Equestrian sports and horse trading play a vital role in the economy of the European Union. The equine industry in the EU is not only a hub of sporting excellence but also a major economic driver, generating over €100 billion annually and providing more than 400,000 jobs across various sectors. This includes horse breeding, training, competition, and sales, with countries such as Germany, France, and the Netherlands leading in elite horse breeding and equestrian events like show jumping, horse racing, dressage, polo, and eventing. Additionally, the European horse market is driven by the demand for high-performance sport horses, especially in international competitions and horse sales, including auctions. For example, last Thursday evening, 19 September, in Belgium, a young stallion—seven-year-old Codex Diaz Z (Codex One Z x Cornet Obolensky)—was sold for €1 million. As the industry continues to grow, the legal frameworks governing horse sales, especially in cross-border cases, have become increasingly important for ensuring smooth transactions and protecting the rights of both buyers and sellers.
Switzerland boasts a rich equestrian tradition, characterized by a vibrant culture and consistent success on the international stage. Swiss riders have consistently excelled in prestigious competitions, including the 2012 and 2024 Olympic Games, the Mercedes-Benz Nations Cup, and most recently, the CSIO5* Nations Cup at the Henders & Hazel Nations Cup during the 2024 Brussels Stephex Masters. These achievements highlight their exceptional skill and dedication to the sport. This success is underpinned by a strong infrastructure and a passionate equestrian community, making it one of the top ten most popular sports in the country.
The Swiss equestrian sector is significant, with approximately 70,000 active horse enthusiasts and 23,200 registered sport horses in recent years. In addition, Switzerland is home to many internationally recognized horse breeds, including the Swiss Warmblood and the famous Freiberger, the latter of which is considered part of the country's living heritage. The Freiberger, in particular, is celebrated for its versatility in both leisure and competitive settings, embodying the cultural importance of horses in Switzerland. Economically, the Swiss horse industry generates an estimated €1.67 billion annually and supports 12,900 full-time jobs, illustrating its significance not only in sports but also in the broader agricultural and leisure industries.
Cross-border horse sales between the EU and Switzerland are increasing due to the strong demand for well-bred, high-performance horses. Managing the legal intricacies of these transactions can be complex, particularly due to differences in contract laws and regulations. To help our clients better understand these intricacies, this insight will address key questions on horse purchase agreements in EU-Swiss cross-border cases, focusing on the key legal considerations for both buyers and sellers.
What are the key elements of a horse sale and purchase agreement in EU-Swiss cross-border cases?
A valid horse sale and purchase agreement in EU-Swiss cross-border transactions requires several essential elements, including:
- Identification of the parties: Both buyer and seller must be clearly identified with full legal details.
- Description of the horse: The agreement must provide precise details about the horse, including its breed, age, pedigree, identification number (such as microchip), and any specific competition records and level of riding skills.
- Transfer of ownership: The contract should detail when ownership and risk transfer from the seller to the buyer, which is often at the moment of delivery.
- Conditions of delivery: The parties should also agree on conditions of delivery of a horse to a new owner/stable including a party responsible for transportation and the means of horse transport, costs of such delivery and its possible insurance conditions.
- Warranty and defects: The parties need to agree on any warranties regarding the horse's condition, health, and fitness for purpose, and how defects will be handled.
These agreements must comply with the domestic laws of both the buyer and the seller, ensuring that the contract is enforceable under the applicable jurisdiction. Clearly defining the terms is essential to prevent disputes. The legal systems in both Switzerland and the EU demand precision to avoid future misunderstandings. At LINDEMANNLAW, we follow these guidelines to ensure that agreements cover all necessary legal elements.
An additional important element to consider in EU-Swiss cross-border horse sales is the use of escrow services. These services provide a neutral third party (the escrow agent) to hold the funds until all terms of the contract, such as delivery or a satisfactory veterinary examination, are fulfilled. This mechanism significantly reduces the risks of fraud and non-payment, providing protection for both buyer and seller. For instance, equine escrow services can protect against common issues like undisclosed health problems or fraudulent representations of a horse's abilities, which are often seen in international horse sales. Such services can be also applied in case of horse sale on trial or subject to pre-purchase veterinary examinations.
Which law is applicable when it comes to a horse sale and purchase agreement in EU-Swiss cross-border cases?
In cross-border horse sales between the EU and Switzerland, determining the applicable law can be complex due to the differing legal frameworks. For EU countries, the Rome I Regulation (Regulation (EC) No 593/2008) governs the choice of law in contractual obligations. Under this regulation, the parties are free to choose the law that will govern their contract. If no law is chosen, the default law is typically that of the country where the seller is habitually resident. It should be also outlined that special rules on choice of law apply to contracts concluded with the participation of consumers.
Switzerland, however, is not bound by the Rome I Regulation since it is not an EU member. Instead, Swiss private international law applies, specifically under the Swiss Federal Code on Private International Law. Similar to the EU, Swiss law allows the parties to select the applicable law. In the absence of such a choice, Swiss law will generally apply if the seller is domiciled in Switzerland.
Finally, if the buyer is domiciled in Switzerland, the law of the respective EU country will apply in accordance with that country's private international law. For instance, in Poland, the law directly refers to the application of the Rome I Regulation.
