigation funding is an accepted practice in Switzerland and has twice been upheld by the Federal Supreme Court. Through its legal analysis, the court has established a straightforward and favourable environment for third-party litigation funding in Switzerland.
Commercial legal finance generally consists of a non-recourse investment in any type of commercial dispute brought by a company or individual in return for a share of any recovery.
Consumer legal finance primarily consists of non-recourse cash advances to personal injury claimants and other individual consumer cases. The risk capital is typically repaid, together with legal fees, if the claimant recovers anything from its claim. The value of claims in consumer cases is much lower than that in commercial litigation.
Contingency agreements are not permitted in Swiss law. However, it is permissible to add a success fee for the lawyer in addition to the basic fee paid during the proceedings regardless of the outcome of the case.
Given that third-party funding is not regulated in Switzerland, we have no statistical data on the subject. However, in our experience, the main litigation finance products/solutions used in Switzerland are single case fees and expenses.
In Switzerland, litigation funding can be used in all areas of law, provided that there is a financial stake involved.
Litigation funding is regularly used in commercial disputes – mainly those involving contract and company law. This is because the amounts in dispute are generally higher in this type of litigation.
The financing of arbitration is also common in Switzerland, as there are many international disputes, some of which are against states.
There is also an increasing amount of financing for IP disputes, as well as inheritance and divorce cases.
Finally, litigation financing is also starting to be used in the area of white collar crime.
The main players in the Swiss market are pure players.
The legal finance market in Switzerland is still in its infancy. The first player arrived in the Swiss market less than 10 years ago and this activity is still developing.
However, after several years of raising awareness of this financing option and demonstrating that it is legal, we are now seeing significant growth in the Swiss market. Requests for financing are becoming increasingly frequent and are of very high quality. The evolution of the market is also reflected by the number of foreign funding companies setting up in Switzerland or simply looking to fund cases in Switzerland.
All types of commercial litigation and/or arbitration can be funded by a third party, as litigation funding is not yet regulated.
Switzerland lacks a specific legal finance regime. However, the Federal Supreme Court has determined that several general provisions of Swiss law will apply if a litigation funding agreement breaches certain Swiss legal principles (BGE 131 I 223 c 4.6.6).
The Federal Lawyers Act also indirectly regulates the relationship between funders and lawyers, as the latter must stay independent in their mandate with clients. This act also prohibits lawyers from being paid based on contingency fees only.
The lack of a dedicated legal regime for legal finance is also reflected at the institutional level: there are no public bodies or authorities specifically tasked with the supervision of legal finance providers.
The Federal Supreme Court has explicitly clarified that third-party litigation funding does not qualify as an insurance offer under the Swiss Insurance Supervision Act (ISA, BGE 131 I 223 c 4.7). Additionally, the primary services provided by a litigation funder are not generally governed by Swiss financial market laws.
The private sector is like the public sector in that there are no independent self-regulatory organisations in Switzerland. Moreover, it seems unlikely that Switzerland will set up such an organisation. In the event of future regulation, its application will most likely be monitored by a state administration.
In addition, several of the international litigation funders operating in Switzerland are members of international trade associations such as the International Legal Finance Association. These associations establish best practices that must be respected by their members.
As litigation funding is still developing, it is difficult to determine the general attitude towards it. However, this type of funding is beginning to be widely accepted in Switzerland, because it fills a gap and thus improves access to justice. With legal costs constantly increasing, this tool helps to compensate for this and to redress the balance of power between the parties.
Furthermore, the Federal Supreme Court has twice confirmed the legitimacy of litigation funding, which has reassured lawyers and claimants seeking to benefit from it.
Legal funding is not considered consumer credit because the funding provided is non-recourse, meaning that if the case is lost, nothing is repaid to the funder.
In contrast, typical consumer credit – such as a loan – must be reimbursed in full at some point regardless of the outcome of the case.
