Switzerland: Switzerland Dispute Resolution Law Guide 2016

1. What is the structure of the court system in respect of civil proceedings?

In Switzerland, litigation is usually preceded by an attempt at conciliation before a conciliation authority. In some instances, trial parties may approach the court directly (see question 6 s.).

In principle, Switzerland has a three-tiered court system in private law matters: a district court acting as a court of first instance, a court of appeal or high court in the second instance and the Federal Supreme Court as the highest body of appeal. Further, there exist specialised first instance courts such as labour courts or courts dealing with rental matters. In four major cantons, commercial courts have been set up. Cases brought before such commercial courts only have one tier of appeal as judgments by the commercial courts can only be appealed to the Federal Supreme Court.

2. What is the role of the judge in civil proceedings?

The judge directs the proceedings and issues the required procedural rulings, therefore has a case management role. As a rule, it is the parties' (and their lawyers') obligation to present the facts to the judge. In all proceedings, the judge has the duty to enquire of his or her own accord, if a party's submission is unclear, contradictory, ambiguous or manifestly incomplete. The degree to which this needs to be done depends on the area of law and whether an attorney represents the party or not. The duty to inquire is substantially lowered when parties are represented by lawyers.

In some special proceedings however, the judge has the duty to establish the facts on his own (i.e. in family law cases with regard to child matters).

In Switzerland, the courts apply the law ex officio. The court deals with claims by either not entering into the matter and not considering the merits or by making a decision on the merits itself and adjudicating the matter.

3. Are court hearings open to the public? Are court documents accessible to the public?

The majority of civil law proceedings and the delivery of judgments are open to the public, unless public interests or the legitimate interests of involved parties require the proceedings to be held in camera. Conciliation hearings as well as judicial settlement hearings are not open to the public.

Copies of judgments of the higher courts, usually in an anonymized version, may be requested by the public and are often published online, e.g. judgments of the Federal Supreme Court (see http://www.bger.ch/index/juridiction/jurisdiction-inherit-template/jurisdiction-recht.htm ). Importantly, all submissions by the parties, including the exhibits, are not open to the public. Compared to proceedings in common law jurisdictions, a higher degree of confidentiality is maintained.

The courts' deliberations are usually confidential also for the parties.

4. Do all lawyers have the right to appear in court and conduct proceedings on behalf of their client? If not, how is the legal profession structured?

Any attorney registered with a cantonal attorney register has the right to appear in any Swiss court and may conduct proceedings on behalf of his clients. In order to register, an attorney must pass a cantonal bar exam. Attorneys registered with an EU/EFTA attorney register also have the right to appear in a Swiss court on a temporary basis. European legal professionals registered with a cantonal register may appear in court on a permanent basis, provided they make use of their original European professional title. They can even register with a cantonal attorney register after either passing an exam or having worked actually and regularly as an attorney in Switzerland for three years.

5. What are the limitation periods for commencing civil claims?

Limitation periods are a matter of substantive civil law. The general statutory limitation period for contractual claims is ten years if the law does not provide otherwise (e.g. five years for periodic payments). Tort claims and claims for unjust enrichment become time-barred after one year. However, if a tort claim is derived from an offence for which criminal law envisages a longer limitation period, that longer period also applies to the tort claim. Usually, the courts observes limitation periods only if pleaded by the parties.

6. Are there any pre-action procedures with which the parties must comply before commencing proceedings?

If a conciliation hearing is required by law, the parties have to attend this hearing first. The most important exceptions, where prior conciliation hearings are not required, are summary proceedings, some actions in connection with debt enforcement and if a single cantonal instance is competent to hear a matter, such as a commercial court. If the value of the dispute is at least CHF 100,000, the parties can mutually agree to waive the preceding conciliation hearing. Furthermore, the claimant may waive conciliation if the defendant's registered office or domicile is abroad or if his residence is unknown. If a conciliation hearing is necessary, a party domiciled outside the canton or abroad is exempt from appearing in person and may send a representative.