It is always advisable that the contract explicitly states the governing law to avoid any legal uncertainties. This ensures that disputes will be handled under the agreed legal framework, simplifying any future proceedings.
Which jurisdiction applies to the cross-border sale of horses between the EU and Switzerland?
Jurisdiction in horse sales between the EU and Switzerland is primarily determined by the agreement between the parties, but if not specified, it can be determined on the basis of several legal frameworks. The Brussels I Regulation (Regulation (EU) No 1215/2012) governs the allocation of jurisdiction in civil and commercial matters between EU countries. While Switzerland is not part of the EU, it has entered into bilateral agreements with the EU, including the Lugano Convention (2007).
Under the Lugano Convention, the parties may choose the jurisdiction that will handle disputes arising from the contract. In the absence of such an agreement, jurisdiction will usually lie with the courts competent for the place of performance of the contractual obligation. Unless otherwise agreed, the place of performance of the obligation shall be in the case of the sale of a horse, the place in a State bound by this Convention where, under the contract, a horse was to be delivered. Certain exceptions may apply, particularly when the contract involves consumers, where the courts of the consumer's domicile may have jurisdiction. Therefore, it is important that the horse sale contract includes a clause specifying which court will have jurisdiction to resolve disputes.
Can one exclude warranty for horse defects in horse sale and purchase agreements between the EU and Switzerland?
In cross-border horse sales agreements between the EU and Switzerland, the exclusion or limitation of warranties for defects is legally permissible but subject to specific conditions under both Swiss and EU law.
In Switzerland, the Swiss Code of Obligations (Articles 197-210) permits the exclusion or limitation of warranty claims for latent defects, provided this exclusion is clearly stated in the contract. However, exclusions are invalid in cases of fraud or gross negligence by the seller. The statutory warranty period for latent defects is generally two years, though parties can agree to extend or reduce this period. In particular, the seller remains liable for defects even if he is unaware of them, but this liability may be limited by agreement between the parties.
In the EU, the legal framework is more stringent, particularly with regard to consumer protection. The Sales of Goods Directive (EU 2019/771) prohibits the full exclusion of warranty liability for latent defects in consumer transactions. However, there is more flexibility in business-to-business (B2B) transactions. Here, the parties can agree to limit or exclude implied warranties, such as the implied warranty of fitness for purpose or merchantability, provided this is explicitly detailed in the contract. For obvious reasons, however, liability cannot be excluded on the basis of wilful misconduct, misrepresentation or even fraud
It is crucial that cross-border contracts contain clear and legally compliant clauses, including "as-is" or warranty exclusion terms, to address any potential defects and avoid disputes. Proper documentation ensures that both parties understand and accept the terms of the sale.
How do pre-purchase veterinary examinations affect a horse sale agreement in EU-Swiss cross-border cases?
Pre-purchase veterinary examinations play a crucial role in horse sale agreements, particularly in cross-border transactions. These examinations are intended to assess the health and soundness of the horse before the sale is finalized, helping to mitigate risks for both the buyer and the seller.
In the EU, pre-purchase veterinary checks are a common part of equine sales, and the findings of these examinations are often included in the contract as warranties or conditions precedent. If the horse is found to have certain conditions that affect its performance or health, the buyer may either renegotiate the terms of the sale or withdraw entirely from the transaction. These examinations also provide legal protection by documenting the horse's condition at the time of sale, reducing the risk of litigation over latent defects.
Although there is no obligation to conduct pre-purchase veterinary examination under a particular EU Regulation, it is worth mentioning that in some EU jurisdictions local law may impose such an obligation. Therefore, it is always essential to verify the local legal requirements.
Similarly, in Switzerland, pre-purchase examinations are considered vital for high-value horses. Swiss law recognizes the importance of such reports in determining whether a horse is fit for its intended purpose. A veterinary examination report may also influence the scope of any warranties offered by the seller or any exclusions agreed upon in the contract.
It should also be highlighted that pre-purchase veterinary examinations do not guarantee that each horse defect can be detected during such a vet check. Therefore, it is recommended to choose a scope of pre-purchase veterinary examination properly and to consider including particular disclaimers in a contract covering the horse health condition that was not submitted to a veterinary examination.
Managing the intricacies of EU-Swiss cross-border horse sales requires careful attention to legal details and the knowledge of the equine business. At LINDEMANNLAW, we provide comprehensive legal support in the field of equine law, assisting our clients with a range of services including sale and purchase assistance, in particular drafting and reviewing horse sale agreements, offering legal advice on regulatory compliance or providing escrow services to secure any transaction between contracting parties.
Our Equity Partner Dr. Ariel Sergio Davidoff brings not only extensive experience in Swiss equine law but also a personal passion for horses as the Co-President of the Zurich Racing Association. His unique perspective allows him to offer tailored advice to clients engaged in the equine industry, supported by an excellent team under the tutelage of Agnieszka Kalinowska.
We are also proud to welcome Agnieszka Kalinowska to our team, who brings over a decade of experience advising on EU equestrian law. Her in-depth knowledge ensures that our clients benefit from expert guidance on cross-border transactions, compliance with EU regulations, and all equine legal matters.
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.