Contingency or conditional fees, which depend entirely on the outcome of the case, are not permitted in Switzerland. However, the parties and their lawyers may agree on a success fee as long as the lawyer’s basic fee, which covers the actual costs, is paid. According to Federal Supreme Court decisions, the lawyer’s independence in acting on behalf of the claimant is crucial; this also applies to cases in which a third party is involved.
The advantage of this type of success fee arrangement for clients is that they can retain competent lawyers despite their hourly rate, which may be higher than others.
For lawyers, this type of arrangement allows them to be instructed on cases despite a possible lack of finance, without being limited in the hours that they can spend on such cases.
According to the Federal Supreme Court, success-related fees cannot exceed the total amount of the basic fee (Federal Supreme Court Decision 4A 240/2016 c 2.7.5).
This type of agreement is not provided for under Swiss law.
In Switzerland, there are other financing options available, such as legal assistance and legal insurance. The criteria for obtaining the former are very strict; while for the latter, the claimant must have paid the premium and taken it out before the damage occurred. These two options are therefore very restrictive and often unavailable.
The hourly rate is limited to an amount that is the same for all lawyers, depending on their position (trainee, associate or partner). There is also a limit on:
- the number of hours worked on the case; and
- the number of appointments and discussions with the client.
The same applies to legal insurance, which usually limits lawyers’ fees and the amount of work that they can do, with the aim of keeping legal costs to a minimum. As far as insurance is concerned, it applies only in the specific cases provided for in the insurance contract.
Bank loans are another possibility, but these are usually very difficult to obtain.
No, law firms must be owned by lawyers.
In view of the legal restrictions in force in Switzerland, these options do not play a significant role for Swiss corporate claimants in determining the chances of successfully enforcing their claims.
On the other hand, corporate claimants are becoming increasingly aware that legal finance solutions such as litigation funding are an effective means of:
- managing litigation risks;
- improving balance sheets; and
- most importantly, allowing them to retain the financial resources they need for their day-to-day activities.
The funding options are interesting for lawyers, as litigation funding allows them to take on more complex cases without being limited by the client’s financial means.
There are no legal mechanisms that allow Swiss consumers to act together. The possibilities for grouping a large number of similar claims together are more of a ‘do-it-yourself’ affair. They also involve a daunting financial and personal investment at the individual level, with an uncertain outcome. The Federal Council pointed out the shortcomings of Swiss law in a report published back in 2013. On 10 December 2021, the Federal Council published the long-awaited bill to revise the Code of Civil Procedure, which proposes the introduction into Swiss law of an instrument for grouping the claims of natural or legal persons that have suffered the same collective damage.
In April 2024, the Legal Affairs Committee of the National Council once again postponed its decision on whether to consider the bill on collective redress. In October 2024, the Committee rejected the proposal to take up the bill, prompting a debate before the full National Council. By March 2025, the National Council decided not to proceed with the bill. The Council of States still has yet to take a position.
Class actions are not permitted in Switzerland and therefore do not exist.
The criteria are diverse and depend on the case in question. However, certain key criteria are analysed for all funding applications, as follows:
- the merits of the case;
- the value of the claim;
- the litigation budget;
- the solvency of the opposing party;
- the expected duration of the proceedings;
- the applicable law and jurisdiction;
- the lawyers’ qualifications and legal strategy;
- the stage of the proceedings; and
- the likelihood of a successful recovery.
The first thing is to ensure that the funder has the funds to finance the entire procedure.
It is very important for the claimant’s lawyers to look for a funder which has:
- expertise in the law applicable to the case; and
- specific knowledge of the competent court/jurisdiction.
This is vital for an effective analysis of the case. With regard to the continuation of the proceedings, it is also essential to be able to follow the case so that the funder can also provide support to the adviser if the latter considers it necessary.
It is also key that the funder in question is accessible and available so that it can respond quickly and effectively throughout the collaboration.
After an initial analysis of the case, and if this is conclusive, the funder proposes the key contractual terms to the claimant, such as the remuneration and obligations of the parties. Once these points have been approved, the funder submits a draft funding agreement to the claimant and its lawyers.
