15    SWITZERLAND

15.1    LEGAL FRAMEWORK

Switzerland has 26 cantons (states). Each canton has established its civil courts (first and second instance) for the jurisdiction in the area of the Swiss federal civil law. All civil law in Switzerland is federal law. Cantonal law is limited to the public sector, for which the federal constitution did not give the legislative competence to the Federation (e.g. tax law for the cantonal tax). Before 2011 each and every canton had even its own procedural law for the application of the federal civil law. However, on January 1, 2011 the new Swiss Code of Civil Procedure (CCP) entered into force and replaced the 26 civil procedural laws of the cantons.

The new CCP applies to all civil matters that are in dispute before Swiss courts; there is, however, one exception: For proceedings before the Swiss Federal Supreme Court the procedure applies according to the Swiss Federal Supreme Court Act, which was enacted already in 2005. The organization of the cantonal courts is still in the competence of the cantons.

15.2    MAIN PRINCIPLES OF PROCEEDINGS

1. Where can a suit be filed? The plaintiff has now the right to choose, whether to sue the 
defendant at his domicile/seat or at the place of performance of the characteristic service. The 
place of performance is the place where the service that characterizes the contractual obligation in question has to be carried out. The characteristic service is the action that comprises the typical attribute of the respective contract type. As an example, the development work of the software provider in case of a software development contract is the characteristic service. The remuneration for the software development (the obligation of the customer) is not regarded as characterizing the service. The place at which this performance is to be done is normally stipulated in the agreement.

In practice, agreements on jurisdiction are very 
important:  the parties specify in their contract – usually in 
advance – which court shall have jurisdiction over their dispute case. As in the past, the stipulated court and the choice of the law that governs the 
agreement must be identified in a precise manner. The stipulated court cannot deny 
its jurisdiction, but must accept the case. A contractual arrangement on jurisdiction is valid if it can be proven 
by text; this includes a respective “click” of agreement in a website.

2. In order to reduce the workload of the courts and facilitate the parties’ first step in the 
legal arena, proceedings must, as a matter of principle, be preceded by an attempt of conciliation or mediation.

Requests for conciliation or mediation disrupt the statute of !imitations; for the mediation this is only the case, if the mediation is requested 
from the official conciliation authorities.

However, for disputes which are heard only before one cantonal court (e.g., the commercial court for commercial cases), 
there is no possibility to attempt  a conciliation. 
This has the consequence, that the disruption of the statute of limitations requires the filing of the formal suit instead 
of a conciliation request.

3. The court has a large degree of flexibility to structure the proceeding. Depending on the amount in dispute and the complexity of the case, a simpler or 
a more detailed proceeding can be ordered. A civil case begins with a written statement of claim followed by a written statement of defense. Then the case continues with oral 
arguments at the beginning of the hearing phase. 
 If less than CHF 30’000 is 
in dispute, parties may present their respective 
positions by oral statements. However, the court can also order a second exchange of written submissions and, moreover, 
summon the parties to a preparatory hearing prior to the main hearing. Because the court has considerable freedom in how 
the proceeding is to be conducted, for example, 
the parties cannot know at the beginning of the proceeding what the deadline is for their presentation of allegations and facts and for submission of the corresponding evidence.

15.3    LEGAL REMEDIES AGAINST THE JUDGMENT

1. Essentially any decision 
handed down by a cantonal court of first instance 
can be challenged before a higher cantonal court (cantonal court of appeal or cantonal supreme court), after which it can go before the Swiss
Federal Supreme Court. An exception, however, applies for 
commercial courts (that exist e.g. in the 
cantons of Zurich, St.Gallen and Bern) and for actions in specific areas of law (such as intellectual property law): The decisions of these commercial courts of the cantons must be 
appealed directly with the Swiss Federal Supreme 
Court.
2. The CCP has two principal legal remedies: the 
appeal and the request for setting- 
aside; the three further remedies of revision, interpretation and correction do not play an important role. Both the appeal and the request for setting-aside 
must be filed with the appellate instance within 30 
days, in writing and with arguments. The deadline 
may not be extended. This means that a party which
has not been successful before the first instance must decide within short notice whether to challenge the lower court’s decision before the higher cantonal instance. The relative short deadline of 30 days from 
the issuance of the. lower court’s decision is not the only challenge to be considered: If 
the lower court issues its decision without giving written reasons, the losing party must request written reasons within 10 days, without 
which the law assumes that the right to challenge the decision before the higher court has been waived.
3. The main difference between the appeal and the 
request for setting-aside is that the appeal is intended for cases with an amount in dispute of at 
least CHF 10’000, whereas the request for 
setting-aside covers cases below that amount as well as 
decisions concerning the enforcement of civil judgments. Decisions handed down during a first-instance proceeding are subject to appeal if they 
are actually procedural or substantive interim decisions (e.g., the dismissal of a plea under the 
limitation of actions). To the contrary, procedural orders are – where applicable – to be challenged 
through a request for setting-aside.

15.4    COSTS OF LITIGATION

The costs of litigation consist of the court fees and the attorneys’ fees. The cantons are competent to regulate these fees. Thus, the CCP has not standardized the cost of litigation.

The court can demand an advance of the court fees from the plaintiff up to the presumed amount, and -on request of the defendant- to secure the attorneys’ fees if the plaintiff has its domicile/legal seat outside of Switzerland. The security can be in cash or as a guarantee of a bank or an insurance company established in Switzerland. If the advance or the security is not performed within the deadline set by the court the action is –after a period of grace- dismissed.

For the costs of taking of evidence the court demands also the respective advance; if it is not paid in due time the taking of evidence is ceased.

Normally the court decides on the costs of litigation in its final decision; the losing party has to bear them, unless the court decides otherwise under certain circumstances listed in the CCP. If the case is settled by an agreement before the court the cost of litigation are distributed according to the proportion of the agreement.

For proceedings before the Swiss Federal Supreme Court the costs of litigations are regulated in the Swiss Federal Supreme Court Act.

15.5    ARBITRATION

1. Important especially for disputes in commercial matters, Arbitration has a high importance. The CPP concerns itself not 
only with civil litigation before state courts, but also with the procedure before private arbitral tribunals established in Switzerland between parties who are residing in Switzerland.
2. It is certainly not a surprise, that arbitral proceedings are different from proceedings before a state court; in particular, the parties 
have themselves the right to determine the composition of the 
arbitral tribunal (with members whom they trust) 
and even to define the procedural rules. And what is most important:
A decision of an arbitral tribunal has the same 
legal binding effect as a final and enforceable decision by a state 
court. Another key difference is that arbitration 
proceedings are not conducted in public, bunt behind closed doors. It is exactly this confidentiality that arbitration is often the preferred way of settling disputes arising from commercial agreements, which the parties wish to keep confidential.
3. When the parties agree on arbitration, they are not bound to the inflexible rules of the CCP, but can instead specify the procedural rules of the arbitration. Very often the parties adopt the procedural rules of 
an existing arbitration institution. Within the limits of mandatory procedural rights (such as equal treatment 
and due process) the arbitral tribunal determines 
the details on how to conduct the proceedings in close coordination with the ideas of the parties.
4. The arbitral decision (award) is only and exclusively subject to an action for annulment by the Swiss Federal Supreme 
Court. However, only in very exceptional cases the 
Swiss Federal Supreme Court is in a position to annul an arbitral award. The Swiss Federal Supreme Court does not verify as to 
whether the arbitral tribunal made the right material decision; even an arbitral award that is erroneous is overruled only in instances when it would lead to arbitrary results.

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