Bringing a claim - initial considerations

Key issues to consider

What key issues should a party consider before bringing a claim?

A claimant will be expected to clearly substantiate and evidence its claim in court. Swiss courts tend to put a premium on documentary evidence over witness testimony. Also, as only limited production of documents is available, a well-documented claimant is at an advantage.

The ZPO takes a ‘costs follow the event’ approach with respect to court and legal fees. Accordingly, a claimant will need to make a cost and benefit analysis prior to bringing a claim.

Establishing jurisdiction

How is jurisdiction established?

In domestic matters, jurisdiction is governed by article 9 et seq ZPO. Basically, jurisdiction is either (i) at the seat or domicile of the defendant, (ii) at the agreed forum or (iii) at specific places of jurisdiction for a variety of subject matters such as personality rights, family law, inheritance law, property law, contract law and so forth. For contract matters, jurisdiction is notably available at the place of the characteristic performance, while for tort claims jurisdiction also exists where the tortious acts took place or from where the harm arose.

In international matters, jurisdiction is governed by the Federal Code on Private International Law (IPRG) or the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 30 October 2007 (Lugano Convention 2007). Again, jurisdiction is available either at the seat or domicile of the defendant, at the agreed forum or at a place of specific jurisdiction for a variety of subject matters. For international contractual matters, jurisdiction may also be available at the place of performance. With regard to tort claims the rules regarding jurisdiction mainly correspond to the ones in domestic matters.

Preclusion

Res judicata: is preclusion applicable, and if so how?

Yes, preclusion (res judicata) applies automatically. A court is not permitted to decide on the same matter between the same parties that has previously been ruled on.

In international matters, the issue of res judicata is, in principle, governed by the law of the forum. Foreign decisions which can be recognised in Switzerland have a preclusive effect (article 9 paragraph 3 IPRG). Moreover, the second court seized of the same matter would suspend its proceedings until the court first seized of the matter renders a decision. This is the case in a domestic scenario (article 126 ZPO), under the Lugano Convention (article 27 Lugano Convention 2007) as well as under the IPRG provided that it is to be expected that the foreign court renders a decision within a reasonable period of time, and said decision can be recognised in Switzerland (article 9 paragraph 1 IPRG).

If the foreign decision cannot be recognised in Switzerland, there is no preclusion.

Applicability of foreign laws

In what circumstances will the courts apply foreign laws to determine issues being litigated before them?

Swiss courts will apply foreign laws either where the parties have chosen the application of foreign law (article 116 IPRG) or where the conflict of law rules point to such foreign law. In addition, Swiss courts may consider mandatory foreign rules if the court deems this appropriate in the given circumstances (article 19 IPRG).

The content of foreign law is to be established ex officio by the court; however, in commercial disputes the parties can be ordered to prove the content of the law as a matter of evidence. If the content of such foreign law cannot be determined or is not proven, the court will apply Swiss law.

Initial steps

What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?

A claimant may seek injunctive measures (eg, an attachment order) against the defendant and its assets.

A defendant can file a protective brief against ex parte measures. Also, since an attachment order requires the creditor to show probable location of assets, a defendant may wish to move assets to other locales, albeit this in itself can constitute grounds justifying an attachment order.

Freezing assets

When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?

A claimant can request an attachment order from the court at the defendant’s place of residence or domicile, or at the place where assets are located if the claimant plausibly shows that its claim exists, that assets belonging to the debtor exist and that grounds for an attachment exist (article 271 et seq SchKG).

Prior to obtaining a judgment, a claimant can obtain an attachment order if the debtor has no domicile in Switzerland, and the claim has a sufficient connection to Switzerland or is based on a signed recognition of debt. Similarly, a claimant can obtain an attachment order if a defendant dissipates assets with the purpose of evading its liabilities, flees or is taking steps to flee. Further, special grounds for obtaining an attachment order exist.