- The costs borne by the funder;
- The specific duties of the client;
- The remuneration of the funder;
- Termination during the proceedings;
- Confidentiality; and
- The applicable law and jurisdiction.
Swiss law does not explicitly specify what constitutes acceptable remuneration. However, as a general rule of contract law, the funding agreement may not constitute unjust enrichment. While the Federal Supreme Court has not set any express limit in this regard, it has indirectly approved the common practice in Switzerland of success fees ranging from 20% to 40% of the net proceeds.
Generally, the funder provides for the following methods of remuneration:
- a percentage of the net gain obtained;
- a multiple of the amount invested; or
- a combination of the above.
Remuneration is adapted on a case-by-case basis and it is sometimes necessary to adopt a more or less inventive approach to how it is structured.
Funding agreements may stipulate a minimum and/or maximum remuneration.
As there is no regulation on litigation funding in Swiss law, the possibility of termination must be provided for in the funding agreement.
Typically, the funder will be entitled to terminate the agreement in the following situations:
- In case of a breach by the client: In this case, the funder is entitled to:
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- full reimbursement of its funding up until termination of the agreement; and
- remuneration in case of gain prior or subsequent to termination.
- If the chances of success change significantly and unforeseeably during the proceedings or the financing of the trial becomes too risky for the funder: In this case, the funder will generally bear the full costs incurred up until termination regardless of the continuation of the proceedings, which the client may continue for its own benefit and at its own risk.
There is no such obligation in the Swiss courts.
However, in certain arbitration proceedings – such as International Chamber of Commerce arbitration – the presence of a funder must be disclosed.
Not to our knowledge. In order to avoid such disputes, it is essential to be very transparent when working with the claimant and discuss each point of the agreement together. For example, it is suggested to discuss the amount below which the claimant is unwilling to settle, so that both parties know in advance what the settlement conditions are.
In the agreement, the funder typically requires the claimant to confirm that they are not aware of any existing or potential counterclaims by the opposing party. The funder will also assess this risk during its due diligence process. To limit its exposure, the funder will usually include a provision stating that it is not liable for any costs arising from potential counterclaims.
Yes.
This type of transaction must be approved by the liquidator of the company in question and by the creditors’ committee.
In Switzerland, final judgments can be handed down in accordance with the Code of Civil Procedure and the Civil Code.
Any agreement should ensure that the litigant retains the final say in the selection of its legal representation. However, the legal team in place is one of the criteria that the funder will consider when deciding whether to grant funding. Thus, if the chosen lawyers do not meet the funder’s criteria, the funder may withhold funding or propose the appointment of co-counsel.
Subject to certain exceptions, Swiss law provides for the principle of public access to justice. This means that most hearings are public and citizens can attend them.
That said, litigation funders generally do not attend or participate directly in court proceedings in Switzerland. Their role is typically confined to providing financial support and strategic advice outside the courtroom. The parties involved in the litigation, such as the claimants and their legal representatives, are responsible for presenting the case and appearing in court. Also, the funder usually does not attend the court hearing because it is not disclosed to the opposing party that a funder is involved in the case.
Legally, the claimant is the sole owner of the claim and can therefore decide to accept a settlement without the funder’s consent. However, in order to align the interests of the parties as closely as possible, it is not uncommon for funding agreements to stipulate a specific amount above or below which no agreement can be refused or accepted. It is common for claimants and funders to agree in advance on certain minimum and maximum amounts in order to limit the funder’s right of veto and its right to require the claimant to accept a particular settlement. This means that if the claimant accepts a settlement without the funder’s consent, it risks being pursued by the funder, which is entitled to damages under the agreement.
The litigation funder does not intervene in the attorney-client relationship. As the claimant’s lawyer must be independent from the litigation funder, the funder cannot directly approach the lawyer for instructions during the proceedings. If the lawyer were to follow the funder’s instructions instead of the client’s, this would constitute a breach of professional conduct. Therefore, any rights and actions that the funder intends to exercise during litigation must be outlined and agreed upon in the litigation funding agreement with the claimant.