7. What is the typical civil procedure and timetable for the steps necessary to bring the matter to trial?

A conciliation hearing, if required by law, should take place within two months of receipt of the claimant's application by the conciliation authority. If no agreement is reached during the conciliation hearing, the conciliation authority grants authorisation, usually to the claimant, to approach the first instance court. The claimant is then entitled to file the action and bring the matter to trial within three months. The claimant is of course free to submit the statement of claim earlier to speed up proceedings.

If no conciliation hearing is required by law, the matter is brought directly to trial with a submission to the court of first instance, e.g. the district court or the commercial court.

8. Are parties required to disclose relevant documents to other parties and the court?

This obligation is very narrow and not comparable to the disclosure required in proceedings in common law jurisdictions. Trial parties and third parties have a duty to cooperate with the court in the taking of evidence. The production of evidence is either ordered by the court or the parties can produce documents with their legal brief. A request to the court by a party to order the other party to disclose evidence will only be granted by the court if the evidence is required to prove facts that are legally relevant and the claim has been substantially motivated by the requesting party and the evidence requested (e.g. a specific document) is sufficiently identified. As a rule, each party is well advised to rely on the evidence in his/ her hands rather than hoping to find evidence in the hands of the counterparty.

9. Are there rules regarding privileged documents or any other rules which allow parties to not disclose certain documents?

A party may refuse to cooperate where the taking of evidence would expose a close associate, such as a direct relative or a spouse, to criminal prosecution or civil liability. Furthermore, cooperation may be refused if the disclosure would constitute a breach of professional confidentiality (e.g. attorney-client privilege). Please note that there is no attorneyclient privilege for in-house counsels, although patent attorneys working as in-house counsels enjoy the attorney-client privilege.

10. Do parties exchange written evidence prior to trial or is evidence given orally? Do opponents have the right to cross-examine a witness?

Precautionary taking of evidence by the court before a matter is actually pending is possible if either the law grants the right to do so or the applicant shows credibly that the evidence is at risk or that it has a legitimate interest. There is no prescribed exchange of evidence between the parties prior to trial, neither in written form nor orally.

There is no comparable right to cross-examine a witness as in common law jurisdictions. Nevertheless, each party is allowed to put additional questions to a witness through the judge after the judge's initial interrogation. The court's examination of a witness is usually thorough.

11. What are the rules that govern the appointment of experts? Is there a code of conduct for experts?

There are no specific rules governing the appointment of experts. However, only court appointed experts are experts with an added evidentiary weight. The findings of partyappointed experts are considered by the court as mere party allegation without any evidentiary value. If the court believes that expert knowledge is required, it can obtain an opinion from one or more experts, either of its own accord or if requested by a party. Experts are subject to the same recusal grounds as apply to judges and judicial officers.

The expert must tell the truth, as there are criminal consequences for perjury by an expert witness and with regard to breach of official secrecy. The expert must submit his opinion within the set deadline. The court instructs the expert and submits the relevant questions to him. The court gives the parties the opportunity to respond to the proposed questions put to the expert and may invite them to suggest amendments or additional questions. The expert submits his or her opinion in writing or presents it orally. If necessary, an expert can also be summoned to the hearing. The parties have the opportunity to ask for explanations and to put additional questions to the expert.

12. What interim remedies are available before trial?

Interim remedies available before trial are general interim measures, freezing orders under the Debt Enforcement and Bankruptcy Act (DEBA) and protective letters.

The types of general interim measures available to parties are not limited by law. Rather, the parties are free to request and the court is at liberty to order whatever measure is required. This can be in the form of a mandatory or prohibitory interim injunction such as an order to a bank to freeze certain assets or a cease and desist order. Further options include orders to take on record entries in a public register, orders to perform or rectify something or orders forbidding to dispose of something.

