This blog series provides litigators and corporate counsel from other jurisdictions with a practical understanding of the mechanics, advantages, and limits of litigation before State Courts in Switzerland.
Jurisdiction in International Matters
Depending on the parties involved, the criteria for determining the forum are provided for either in international treaties such as the Lugano Convention (Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 30 October 2007 [LugC]), the Private International Law Act (Federal Act on Private International Law of 18 December 1987 [PILA]) or the CPC.
As a general rule, proceedings can be initiated in the competent forum at the domicile or seat of the respondent (art. 2 LugC, art. 2 PILA, art. 10 CPC). Depending on the area of private law concerned, a Claimant may also initiate proceedings at its own domicile or in another forum such as, for example, the place where the characteristic performance must be rendered in contractual disputes (art. 5(1) LugC, art. 113 PILA, art. 31 CPC) or, in matters relating to tort, in the Courts at the location of the harmful event (art. 5(3) LugC, art. 129 PILA, art. 36 CPC).
Choice of Forum Agreements
Parties generally have a right to agree upon a specific forum prior to or after the commencement of proceedings. In socially sensitive areas of private law such as individual employment or consumer law, parties may only decide upon a specific venue once the dispute has arisen (arts. 23(5), 21 and 17 LugC, art. 35 CPC). In a few matters such as the validity of patents, trademarks, etc, in LugC circumstances, the law provides for a binding forum with the consequence that the parties cannot choose any other forum (art. 22(1) LugC).
The venue of the competent Court is determined by cantonal law. Usually, the venue depends on the amount in dispute and there are generally no special considerations when one of the parties is foreign. As Switzerland is not part of the EU, EU law and regulations do not apply.
Switzerland does not commonly attract disputes that have a stronger nexus with other jurisdictions. As opposed to other jurisdictions, Swiss law knows neither punitive damages nor class actions. However, Courts are known to handle disputes efficiently and cost-effectively, and Swiss law is known to be predictable, stable, and entrepreneur-friendly.
Generally, if a dispute is already pending between the same parties in the same matter before another forum, be it Swiss or foreign, the Court first seized remains competent to decide the dispute.
If a dispute is already pending before a Court in another EU or EFTA Member State, the LugC requires a Court to stay the proceedings until the Court first seized has decided upon its jurisdiction (art. 27 LugC). This rule enables a party to initiate proceedings in States that are known to have a slow judicial system (known as torpedo actions), thereby blocking efficient proceedings. As Switzerland is not part of the EU, a Claimant does not benefit from the new Brussels Regulation's rule according to which a Court having exclusive jurisdiction will not stay the proceedings even if another Court is seized first (art. 31(3) of EU Regulation 1215/2012 of 20 December 2012).
If a dispute is pending before a Court in a non-EU or non-EFTA State, a Swiss Court shall stay the proceedings only if a judgment of the Court first seized can be expected within reasonable time and is enforceable in Switzerland (art. 9 PILA).
Switzerland has a long-standing, well-established arbitration tradition and enjoys the reputation of being very arbitration-friendly. In international arbitration, State Courts have a duty to refer the parties to arbitration if they concluded a valid arbitration agreement (art. 7 PILA). Since an arbitral tribunal in Switzerland has the competence to decide upon its own jurisdiction (competence-competence), State Courts are only allowed to superficially examine the validity of the arbitration agreement and to refer the parties to State Courts only if the parties did not intend to submit their dispute to arbitration (DFT 138 III 651, consid. 3.2).
After the constitution of the arbitral tribunal, the jurisdiction of State Courts and arbitral tribunals concerning interim relief is considered concurrent. This notion is reflected in Art. 374(1) CPC (regarding national arbitration) and in Art. 183 PILA (regarding international arbitration). Accordingly, the arbitration agreement does not affect the State Courts' jurisdiction to grant interim relief, and the parties basically have the choice to request interim relief from either authority. However, the parties are free to limit or exclude the State Courts' jurisdiction by an express agreement.
Arbitral awards may be set aside due to a lack of jurisdiction of the arbitral tribunal, either due to invalidity of the arbitration agreement or the fact that the scope of a valid arbitration agreement does not encompass the dispute between the parties, which the arbitral tribunal has decided (art. 190(2)(b) PILA, art. 393(b) CPC).
No Anti-suit Injunctions
There are no specific provisions on anti-suit injunctions in Swiss law. In a leading case, the Federal Supreme Court declared the European Court of Justice's West Tankers-judgment (Allianz SpA v West Tankers Inc, Case C-185/07 of 10 February 2009) binding on Swiss Courts and therefore held that anti-suit injunctions are inadmissible to Swiss Courts applying the LugC (DFT 138 III 304, consid. 5.3.1).
Even though the Federal Supreme Court left the issue open, legal doctrine generally considers anti-suit injunctions unavailable to Swiss State Courts in international disputes outside the scope of application of the LugC (DFT 138 III 304, consid. 5.3.1). However, international arbitral tribunals in Switzerland are considered to have the power to order anti-suit injunctions in support of the arbitration agreement (Kaufmann-Kohler/Rigozzi, International Arbitration, Law and Practice in Switzerland, Oxford 2015, para 5.75).