Third-party funding is a passive investment, so lawyers and their clients remain in control of the strategy of the proceedings. However, the funder will ask to be consulted on financial decisions – that is, those which have a direct impact on it, such as the decision:
- to proceed with an expert opinion; or
- to accept a settlement.
Moreover, because the involvement of a litigation funder is often not disclosed to the court or the opposing party (except in international arbitration), the funder’s role in the litigation process is considerably restricted.
Although litigation funding has been recognised and accepted since 2004, it is not currently regulated in Switzerland. As a result, there is no general requirement to disclose the existence of a litigation funding agreement to the court or the opposing party.
In Switzerland, most communications are protected under the concept of professional secrecy (legal privilege), particularly if they involve information exchanged between the legal counsel and the funder. To ensure confidentiality, the parties to a litigation finance agreement should:
- clearly outline confidentiality provisions in the funding agreement; and
- restrict the dissemination of sensitive information to necessary parties only.
This is not yet regulated by Swiss law. To enhance protection, communications should be structured in a way that incorporates the legal counsel, thus bringing the communications under the umbrella of attorney-client privilege.
In Switzerland, the legal profession is regulated by cantonal laws and the Federal Act on the Freedom of Movement for Lawyers. These instruments generally prohibit fee-splitting arrangements between lawyers and non-lawyers, which means that any financial agreements must be carefully constructed to comply with these prohibitions.
The doctrines of champerty and maintenance do not have the same historical roots or significance in Switzerland as they do in common law jurisdictions. Swiss law does not expressly prohibit third-party funding of litigation and there are no direct equivalents to these doctrines. Consequently, litigation finance is generally permissible, provided that it complies with relevant ethical and legal standards.
There are no explicit prohibitions on the types of cases that can be funded by third parties in Switzerland.
The timeframe for first-instance proceedings in Switzerland varies by canton and the type of case. On average, a first-instance decision can be obtained within 12 months of filing. Complex cases or those requiring extensive evidence may take longer, while simpler cases may be resolved more quickly.
Under Swiss civil procedure, there is no mechanism for early case dismissal equivalent to a motion for summary judgment or an application to strike out manifestly unfounded claims. However, a defendant may raise certain procedural or substantive defences that, if successful, can result in the early dismissal of the claim before the case proceeds to a hearing. These may include, for example:
- the statute of limitations; or
- procedural aspects such as res judicata or jurisdiction.
Swiss civil procedure has no extensive discovery processes similar to those applicable in common law jurisdictions. However, parties can request the court to order the production of specific evidence. Non-parties can also be compelled to produce evidence if it is relevant to the case. The court plays a central role in managing evidence and ensuring its proper presentation.
Swiss law provides for interlocutory appeals, which are appeals against decisions or orders made during the course of legal proceedings, but not against final judgments. The Code of Civil Procedure and the Federal Supreme Court Act regulate the conditions and procedures for such appeals.
In Switzerland, interlocutory appeals may be lodged in certain circumstances with higher courts against interlocutory decisions of lower courts. These appeals are generally allowed:
- to prevent irreversible harm;
- to resolve important legal issues; or
- to correct serious procedural errors.
No statistics are available on the proportion of appeals. There are also considerable differences in practice depending on which court has jurisdiction.
On average, a second-instance decision takes between one year and 18 months to reach a decision. Only a minority of these decisions are then appealed to the Federal Supreme Court. On average, an appeal before the Federal Supreme Court is resolved in under a year.
In Switzerland, court decisions are enforced through the system governed by the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA). Enforcement proceedings generally begin with a formal request to initiate debt collection, even if based on a court judgment. If the debtor does not object or the objection is set aside (e.g., via summary proceedings), the creditor may proceed to request the seizure or realization of the debtor’s assets.