If the opposing party provides appropriate security, the court can refrain from ordering an interim measure. If the principal action is not yet pending when an interim measure is requested, the court sets a deadline within which the applicant must file his principal action (no conciliation hearing required) failing which the interim measure lapses automatically. The court can issue the interim measure subject to the payment of security by the applicant if it is anticipated that the measures could cause loss or damage to the opposing party.

In cases of special urgency, and in particular where there is a risk that the enforcement of the measure will be frustrated by the other party if it became aware of the application, the court can order the interim measure immediately in ex parte proceedings with a first hearing after the measure has been put in place.

Securing claims for money must take the form of a freezing order under the DEBA. A disposal or transfer of the assets of the debtor is prohibited by such an order until the creditor's claim has been determined in debt collection proceedings. If the creditor has not already commenced debt enforcement proceedings or filed a court action, he must do so within ten days of service of the freezing order. If the debtor files an objection, the creditor must either apply for the objection to be set aside or file a court action to have his claim confirmed within ten days of service of the objection.

A protective letter can be filed by any person who has reason to believe that an ex parte application for an interim measure, a freezing order under the DEBA or any other measure against him may become pending. This person can set out his position in such a letter. The party applying for the ex parte interim measure is only served with this letter if it actually initiates the relevant proceedings. Such a letter becomes ineffective six months after it is filed. The aim of such a letter is to prevent the court from adopting an ex parte interim measure.

13. What does an applicant need to establish in order to succeed in such interim applications?

With regard to interim measures, the applicant must credibly show that a right to which he is entitled has been violated or that a violation is immediately anticipated and, additionally, that the violation threatens to cause not easily reparable harm to the applicant. When applying for ex parte interim measures, the applicant must furthermore establish that there is special urgency by showing why it is necessary to adopt an interim measure without hearing the other party.

For a freezing order to be successful under the DEBA, a creditor has to show that it has a mature claim against the debtor and that there exists a ground for freezing assets. Further, the creditor needs to plausibly demonstrate the existence of assets and their location. The DEBA provides for the following six grounds for the freezing of assets:

14. What remedies are available at trial?

General interim remedies and freezing orders may also be requested during the trial phase. The same rules apply as for remedies before the trial phase (see questions 12 s.).

15. What are the principal methods of enforcement of judgment?

The method of enforcement of domestic judgment depends on whether a monetary or non-monetary judgment is at stake (for the enforcement of foreign judgments, see question 22). In case of a monetary judgment, the issuing of a payment order by the local debt collection office has to be requested. Such a payment order can be objected to by the debtor. A creditor can request the setting aside of this objection in court if he has an enforceable judgment (or award) in hand.

The enforcement court itself decides about enforcing non-monetary judgments. The enforceability is examined ex officio and the opposing party can file its comments. The question of whether a judgment is enforceable is decided either as a preliminary question in the pending proceedings (incidentally) or separately (exequatur).

16. Are successful parties generally awarded their costs? How are costs calculated?

Yes, generally speaking, the costs are borne by the unsuccessful party. If no party succeeds fully with its claims, the costs are apportioned in accordance with the outcome of the case. Usually, the court decides on the costs in the final decision.

The claimant is obliged to make a reasonable deposit in the amount of the likely court costs at the beginning of the proceedings. In the final judgment, the court costs are set off against the advances paid by the parties. Any balance is collected from the person liable to pay, i.e. the unsuccessful party. The latter party has to reimburse the other party for its advances and must pay the party costs awarded. Note in conclusion that the risk of insolvency of a counterparty is borne largely by the other party.

Unless a treaty (such as the Hague Convention of 1954 on Civil Procedure) provides otherwise, a defendant can also apply for the court to order that the claimant must provide security for its party costs if: the other party has no residence or registered office in Switzerland; appears to be insolvent; owes costs from prior proceedings; or if for other reasons there seems to be a considerable risk that the awarded party costs will not be paid.

