Preliminary and jurisdictional considerations in insurance litigation

Fora

In what fora are insurance disputes litigated?

The fora where insurance disputes are litigated in Switzerland depend mainly on the parties (individuals or legal entities), their domicile and the subject matter of the dispute.

While Switzerland nowadays (as from 1 January 2011) has one unified (Federal) Civil Procedure Code (CPC), the organisation of the courts and to some extent the allocation of matters to these courts is a matter of the law of the cantons (member states), and there are 26 different cantons, each with its own specific court system. In other words, the issue of what court will hear an insurance dispute depends to some extent on the canton in question.

Generally speaking, there is a distinction between claims arising out of insurance contracts based on private law and claims based on public law, in particular social security insurance.

In general there are two civil court levels, a district court and a superior court on the cantonal level. However, in certain cantons (ie, in the cantons of Zurich, Berne, St Gallen and Argovia) there are commercial courts. In the canton of Zurich, it is often the Zurich Commercial Court that hears insurance disputes. In the Zurich Commercial Court, cases are heard by five sitting judges. Two of them are legally trained professional judges, the other three are part-time judges, chosen for their business expertise. In an insurance matter, they would normally come from the insurance industry, in a banking matter from the banking industry and so on. This business background is meant to make sure that the expertise necessary for a case is given (one could refer to them as ‘expert judges’). However, it also means that an insured party is up against a panel in which the majority works in the insurance industry. In cases where the claimant has a choice, he or she may prefer to bring the action with the district court. It is a long-standing tradition of the Commercial Court to give a preliminary view on the case after the first exchange of written briefs in order to facilitate a settlement.

On the federal level, it is the Swiss Federal Supreme Court, the highest court in Switzerland, that hears appeals in insurance matters.

Issues with regard to insurance supervisory authorities are dealt with by centralised federal courts.

Reinsurance disputes are primarily dealt with by way of arbitration.

Causes of action

When do insurance-related causes of action accrue?

By and large, it seems fair to say that the Swiss private insurance market is characterised by a culture of negotiation and amicable settlement. In light of court costs (which are to be advanced by the claimant) and the rather long average duration of litigation, the insured and insurer often prefer to settle their case out of court.

Courts are often involved in cases where there are issues that raise general legal issues that are likely to have an impact on similar cases (in this context, it should be noted that Switzerland does not have a system of binding case law, in contrast to common law jurisdictions) or in cases where the evidence is unclear.

In matters of social security insurance, there are more court cases because the court costs there are fairly low.

Preliminary considerations

What preliminary procedural and strategic considerations should be evaluated in insurance litigation?

From the point of view of a potential claimant (insured) it is important to realise that he or she will have to embark upon a rather lengthy, time-consuming and costly proceeding. It is therefore crucial for a claimant to make sure that he or she can afford such long and costly proceedings (ie, that there are enough means to finance the proceedings).

Another crucial issue – for both parties, insured claimant and insurer – is to take any and all steps necessary to obtain and secure evidence for the case. This can involve securing an expert early on, given that Switzerland is a relatively small country and that, depending on the field, there may be very few potential experts available.

In the context of securing evidence well in time, one should bear in mind that the new CPC provides for a possibility of taking evidence before bringing a full suit, in summary proceedings, in order to assess the chances of a suit. However, recent court decisions have made it more difficult to take evidence in these summary proceedings, compared to the rather open provision in the CPC. It should also be noted that there is no such thing as US-style discovery in Swiss courts. In recent times, potential claimants have successfully invoked the Swiss Data Protection Act in order to get access to the counterparty’s documents; this has so far been primarily done by bank clients against their banks, but this route could be used in other industries as well.

In cases brought by an insured against an insurer, one can often see that the claimant did not sufficiently prepare for the suit and instituted proceedings while ill-prepared. In Switzerland, courts take an active role in facilitating amicable settlements between the parties, normally on the basis of a preliminary, non-binding assessment of the case based on a first exchange of written briefs and documents filed along with the briefs. If the case is not well presented, the court’s preliminary assessment is likely to be to the disadvantage of the claimant, and the settlement eventually made will reflect this. It is not uncommon for courts to put quite a lot of pressure on the parties to reach a settlement.

Damages

What remedies or damages may apply?

The types of remedies and damages depend on the specific case. Generally speaking, in Switzerland only actual damages are compensated. Moreover, courts are quite strict and make it difficult for a claimant to meet his or her burden of proof with regard to damages. In this context, it should also be noted that there are no jury trials in Switzerland; cases are heard by professional judges (who normally have full legal training, although there are some lay judges sitting in smaller cases in small courts in rural parts of the country).

Under what circumstances can extracontractual or punitive damages be awarded?

In principle, there are no punitive damages as such under Swiss law. However, there are certain specific provisions under Swiss law that generate results that may seem similar. In particular, it may be possible to disgorge profits.

Law stated date

Correct on

Give the date on which the information above is accurate.

The information contained in this chapter was accurate as at March 2017.