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.
Organisation of the Court System
The Swiss court system is organised hierarchically. In spite of the fact that substantive private law is a federal matter, any dispute in private law matters is generally initiated in a cantonal Court. There is no distinction between State Courts and Federal Courts.
Each of the 26 Cantons is required to implement a Court of first instance and a Court of second instance (art. 75 of the Law on the Federal Supreme Court). In certain areas of private law, such as intellectual property, each canton must appoint a Court as a single instance.
In trade law matters, the Cantons are free to establish a single Court specialised in commercial matters (art. 6 of the Civil Procedure Code [CPC]). The Cantons of Aargau, Bern, St Gallen, and Zurich have each established such a Commercial Court. The Federal Supreme Court is the Supreme Court within the Swiss Court system (art. 1 LFT). It ensures the uniform application of private law.
The Cantons are autonomous in determining the jurisdiction ratione materiae and the organisation of the Courts in their territory (art. 4 CPC). Each Canton defines independently how many Courts it implements, which matters of private law are dealt with by which Court, and how many Judges (usually dependent on the amount in dispute) will decide upon a case. Cantonal laws usually provide for several District Courts of first instance, a single Court of second instance and certain specialised Courts.
The Anglo-American concept of Juries is alien to Swiss law. By contrast, the bench in Courts of first instance often comprises lay Judges alongside the presiding Judge.
No Stare Decisis Rule
Cantonal Courts and the Federal Supreme Court are independent of each other and of any executive or legislative authority. Courts are only bound by the rule of law. In the absence of any applicable written legal provision or case law, a Judge has the power to shape the law by applying the rule that would most likely be implemented by the legislator (art. 1 of the Swiss Civil Code). Even though they are not formally required to follow precedents, cantonal Courts tend to follow rather strictly the case law established by the Federal Supreme Court to avoid judgments being overturned.
Reach of the Binding Effect of Judgments
In related later proceedings (other than Appeal proceedings), only the decision as such is binding. The findings of fact do not become formally binding but may, nonetheless, be difficult to rebut. The application of the law does not become binding.
The Legal Profession
Only licensed attorneys can commercially represent clients in legal matters before a Court or arbitral tribunal. Any licensed attorney may represent clients in any area of law in any Court in Switzerland, cantonal or federal (art. 4 of the Law on Attorneys of 1 January 2000 [BGFA]). There is no split bar between barristers and solicitors.
Admission to the bar requires a master's degree in law from a Swiss university, at least one year of legal practice, the successful completion of a cantonal bar exam, as well as registration with the cantonal bar at the main place of practice (art. 7 BGFA).
European Union (EU) and European Free Trade Association (EFTA) nationals licensed as attorneys in their country are free to occasionally represent clients in Swiss Courts without registration (art. 21 BGFA). If they regularly represent clients in Swiss Courts, registration with the cantonal bar is required (art. 27 BGFA). Non-EU or non-EFTA nationals must acquire a master's degree in law from a Swiss University, pass the bar exam and fulfil all other prerequisites for admission to the bar.
The rule of law and the independence of Courts are cornerstones of Civil Procedure law in Switzerland.
The Court system is efficiently and professionally organised and enjoys a high degree of trust among Swiss, as well as foreign, parties.
The fact that legal costs are rather high in general and the rule that the losing party bears the legal costs as well as the other party's legal fees poses a risk for the party initiating proceedings. Even in litigation between businesses, parties usually try to reach a settlement. Consequently, in general, Switzerland is not an overly litigious country.
Nevertheless, due to the financial crisis and its ongoing impact, the caseload of the Courts has become heavier in recent years.