For foreign judgments, enforcement typically follows the procedure under the Swiss Private International Law Act (PILA) or applicable international treaties (e.g., the Lugano Convention), requiring recognition of the foreign judgment before enforcement can proceed.
The timeframe for enforcement varies depending on the complexity of the case, the debtor’s cooperation, and whether objections are raised. In straightforward cases with no opposition, enforcement may begin within a few weeks and be completed in a few months. In more contested cases, the process can extend to a year or more.
In general, enforcement can commence immediately after a final judgment.
In Switzerland, an appeal does not automatically stay enforcement of a first-instance judgment. However, the appellant may request a stay of enforcement from the appellate court. The court will grant this only if the appeal appears to have sufficient merit and if enforcement would cause irreparable harm. The decision to grant a stay is discretionary and assessed on a case-by-case basis.
Appeals from first-instance decisions are generally granted as of right, provided the case meets certain threshold requirements—most notably, a minimum disputed amount (e.g., CHF 10,000 in civil matters). In some instances, particularly in matters of lesser financial value or summary proceedings, leave to appeal may be required.
In Switzerland, the losing party is usually ordered to pay the winning party’s costs. These include court fees and legal costs, which are based on:
- cantonal fee schedules; and
- the complexity of the case.
Generally, the winning party does not recover all of its funding because, depending on the judgment, it may be able to claim its actual legal costs but often not all of its lawyers’ fees.
Swiss law does not contain provisions that require costs to be paid by the funder, so the courts do not normally order litigation funders to pay costs directly. Responsibility for costs remains with the parties to the litigation.
The defendant may request the court to require the claimant to provide security for the potential compensation of the opposing party’s costs if:
- the claimant:
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- is not domiciled or resident in Switzerland;
- appears to be insolvent; and
- owes costs from previous proceedings; or
- there is a significant risk that the compensation will not be paid for other reasons.
However, no security is required if the claimant is domiciled in a country with which Switzerland has a treaty that excludes such security.
As the presence of the funder is rarely disclosed in the Swiss courts, it is difficult to say whether security for costs is commonly ordered in funded litigation. However, security for costs is relatively common in litigation to protect the defendant’s interest in recovering legal costs when the claimant is not domiciled in Switzerland.
While ATE insurance is more prevalent in common law jurisdictions, it is permitted in Switzerland, as there are no legal or regulatory restrictions in this regard. Typically, some foreign insurance companies operating in Switzerland can offer ATE insurance to clients involved in legal proceedings before the Swiss courts.
ATE insurance is typically used in civil litigation involving multiple defendants in cantons where the legal costs are high.
Other types of insurance available to claimants in Switzerland include legal expenses insurance, which covers legal fees and costs associated with various legal matters. This type of insurance is often used by individuals and companies to manage legal risks. However, this insurance:
- must be taken out before the need for litigation arises; and
- only covers certain types of claims.
Swiss law firms are increasingly collaborating with funders to offer third-party litigation funding options to their clients, making litigation more accessible and financially manageable.
The third-party litigation funding landscape in Switzerland is evolving rapidly, characterised by:
- increasing acceptance;
- diversification of funded cases; and
- innovative funding solutions.
While no specific legislative reforms on third-party litigation funding are expected in Switzerland over the next 12 months, international developments may influence future policy discussions. Notably, the European Commission published a comprehensive study in March 2025 examining regulatory approaches to third-party litigation funding across the EU and selected non-EU jurisdictions, including Switzerland. Although Switzerland is not bound by EU regulations, such comparative analyses could shape the domestic debate around potential oversight. As the market matures, it is likely to expand and become more sophisticated, making third-party litigation funding an integral part of the Swiss legal finance landscape.
To ensure the smooth progress of funded litigation in Switzerland, it is crucial to:
- conduct thorough due diligence on cases and funders;
- maintain clear and transparent agreements;
- uphold ethical standards; and
- manage the litigation process effectively.
By following these recommendations, parties can reap the benefits of third-party litigation funding while minimising the potential drawbacks.
