SWITZERLAND: An Introduction to Litigation
Switzerland has steadily been praised as a stable place for jurisdiction based mostly on its independent and efficient judiciary. The strong and reliable legal system of Switzerland echoes the strong and stable economy of the country, which also ensures stability and therefore predictability of its laws. While those various aspects have made Switzerland a welcome and wanted place of jurisdiction, the costs efficiency of legal proceedings also generally pleads in its favour.
Recently the Swiss parliament has enacted a revision of the bill on the Swiss Civil Procedural Code that will enter into force on 1st of January 2025.
Such amendments encompass inter alia (i) an extension of Swiss jurisdiction for international disputes before a specialized commercial court and (ii) the possibility to use English as the language of such proceedings while also (iii) permitting the use of electronic communications technology in court hearings.
An important addition contemplated by this revision embraces the introduction of a right to refuse to collaborate for in-house counsel, which is a light version of an in-house privilege in civil proceedings.
Those amendments shall further enhance the attractivity of Switzerland as a place for international disputes by increasing the efficiency of their resolution before Swiss courts.
International Commercial Courts and English as language of proceedings
The actual rules already allow for the cantons to decide on a cantonal level, whether they wish to introduce a commercial court to solve commercial disputes. Some cantons have indeed introduced such a (one instance only) commercial court, such as Zurich. The revision extends this possibility for the cantons by allowing them to create dedicated international commercial courts to rule on international cases with specific regulation that aims at making the resolution of such cases more efficient.
The implementation of such international commercial courts shall require further implementation on the cantonal level. As a consequence, each canton shall decide if they wish to set up such dedicated court and no such court will be available as of 1 January 2025. However, Zurich and Geneva both have already expressed a clear interest in implementing such courts. If the cantons make use of this possibility, such international commercial courts will be able to hear international commercial cases under certain conditions, namely that the case concerns the commercial activity of at least one of the parties (i), the litigious amount is in minimum CHF 100,000 (ii), the parties agreed on the jurisdiction of the international commercial court (iii) and that, at the time of such agreement, at least one party has its domicile, habitual residence or registered office abroad (iv). The cantons may decide to submit such international commercial courts to dedicated rules and may thereby set specific requirements for the judges to act in such courts, typically to require a specific expertise or knowledge.
In addition, cantons will further have the possibility to permit proceedings, if all the parties so request, to be conducted in English. Proceedings could then be conducted in English before ordinary courts or, if any, before the dedicated international commercial courts. Such opportunity to use English shall require that (i) the canton allows for it and therefore implement such opportunity in its own regulation and (ii) both parties agree on the use of English. Additionally, the parties will also be entitled to submit their proceedings to another official language of Switzerland that would not be the language of that canton.
In case the parties elect to conduct the proceedings in English, they will also be entitled to submit their appeal proceedings before the Federal Supreme Court (as is nowadays also permitted for the appeal against arbitration award before that same court).
Right to refuse to collaborate for In-house Counsel
The current rules in Switzerland do not provide for any special in-house privilege. This has been highly debated for years as that created an unbalanced situation for Swiss companies as opposed to US based companies for instance. Such discrepancy proved unsatisfactory notably among group companies facing foreign proceedings, in which the Swiss entity was regularly found in a weaker position than its US affiliates when attracted before US jurisdictions.
This situation will now be – at least partially – solved as from 1 January 2025 since the revision shall implement a - sort of - in-house privilege. While the latter cannot be deemed a full privilege, it is construed under Swiss law as a right for in-house counsel to collaborate in a civil proceeding. Such right of refusal will however be subject to restrictive and specific conditions. Provided those will be met, an in-house counsel will then have the right not to give testimony or to disclose in-house privileged documentation.
The benefit of such a right can be triggered provided that:
(i) the company is registered as a legal entity in the Swiss Commercial Register or in an equivalent foreign register;
(ii) the head of the legal department holds a bar licence to practice as an attorney either in Switzerland or in his/her home country; and
(iii) that the activity of the in-house counsel to be protected is regarded as typical in-house counsel services which is to be assessed similarly to the typical lawyers' services.
It is to be noted that all employees of the legal department shall be protected by that rule provided that the head of department qualifies as a licensed lawyer. The implementation of such privilege in the activity of the in-house counsel should reduce the procedural disadvantages, which Swiss companies have faced compared to foreign companies and particularly in foreign court proceedings.
Electronic means of communication and remote hearing
After the COVID19 period during which several Swiss courts had to adapt and switched to remote hearings based on an urgent bill that was enacted a few weeks after the first Swiss lock down, the Swiss Parliament now enacted a permanent rule to allow the cantons to elect for the use of technology and potential remote hearing.
Such remote hearing could be used especially for evidenciary hearings but will always be subject to the parties' consent and the compliance with data privacy protection.