Civil liability

Primary liability

What civil law causes of action are available against businesses for human rights abuses?

Employees may bring contractual claims for workplace-related human rights violations, but there are currently no specific extra-contractual causes of actions against businesses for human rights abuses under Swiss law. Therefore, the general provisions on extra-contractual liability – in particular, articles 41 (for primary liability) and 55 (for secondary liability) of the Code of Obligations (CO) – apply.

Article 41, paragraph 1 of the CO provides that any person (including a legal entity) who unlawfully causes loss or damage to another, whether wilfully or negligently, is liable to pay compensation. The elements required to establish liability are, therefore, loss or damage; causation; unlawful conduct; and fault.

Establishing unlawful conduct in particular can be problematic in the context of human rights abuses. Businesses are not directly bound by human rights and their conduct can, therefore, only be deemed unlawful if it impinges on a right that is legally protected under private or criminal law (eg, physical integrity or property).

As to fault, one available defence for businesses is that they took adequate measures to prevent identified risks, even if those measures then failed. International and national standards may be taken into account in this context. Other defences include self-defence, emergency or self-help (ie, securing endangered rights).

The remedy under article 41 of the CO is damages. The claimant must demonstrate an actual loss or damage; punitive damages do not exist under Swiss law and reparation for moral damage is only due in the event of homicide or personal injury.

The Responsible Business Initiative (RBI) would have introduced an express cause of action against businesses for human rights abuses committed by a Swiss business or its Swiss or foreign subsidiaries, in Switzerland or abroad, but it was rejected. The counterproposal to the RBI, which is expected to be adopted into law in 2021, does not provide for a separate cause of action against businesses for human rights abuses.

Director and officer liability

In what circumstances and to what extent are directors and officers of businesses subject to civil liability for involvement or complicity in human rights abuses?

Directors and officers of businesses may be subject to civil liability for the business’s commission of or involvement in human rights abuses on the basis of article 41 of the CO, to the extent that the requirements of that provision are fulfilled with respect to them personally. They may also be held indirectly liable on the basis of article 754 of the CO, which provides that directors and officers are liable to the company, its shareholders and its creditors for any loss or damage caused in breach of their duties. The requirements to establish liability under article 754 are a breach of duty causing loss or damage to the company, a shareholder or a creditor, wilfully or negligently.

Directors are not required, as a matter of Swiss law, to consider the interests of third parties. Their primary duty is to act in the interest of the company. Nevertheless, directors are required to comply with the law and to protect the company from legal or reputational damage. In that context, they may have to consider the impacts – including the human rights impacts – of the company’s activities and take measures to prevent liability or reputational risks from materialising. In addition, the business’s internal regulations and policies may include human rights-related duties, a breach of which could trigger liability under article 754. Directors can defend themselves by showing they exercised due care and diligence in the performance of their duties.

Only the company, its shareholders and creditors may bring a claim for damages against a director under article 754. Third parties do not have standing to sue. Therefore, as a rule, a victim of human rights abuses committed by a business will not be able to bring a claim against the business’s directors under article 754, but may do so under article 41 of the CO if the requirements are fulfilled with respect to the directors personally.

Piercing the corporate veil

When can the courts disregard the separate legal personalities of corporate entities within a group in relation to human rights issues so as to hold a parent company liable for the acts or omissions of a subsidiary?

In general, businesses cannot be held liable for the acts or omissions of separate legal entities, including those of fully owned subsidiaries. However, a number of exceptions to this rule exist in practice.

The Swiss Federal Supreme Court has recognised that the corporate veil may be pierced where it would be abusive to rely on the separate legal personalities of two entities (eg, where the entities form a single economic unit or where the separate legal personalities of the entities are used to circumvent legal regulations). A further exception exists where the parent company’s conduct creates the legitimate expectation that it intends to be liable for obligations of its subsidiary (good faith liability). In addition, a parent company may be held liable as a principal for the acts of its auxiliaries, which may include subsidiaries to the extent that they must follow the parent company’s instructions (vicarious liability).

The exceptions listed could, in theory, apply in the context of human rights-related claims. However, they do not provide an independent cause of action and the courts apply them with restraint. Moreover, where the subsidiary is abroad, this will raise conflict of laws issues.

In each case, the remedy available is damages.

The RBI would have introduced an express cause of action against parent companies for human rights abuses committed by their Swiss or foreign subsidiaries, in Switzerland or abroad. The counterproposal to the RBI, which is expected to be adopted into law in 2021, does not provide for such a cause of action.

Secondary liability

In what circumstances and to what extent can businesses be held liable for human rights abuses committed by third parties?

A principal may be held liable for loss or damage caused by its auxiliaries in the course of business (article 55 CO). Employees are deemed auxiliaries for the purpose of this provision. Subsidiaries or third parties, such as suppliers or contractors, could potentially qualify as auxiliaries to the extent that their relationship with the principal is comparable to that of an employee to its employer (ie, if they are in a relationship of subordination with regard to the principal). However, there is no settled authority in this respect.

Article 55 of the CO provides for strict liability. The principal is liable irrespective of actual negligence or intent to harm, but may be exonerated from liability if it can show that it exercised due care in choosing, instructing and supervising its auxiliaries, and – where the principal is a business – due care in organising the business, or if it can show that there is no causation between the loss or damage and its failure to exercise due care. The remedy under article 55 is damages.

In discussions surrounding the RBI and the parliamentary counterproposal, article 55 was seen as the starting point to introduce an explicit liability of companies for environmental and human rights-related abuses committed by entities or subsidiaries over which they have actual control. Some authors consider that such a liability already exists under the current legal regime, to the extent that the subsidiary is fully subordinated to the parent company, but this is a matter for debate.

Shareholder liability

In what circumstances can shareholders be held liable for involvement or complicity inhuman rights abuses?

There is no legal basis for holding shareholders liable for human rights abuses committed by a business, unless they were directly involved in the commission (in which case, article 41 of the CO would apply) or acted as de facto directors of the business (in which case, article 754 of the CO would apply).

Law stated date

Correct as of

Give the date on which the information above is accurate.

31 January 2021.