The cantons set the tariffs for the costs (both court fees and party costs) which are usually based on the amount in dispute and may be altered based on the complexity of a case. The Federal Supreme Court has its own tariff, also based on the amount in dispute.

17. What are the avenues of appeal for a final judgment? On what grounds can a party appeal?

A final first instance judgment may either be appealed (Berufung) or may be subject to an objection (Beschwerde) and brought before the second instance cantonal court. An appeal is admissible if the value of the claim is at least CHF 10,000. It is not admissible against decisions of the enforcement court and with regard to some matters under the DEBA (such as freezing orders). Grounds for review may constitute the incorrect application of the law and incorrect establishment of the facts. If a final judgment is not eligible for appeal, an objection is admissible. The grounds for an objection are narrower and limited to incorrect application of the law and manifestly incorrect establishment of the facts.

Second instance judgments as well as judgments of a single cantonal instance (such as commercial courts) can be challenged before the Federal Supreme Court, if the amount in dispute is higher than CHF 30,000 (with some exceptions such as rental disputes). The grounds for an appeal for civil matters to the Federal Supreme Court are for breaches of federal law and/or manifestly incorrect establishment of the facts.

18. Are contingency or conditional fee arrangements permitted between lawyers and clients?

Contingency fee arrangements are not permitted under Swiss law. However, conditional fee arrangements are permitted under specific circumstances, one of them being that the lawyer's base fee covers his actual costs and also allows a modest earning.

19. Is third-party funding permitted? Are funders allowed to share in the proceeds awarded?

Third-party funding is becoming more popular and is permitted as long as the lawyer acts independently from the third-party funder. Furthermore, the lawyer is not allowed to participate in the funding. Nevertheless, funders are allowed to share in the proceeds awarded.

20. May parties obtain insurance to cover their legal costs?

Insurance for litigation costs is available and is increasingly popular.

21. May litigants bring class actions? If so, what rules apply to class actions?

Typical class actions are not available in Switzerland. However, associations and 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 are allowed to bring an action in their own name for a violation of the personality of the members of such group.

The Swiss Parliament has referred a motion to the Federal Government to revise the current system of collective redress and to introduce class actions. Whether the motion will be transposed into law remains to be seen (see also question 26).

Currently, in instances of class action type scenarios, it is sometimes possible to launch a test case during which some core elements of fact and/ or the law can be decided. The other cases with a similar fact pattern are then kept on hold by the court based on an application by the respective claimant for a suspension. Once the test case is decided, the identical elements in the subsequent cases do not need to be litigated from scratch.

Mandatory joinders are given if two or more persons are in a legal relationship that calls for one single decision with effect for all of them. In this case, they must jointly appear as claimants or be sued as joint defendants. Voluntary joinders are possible if two or more persons whose rights and duties result from similar circumstances or legal grounds and if the same type of procedure is applicable.

22. What are the procedures for the recognition and enforcement of foreign judgments?

The Civil Procedure Code (CPC) governs the recognition and enforcement of judgments, as long as the Swiss Private International Law Act (PILA) or an international treaty (such as the Lugano Convention) does not take precedence. The PILA is only applicable if there is no international treaty. The procedure itself is summary in nature and governed by the CPC.

There are two different ways of enforcing a foreign judgment. Regular enforcement proceedings for judgements by a Lugano Convention signatory state are governed by the Lugano Convention. Other state judgements are enforced pursuant to the rules of the PILA. Monetary judgments can be enforced by means of ordinary debt collection proceedings (see question 15). The latter proceedings can either be commenced straight away or one can also initiate regular enforcement proceedings first and start ordinary debt collection proceedings after receiving an enforceable judgment. Against a judgment granting enforceability, an objection can be filed (see question 17).

Please note that foreign ex parte decisions cannot be enforced for lack of adherence to the right to be heard. Neither can declaratory judgments since there are no actual enforcement steps that can be ordered.

