Switzerland: The International Comparative Legal Guide To: Litigation & Dispute Resolution 2015

Last Updated: 24 April 2015
Article by Matthew T. Reiter and Simone Stebler

Most Read Contributor in Switzerland, November 2019

I. LITIGATION

1 Preliminaries

1.1 What type of legal system has Switzerland got? Are there any rules that govern civil procedure in Switzerland?

Switzerland is a civil law jurisdiction. Accordingly, the primary sources of legal authority are written codes and statutes, whereas case law is of less importance than in common law jurisdictions.

Civil procedure in Switzerland is primarily governed by the Swiss Code of Civil Procedure ("SCCP"). The SCCP comprehensively governs civil procedure in Switzerland and domestic arbitration proceedings. Further important sources of civil procedure are the Swiss Federal Act on Private International Law ("PILA") and the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 30 October 2007 ("Lugano Convention") dealing with the question of jurisdiction in cross-border matters. The PILA moreover regulates international arbitrations with a seat in Switzerland.

1.2 How is the civil court system in Switzerland structured? What are the various levels of appeal and are there any specialist courts?

Generally speaking, the Swiss court system consists of three layers of instances: the courts of first instance (at a cantonal level); the upper courts (second instance; also at a cantonal level); and the Swiss Federal Supreme Court as the third and last instance. In exceptional cases, however, a single instance (e.g. the upper court or a specialist court) decides a dispute on the cantonal level (with the possibility to appeal to the Federal Supreme Court). The structure of the (first and second instance) civil court system varies from canton to canton.

In general, cantonal courts have jurisdiction in all areas of the law, including federal law. Cantons are, however, free to have specialist courts such as a court for labour law matters, a court for landlords and tenants, and specialised commercial courts. While most cantons have specialist courts for labour and tenant law matters, only Zurich, Bern, St. Gallen and Aargau have a commercial court. In addition, the Federal Patent Court decides all civil law disputes concerning patents on a first instance level.

The Federal Supreme Court, as Switzerland's highest court, safeguards the application of federal and constitutional law. Proceedings before the Swiss Federal Supreme Court are governed by the Swiss Federal Tribunal Act.

1.3 What are the main stages in civil proceedings in Switzerland? What is their underlying timeframe?

Generally, proceedings before a court of first instance can be divided into the following stages:

  • Presentation of the facts and legal arguments (usually in the form of two rounds of written submissions). Together with their pleadings, the parties must also file documentary evidence and offer any other evidence (e.g., witness testimony) on which they rely.
  • Taking of evidence by the court to the extent that evidence other than documentary evidence has been named. Before evidence is taken, the court indicates the admissible evidence and designates the party bearing the burden of proof. The taking of evidence takes place during an oral hearing. Thereafter, the parties may comment on the result of the taking of evidence.
  • Issuance of the judgment.

Courts may also hold instruction hearings at any time during the proceedings. Such hearings are mainly held to prepare for the main hearing or to facilitate a settlement.

The average length of litigation before first instance courts is between one and two years in commercial cases, and approximately up to one year in simpler cases before specialist courts for labour law and for landlord and tenant matters. In complex cases, the duration of the proceedings may be longer.

1.4 What is Switzerland's local judiciary's approach to exclusive jurisdiction clauses?

Domestic and foreign parties may agree on the court that shall have jurisdiction ratione loci over an existing or future pecuniary dispute ("vermögensrechtliche Streitigkeit") arising from a particular legal relationship. Unless the parties' agreement provides otherwise, the agreed court's jurisdiction is exclusive. The parties' freedom to agree on the court competent ratione loci is excluded or limited in a few instances only.

The designated Swiss court must honour an exclusive jurisdiction clause, unless none of the parties is domiciled in a Member State of the Lugano Convention and the law applicable to the merits of the case is not Swiss law.

1.5 What are the costs of civil court proceedings in Switzerland? Who bears these costs? Are there any rules on costs budgeting?

Court fees and attorneys' fees are regulated by the cantons individually. In Switzerland, litigation costs are generally reasonable. In pecuniary disputes the court and attorneys' fees mainly depend on the amount in dispute. Other factors, such as the type and course of the proceedings and the complexity of the case, are also taken into consideration. Swiss courts may order a claimant to make an advance payment up to the amount of the expected court costs.

