On 15 November 2019, the annual conference as part of the continuing education series "Recht aktuell" concerning the latest developments in civil procedural law ("Basel CPC-Day") took place, organised by the Faculty of Law of the University of Basel. Particular attention was paid to the current federal jurisprudence on civil procedure. Among other things, the relationship between partial actions and negative declaratory actions was clarified.
Partial actions and negative declaratory counterclaim-concepts
Partial actions are a popular procedural instrument, which are mainly used to assess the chances of successful litigation and at the same time to keep the cost risk of the claimant low. A distinction is made between real and fake partial claims. The real partial action is characterised by the fact that only one part of a claim is sued (e.g. there is a purchase price claim of CHF 150'000, of which initially only CHF 30'000 is sued for). The fake partial action, on the other hand, is characterised by the fact that only a few of several claims are sued, which are based on a uniform legal basis (e.g. one month's wages are claimed for the time being, although there the total claim would befor three month's wages).
The negative declaratory counterclaim is, in a certain sense, the counterpart of the fake partial action. With this appellate remedy the defendant disputes the claim brought by the applicant with his main action in its entirety (i.e. not just partially).
Initial situation under procedural law
From a procedural point of view, it should be considered that the value of a claim determines the type of proceedings in which the claim is to be dealt with. The Swiss Code of Civil Procedure ("CPC") stipulates that the so-called simplified procedure applies in particular to property claims with a value of up to and including CHF 30'000 (Art. 243 para. 1 CPC). Only if the value of claim exceeds this amount is the so-called ordinary procedure applied. In relation to counterclaims it should be noted that according to Art. 224 para. 1 CPC, a counterclaim is only possible if the claim asserted with the counterclaim is to be judged according to the same type of procedure as the main action.
Is the negative declaratory counterclaim admissible for the entire amount?
Due to the initial situation cited above, it has long been disputed whether a negative declaratory counterclaim action can be brought against a partial action for the entire amount, even if the value in dispute of the partial action is a maximum of CHF 30'000, but the value in dispute under the negative declaratory counterclaim exceeds CHF 30'000. In this case, the partial action and the negative declaratory counterclaim would have to be dealt with in different types of proceedings, which would suggest the negative declaratory counterclaims would be inadmissable according to the wording of Art. 224 para. 1 CPC.
What does the Federal Supreme Court say? First decision in 2017
In the first decision of principle in 2017, the Federal Supreme Court stated that it was admissible to bring a negative declaratory counterclaim with an amount in dispute of more than CHF 30'000 against a genuine partial action which, in principle, was to be dealt with in a simplified procedure. In this case, both the principal claim and the counterclaim would have to be judged in the ordinary proceedings (Decisions of the Federal Supreme Court 143 III 506).
What does the Federal Supreme Court say? A new decision from 2019
In the second decision of July this year, the Federal Court had to assess the relationship between fake partial actions and negative declaratory counterclaims (Decision of the Federal Supreme Court 4A_29/2019 of 10 July 2019; the decision is planned for publication).
The claimant had demanded payment of CHF 14'981.25 plus interest, expressly reserving the right to sue for further amounts. In support of its claim, it stated that it was a partial claim and that the total claim was for overtime compensation for the years 2014, 2015 and 2016 in the amount of CHF 51'850.00 in total. Of this total claim, the claimant was asserting the overtime compensation from 2016 for the time being.
The defendant then filed a counterclaim and applied for a declaratory judgment that it did not owe the claimant any compensation for overtime. The courts of first instance in Zurich considered the negative declaratory counterclaim inadmissible because the claimant asserted a claim which could be individualised within the overall claim. Thus, there was a fake partial action, which is why the negative declaratory counterclaim was only admissible if the amount in dispute did not exceed CHF 30'000.
The Federal Supreme Court annulled the decision of the Zurich courts with reference to Decisions of the Federal Supreme Court 143 III 506. The interest in a negative declaratory counterclaim by the defendant is obvious if, for example, the claimant claims only a limited part of a holistic claim (e.g. a purchase price claim). The exception to the principle that the counterclaim must be subject to the same type of procedure pursuant to Art. 224 para. 1 CPC generally applies, however, if the partial action gives rise to an uncertainty which justifies requiring the establishment of the non-existence of a claim or a legal relationship. That condition was fulfilled in the present case: In the statement of claim, the claimant had asserted entitlement to a total claim for overtime compensation of CHF 51'850.00 for the years 2014, 2015 and 2016. However, only the overtime compensation for the year 2016 in the amount of CHF 14'981.25 was being claimed subject to the express reservation of the right to bring a subsequent action. In this situation, it must be possible for the defendant to have the overtime compensation from 2014 and 2015 assessed in the same proceedings by means of a negative declaratory counterclaim.
What conclusions can be drawn from case law?
The Federal Supreme Court has confirmed and expanded its case law, which has been criticised by various parties, according to which a negative declaratory counterclaim is admissible in (now all) partial actions, even if this would in principle have to be judged according to a different type of procedure. The Federal Supreme Court gives greater weight to the defendant's interest in security than to the plaintiff's interest in conducting a pilot lawsuit with a small cost risk with a partial action in simplified proceedings in order to assess the chances of enforcing the entire claim. Accordingly, it must always be taken into account in future that even in the case of a partial claim with a value in dispute of less than CHF 30'000 - irrespective of whether it is a genuine or a fake partial claim - the ordinary instead of the simplified procedure may be threatened under certain circumstances. This significantly increases the risk of increased litigation costs for the claimant, even if the advance for the declaratory counterclaim has to be paid by the defendant.