23. What are the main forms of alternative dispute resolution?

Alternative dispute resolution, other than arbitration in international commercial disputes, is currently of only limited significance in Switzerland.

This is likely due to the active approach taken by Swiss judges to find a suitable settlement solution during the course of the court proceedings. Following the exchange of the statement of claim and the statement of defence, the court frequently makes a preliminary assessment of the matter and approaches the parties in an instruction hearing during which it provides a first-hand view of the procedural strengths and weaknesses of the parties' stances. It then sets out a well-reasoned proposal what a settlement could look like and encourages the parties to conclude a settlement agreement during the instruction hearing. Frequently, parties agree to conclude a judicial settlement under such circumstances. Such instruction hearings may be ordered at any time during the proceedings. Parties can also ask the court to suspend proceedings in order for them to negotiate a settlement agreement inter partes.

The CPC contains some provisions on mediation. If all the parties so request, the conciliation proceedings can be replaced by mediation. The court can also recommend mediation to the parties during the proceedings or the parties may make a joint request for mediation. The parties themselves are responsible for organizing and conducting mediation and also bear the costs for mediation. The parties can request that an agreement reached through mediation be approved by the court. Such an approved agreement has the same effect as a state court decision. A court cannot approve a mediation agreement if the parties agree on mediation without pending proceedings in the matter.

As mentioned in questions 1 and 6, a conciliation hearing in front of the Justice of the Peace is usually required before trial. A substantial amount of small cases is settled at this stage.

24. Which are the main alternative dispute resolution organisations in your jurisdiction?

The following are the main alternative dispute resolution organisations in Switzerland:

Swiss Chambers' Arbitration Institution, they have adopted the Swiss Rules of Commercial Mediation (see https://www.swissarbitration.org/sm/download/swiss_mediation_rules.pdf).

WIPO Arbitration and Mediation Center (see http://www.wipo.int/amc/en)

Swiss Chamber of Commercial Mediation (SCCM; see http://www.skwm.ch/)

Swiss Association of Mediators (SDM-FSM; see http://www.swiss-mediators.org/)

25. Are litigants required to attempt alternative dispute resolution in the course of litigation?

Litigants are not required to attempt alternative dispute resolution in the course of litigation. The court can only recommend mediation to the parties during the proceedings.

26. Are there any proposals for reform to the laws and regulations governing dispute resolution currently being considered?

It is being considered whether to amend some of the limitation periods (see question 5).

The Lugano Convention is the equivalent to the Brussels I Regulation [Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation)]. As Switzerland is not a member of the European Union, only the Lugano Convention and not the Brussels I Regulation is applicable. The European Union has enacted the revised Brussels Ia Regulation [Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters]. Despite the amendments, there are currently no initiatives to adapt the Lugano Convention to the revised Brussels Ia Regulation.

As noted in question 21, the Federal Government has been asked by the Parliament to revise the rules on collective redress. The Federal Government has not yet suggested amendments, but has stated that there will be proposals in the first half of 2017. Presently, it is open what solutions the Federal Government will propose.

The Federal Government is currently also reviewing the Swiss Federal Act on International Private Law with regard to the framework for international arbitration with the aim of maintaining the attractiveness of Switzerland as a place for international arbitration.

27. Are there any features regarding dispute resolution in your jurisdiction or in Asia that you wish to highlight?

Switzerland is known for its neutrality, consistent and high quality jurisprudence and large pool of multilingual legal practitioners. These are some of the reasons why Switzerland is also a well-established place for arbitration. The Swiss court system is highly efficient and effective when compared to other states. Court initiated settlements are widespread. The commercial courts are especially known for conducting proceedings efficiently and with a high settlement rate (see also question 23 above). Recent figures show that about two-thirds of the cases pending in the commercial courts are settled with the assistance of the court within a period of six months following the submission of the statement of claim.

Previously published in Dispute Resolution Law Guide 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.