In general, all expenses arising from the litigation are to be borne by the losing party. If no party fully prevails, the court will divide the costs proportionally between the parties. There are no rules on costs budgeting.

1.6 Are there any particular rules about funding litigation in Switzerland? Are contingency fee/conditional fee arrangements permissible? What are the rules pertaining to security for costs?

Agreements on contingency fees are not permissible for proceedings before Swiss courts. On the other hand, incentive payments can be agreed as long as the hourly fee covers the attorney's costs. As regards security for costs, in certain cases and upon the respondent's request, Swiss courts may order the claimant to provide security for the respondent's attorneys' fees. This may be the case if the claimant has no residence in Switzerland, appears to be insolvent or owes costs from previous proceedings. To the extent, however, the Hague Convention of 1954 on Civil Procedure or of 1980 on International Access to Justice or other treaties apply which forbid security for costs for the sole reason of a claimant's foreign domicile, Swiss courts cannot order a claimant to provide security for costs on that ground.

1.7 Are there any constraints to assigning a claim or cause of action in Switzerland? Is it permissible for a non-party to litigation proceedings to finance those proceedings?

In general, the assignment of a claim is permitted and valid, unless one of the following exceptions apply:

  • In few instances, the law forbids the assignment (mainly with regard to employment contracts, claims of the borrower or tenant regarding the usage of the leased item or claims connected to a person's status as heir).
  • The parties agreed that a claim shall not be assigned.
  • Moreover, an assignment is prohibited if a claim is so closely connected to the person of the assignor that an assignment would significantly alter the existence, the content or the purpose of the claim.

The Swiss Federal Supreme Court in principle allowed litigation funding through a third party. It is important to note, however, that litigation funding must not unduly interfere in the client-attorney relationship. The attorney's independence needs to be ensured at all times.

2 Before Commencing Proceedings

2.1 Is there any particular formality with which you must comply before you initiate proceedings?

The SCCP generally requires a claimant to initiate conciliation proceedings before filing a claim with the first instance court. There are several exceptions to this rule, for example in summary proceedings, or if a dispute falls within the jurisdiction of a commercial court. Instead of conducting conciliation proceedings, the parties may agree to mediate.

If no amicable settlement is reached, the conciliation authority grants a temporary authorisation to proceed with the claim ("Klagebewilligung"). Generally speaking, a claimant must file the claim with the competent court within three months from the date of notification of this authorisation. Once the authorisation expires, the claimant must commence new conciliation proceedings if it wishes to pursue the claim.

2.2 What limitation periods apply to different classes of claim for the bringing of proceedings before your civil courts? How are they calculated? Are time limits treated as a substantive or procedural law issue?

Swiss law treats limitation periods as a substantive law issue. The general limitation period for contract claims is 10 years from the date of maturity. However, for certain types of contractual claims, the limitation period is five years (e.g., claims for periodic payments or claims of employees) or less (e.g., two years for warranty claims under a contract for the sale of goods).

Tort claims become time-barred one year after the aggrieved party obtained knowledge of the damage and of the tortfeasor. In any event, such claims are time-barred 10 years after the occurrence of the damaging event. The same limitation period applies to claims based on unjust enrichment.

3 Commencing Proceedings

3.1 How are civil proceedings commenced (issued and served) in Switzerland? What various means of service are there? What is the deemed date of service? How is service effected outside Switzerland? Is there a preferred method of service of foreign proceedings in Switzerland?

Proceedings are commenced by the claimant submitting the statement of claim with the court. In Switzerland, the courts take care of the service of submissions of the opposing party, summons, rulings and other decisions. Service of summons, rulings and other decisions are effected by (registered) mail or other means against confirmation of receipt. Other documents may be served by regular mail. With the consent of the person concerned, service may also be effected electronically.

Service is accomplished when the document has been received by the addressee or an authorised person. Service is also deemed to have been effected on the seventh day after the failed attempt to serve a registered letter, or on the day of refusal to accept service in case of personal service.

Swiss courts can instruct foreign parties to provide a domicile for service in Switzerland. If service must be effected outside Switzerland, the channels of judicial assistance as per the Hague Conventions of 1954 and 1965 or other treaties must be used.