Unless the claimant already holds a judgment against the defendant, the claimant must validate the attachment order by filing either debt enforcement proceedings or court proceedings against the defendant within short deadlines. Once a claimant has obtained a judgment, the judgment itself will suffice as grounds to obtain an attachment order.

A creditor is liable for any damage resulting from an unjustified attachment order and can be ordered to provide security for such damages.

Pre-action conduct requirements

Are there requirements for pre-action conduct and what are the consequences of non-compliance?

For most claims, before going to court the claimant must apply for conciliation proceedings, which have the purpose of facilitating a settlement or an early disposal of claims.

However, in cases with a value in dispute of at least 100,000 Swiss francs, the parties can jointly waive the conciliation proceedings. Also, a claimant can unilaterally waive the proceedings if the defendant is domiciled outside of Switzerland or its address is unknown. Finally, no conciliation proceedings are required if the claim is filed with a commercial court.

Where the conciliation proceedings are mandatory, a claimant must attend the proceedings, otherwise its claim cannot proceed. A defendant, however, generally suffers no consequences if it does not attend.

Other interim relief

What other forms of interim relief can be sought?

Pursuant to article 261 et seq ZPO, the court may order any interim measure if the claimant shows prima facie that it has a claim and that the measures are necessary to prevent irreparable harm. Such measures can include:

  • an injunction (eg, a prohibition to undertake certain actions or modify or dispose of an object in dispute);
  • an order to remedy an unlawful situation (eg, the confiscation of goods);
  • an order to a register authority (eg, an instruction to an authority to block certain transactions or entries into a registry, such as the land registry or commercial registry) or to a third party (eg, prohibiting a third party from paying out sums);
  • performance in kind; and
  • the payment of a sum of money in the cases provided by the law.

This list of measures is non-exhaustive and the court may also grant other suitable measures. Moreover, interim relief can also be sought on an ex parte basis if necessary.

Alternative dispute resolution

Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?

While the ZPO provides for mediation (article 213 et seq ZPO), there is no requirement or expectation of parties to engage in such alternative dispute resolution (ADR). However, most court proceedings are preceded by conciliation proceedings (see question 10).

Claims against natural persons versus corporations

Are there different considerations for claims against natural persons as opposed to corporations?

In cantons where commercial courts exist (ie, in the cantons of Zurich, St Gallen, Bern and Aargau) claims involving corporations may be lodged with the commercial court. If only the defendant is registered in a commercial registry, the claimant can opt to either file a claim with the commercial court or to file it with the district court. If both parties are registered in a commercial registry, the claim has to be filed with the commercial court.

Class actions

Are any of the considerations different for class actions, multi-party or group litigations?

Class actions are not available in Switzerland.

Associations or other organisations of national or regional importance that are authorised by their articles of association to protect the interests of a certain group of individuals may bring claims in their own name on behalf of the members of such group (article 89 ZPO). However, they are limited in the relief they can request. In particular, they cannot pursue financial claims.

In practice, where there are many similar cases, the courts will regularly pick out several key cases and stay the rest. These key cases will then be litigated (if necessary to the Federal Supreme Court) and the rest will often be settled along the principles established by the courts in the key cases.

Third-party funding

What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?

Since a leading decision of the Swiss Federal Supreme Court in 2004, third-party litigation funding is generally permitted in Switzerland. There are, however, no specific statutory rules concerning third-party funding. The most important existing legal limits arise from lawyers’ duties to exercise their activity independently, keep client-related information confidential and avoid conflicts of interest (see question 40).

Lawyers are prohibited from taking on cases on a purely contingent basis (pactum de quota litis or ‘no win, no fee’ arrangement), but can enter into agreements with a success fee component in addition to the usual fee (pactum de palmario/‘uplift’ arrangement). There has been a recent (criticised) decision of the Federal Supreme Court setting three boundaries for ‘uplift’ arrangements: (i) any such arrangement must be agreed at the outset of taking on the mandate; (ii) the non-success fee component of the fee must cover the lawyer’s costs and minimal profit margin; and (iii) the success fee component of the fee should not exceed 100 per cent of the non-success fee component.