Legal system
1. Is your jurisdiction primarily a common law, civil law, customary law or theocratic law jurisdiction? Are the laws substantially derived from the laws of another jurisdiction and, if so, which? What instruments have legal force and effect? Who are the lawmaking bodies? How and where are new laws published? Can laws be passed with retrospective effect?
The Swiss legal system is based on the civil law tradition.
Swiss contract law in particular is very liberal in that it contains very few mandatory provisions and partyautonomy reigns supreme. Owing to its plain wording, neutrality and business-friendliness, Swiss law is often chosen as the law to govern international commercial contracts in a wide range of industries, including the construction industry.
Instruments of legal effect are both federal and cantonal laws as well as numerous ordinances in execution of the superseding laws. However, civil substantive law matters are governed exclusively by federal law. As Switzerland is not a member state of the European Union, EU laws do not directly apply in Switzerland.
The primary legislative body on a federal level is the Federal Parliament comprising the National Council and the Council of States. New federal laws are published in the Official Federal Gazette. Once enacted, they can be consulted on the website of the Swiss Confederation. The main legislation relating to contracts, that is, the Swiss Code of Obligations (CO), is also available in English.
As a matter of principle, laws are not passed and enacted with retroactive effect. There are, however, exceptions.
Contract formation
2. What are the requirements for a construction contract to be formed? When is a "letter of intent" from an employer to a contractor given contractual effect?
The formation of a construction contract requires – as any other contract under Swiss law – the exchange of an offer and corresponding acceptance between the contracting parties. Both offer and acceptance must contain the essentialia negotii of the construction contract (ie, the work to be carried out and a specific or determinable contract price). There is no requirement as to the form of the contract, although the vast majority of construction contracts are made in writing.
A "letter of intent" generally has no binding effect under Swiss law, unless explicitly stated by the parties. However, the letter of intent creates an obligation of each party to negotiate in good faith. If no main contract is concluded, a breach of such a pre-contractual obligation may in certain circumstances entail liability for damages (under the principle of culpa in contrahendo).
Choice of laws, seat, arbitrator and language
3. Are parties free to choose: (a) the governing law of their contract; (b) the law of the arbitration agreement; (c) the seat of the arbitration; (d) any arbitral rules; (e) anyone to act as arbitrator; and (f) the language of the contract and the arbitration? If not, what are the limitations on choice and what happens if the parties act contrary to them?
Swiss law is widely known for its liberal approach with respect to the parties' autonomy when shaping their contractual relationship. The parties to an international construction contract are free to choose the governing law of the contract. They are also free to choose the mechanism for dispute resolution, the seat of the arbitration, the applicable arbitral rules, the law governing the arbitration agreement, the arbitrators, as well as the language of the contract and the arbitration. For public projects in Switzerland, there are specific rules that apply (eg, for tender, dispute resolution). To the limited extent Swiss substantive law contains mandatory provisions, any deviation therefrom by the parties will be considered void; however, only with regard to the deviation and not with regard to the contract as a whole.
Implied terms
4. How might terms be implied into construction contracts? What terms might be implied?
In practice, construction contracts are often comprehensive and stipulate all relevant issues, either in the written contract itself or by referring to a standard contract form such as one of those provided by FIDIC, the Swiss Association of Architects SIA or any other standard terms the parties may choose to adopt. Under Swiss law, there is no comparable concept to the common law notion of "implied terms". Non-mandatory statutory default provisions apply if the parties have not governed certain issues in their contract. For construction contracts, the non-mandatory statutory default provisions governing such contracts are article 363-379 CO.
Certifiers
5. When must a certifier under a construction contract act impartially, fairly and honestly? To what extent are the parties bound by certificates (where the contract does not expressly empower a court or arbitral tribunal to open up, review and revise certificates)? Can the contractor bring proceedings directly against the certifier?
Certifiers and certificates are not distinct notions under Swiss law. Consequently, Swiss law does not contain specific rules governing a certifier. Nonetheless, the parties are free to agree on and enter into a contract with a certifier. The rights and obligations of the certifier are then governed by the terms of the contract and the rules of contract law. In accordance with the mandate, a certifier will usually undertake, expressly or impliedly, to act impartially, fairly and honestly. Depending on the terms of the contract, certificates may have the binding effect of an agreement between the parties and, if so agreed by the parties, will be treated accordingly also by a court or arbitral tribunal. The contractor may be able to bring a claim directly against the certifier as if it has a claim arising out of the contract between the parties and the certifier
Competing causes of delay
6. If an employer would cause (eg, by variation) a two-week critical delay to the completion of the works (which by itself would justify an extension of time under the construction contract) but, independently, culpable delay by the contractor (eg, defective work) would cause the same delay, is the contractor entitled to an extension?
While there is no definitive case law on concurrent delay, the prevailing view in Swiss legal commentary holds that, in cases of two (or more) independent causes of delay that at least partially overlap, whereby one cause is set by the contractor and one by the employer, the general rule is that the contractor is entitled to an extension of time notwithstanding its own delay, however, not to additional costs due to the employer's delay (time-no-money approach). Under Swiss law it will strongly depend on the individual circumstances of the case, including in particular the facts and evidence presented by the parties, whether a court or arbitral tribunal would follow the time-no-money approach or rather a more sophisticated apportionment.
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