3.2 Are any pre-action interim remedies available in Switzerland? How do you apply for them? What are the main criteria for obtaining these?

In order to secure monetary claims, a creditor can seek to attach the debtor's assets in accordance with the Federal Debt Collection and Bankruptcy Act ("DEBA"). The creditor must show to the court that, prima facie:

  • the creditor has a claim;
  • a statutory ground for attachment exists (e.g., foreign domicile of the debtor, provided that the claim has a sufficient connection with Switzerland or is based on a recognition of debt; the debtor is attempting to conceal assets); and
  • the debtor has assets situated in Switzerland.

A court may also grant interim measures for all other claims, if the applicant shows that in the absence of the requested interim measure it would suffer irreparable harm. Moreover, the applicant must show that it is likely to prevail on the merits of the underlying cause of action. In cases of exceptional urgency, interim measures may be granted ex parte.

3.3 What are the main elements of the claimant's pleadings?

The statement of claim to be filed by the claimant must be dated and signed and in essence contain the following:

  • the prayers for relief;
  • a statement of the value in dispute; and
  • a detailed account of all factual allegations and of the evidence offered for each allegation.

The statement of claim usually contains legal arguments as well.

3.4 Can the pleadings be amended? If so, are there any restrictions?

Reductions of the prayers of relief (with prejudice) are permissible at any time. Other amendments of the prayers of relief (including additional claims) are only allowed if they (i) are submitted with the party's second round of pleadings, (ii) are subject to the same type of procedure and venue, and (iii) the new claim is closely connected to the original action or the opposing party agrees with the amendment. After the second round of pleadings, no amendments are admissible, unless they are based on new facts and evidence and the prerequisites mentioned before (ii-iii) are met.

4 Defending a Claim

4.1 What are the main elements of a statement of defence? Can the defendant bring counterclaims/ claim or defence of set-off?

The main elements of a statement of defence are essentially the same as mentioned above under question 3.3. Moreover, the statement of defence must state which of the claimant's factual allegations are accepted and which are disputed.

The respondent may file a counterclaim in the statement of defence if the court is competent to deal with the counterclaim (either because of a jurisdiction clause or statutory ground, or because there is a factual connection between the claim and the counterclaim), and if the counterclaim is subject to the same type of procedure as the main claim. For Euro-international disputes, it is required that the counterclaim is based on the same contract or facts.

Set-off defences are available in Switzerland. A set-off defence should be raised with the respondent's second pleading at the latest.

4.2 What is the time limit within which the statement of defence has to be served?

The court sets a time limit for filing the statement of defence. In deciding on the time limit, the court considers the volume of the statement of claim and the complexity of the case. The average time range for the filing of the statement of defence is 20 to 60 days.

4.3 Is there a mechanism in your civil justice system whereby a defendant can pass on or share liability by bringing an action against a third party?

A party may notify a third party of the dispute ("Streitverkündung") if, in the event of losing the case, the party might take recourse against or be subject to recourse by the third party. The notified third party may decide (i) not to react to the notification, (ii) to intervene in favour of the notifying party, or (iii) with consent of the notifying party, to proceed with the litigation in the latter's place. As a general rule, if the notifying party loses the case, the decision will also have effect on the notified party. The notified party's liability will be the subject of a subsequent litigation. It is also possible for the notifying party to integrate the litigation between it and the notified party into the main proceedings ("Streitverkündungsklage").

4.4 What happens if the defendant does not defend the claim?

If the statement of defence is not filed in time, the court will set a short period of grace. If the respondent again fails to submit the statement of defence, the court will decide the case if it is in a position to do so. Otherwise, the court shall summon the parties to the main hearing. If the defendant fails to attend the hearing, the court shall decide on the basis of the submissions on file and, as a general rule, may rely on the claimant's representations.

4.5 Can the defendant dispute the court's jurisdiction?

The court's jurisdiction can be disputed. It is important to note that as soon as the defendant submits arguments on the merits without in the first place disputing the court's jurisdiction, the defendant enters an appearance and submits to the court's jurisdiction.

To read this Chapter in full, please click here.

This article appeared in the 2015 edition of The International Comparative Legal Guide to: Litigation & Dispute Resolution; published by Global Legal Group Ltd, London.

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.

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