Civil asset recovery – jurisdictional issues
Is there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?
Civil proceedings can be conducted in parallel with, in advance of, or within criminal proceedings. The law provides for several procedural means by which civil and criminal proceedings can be coordinated. For example, civil courts can suspend or stay proceedings, if appropriate (article 126 of the Swiss Code of Civil Procedure (SCCP)). Proceedings may be stayed, in particular, if the decision depends on the outcome of other proceedings, such as criminal proceedings. In practice, only in limited cases will the existence of parallel criminal proceedings be sufficient grounds to stay civil proceedings. Civil and criminal proceedings can also be coordinated by granting victims of criminal offences the right to bring civil claims as private claimants in criminal proceedings (article 122 of the Swiss Code of Criminal Procedure (SCCrP)).
In which court should proceedings be brought?
Civil proceedings are generally brought before cantonal civil courts. In certain cases, however, civil claims can also be brought before the competent criminal authority for proceedings concerning the same subject matter (article 122 of the SCCrP) (see the aforementioned question ‘parallel proceedings’).
As a rule, ordinary civil proceedings should be brought before the courts at the defendant’s domicile (natural person) or seat (legal person) (article 10 of the SCCP). Civil procedural rules also set forth special venues depending on the subject matter of the dispute (eg, family law, inheritance law, property law, contract law, employment law, torts and company law), the existence of other relevant connections (eg, place of business establishment), as well as the nature of the claims or parties involved (eg, counterclaims or third-party claims). In particular, a claim for contractual matters can be filed before the courts either at the domicile or registered office of the defendant, or at the place where the characteristic performance must be rendered (article 31 et seq of the SCCP). The same is also provided in the context of international proceedings (article 10 of the Swiss Private International Law Act (PILA)). The Swiss Federal Supreme Court has changed its practice regarding forum running in an international context and has allowed for negative declaratory action to be filed in Switzerland by a party fearing an action filed abroad by an opposing party. It held that such forum running was possible as far as a forum exists in Switzerland based on the 2007 Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters or the PILA save cases where such an action would be abusive.
As to interim measures, unless the law provides otherwise, they can be ordered by either the court that has jurisdiction to decide the main action or the court of the place where the measure is to be enforced (article 13 of the SCCP). The same is also provided in the context of international proceedings (article 10 of the PILA). Attachment proceedings in support of a monetary claim are regulated specifically by the Swiss Debt Enforcement and Bankruptcy Act.
What are the time limits for starting civil court proceedings?
The initiation of civil proceedings is limited by the statute of limitations applicable to the underlying claim. There is no procedural statute of limitations limiting civil court proceedings as such.
As a rule, claims that arise out of a breach of contract become time-barred after 10 years unless otherwise provided by law (article 127 of the Swiss Code of Obligations (CO)). Some specific contractual claims become time-barred after five years:
- rent, interest on capital and all other periodic payments;
- delivery of foodstuffs;
- spousal support (alimony);
- work carried out by tradespeople and craftspeople;
- purchases of retail goods;
- medical treatment;
- professional services provided by lawyers, prosecutors, legal representatives and notaries; and
- work performed by employees for their employers (article 128 of the CO).
A claim for damages based on tort becomes time-barred three years from the date on which the injured party became aware of the loss or damage and of the identity of the person liable for it, or 10 years after the date on which the loss or damage was caused, whichever is earlier (article 60(1) CO). If the action for damages is derived from an offence for which criminal law provides for a longer limitation period, that longer period also applies to the civil law claim. If the longer criminal statute of limitations is no longer running because a criminal judgment has been rendered, the action for damages deriving from the criminal offence becomes time-barred three years from the date on which the criminal judgment was served (article 60(2) of the CO).
A few contractual claims are subject to other statutes of limitations such as two years for a customer’s general claim for defects in a contract for work (article 371(1) of the CO).
In general, the limitation period commences as soon as the debt is due (article 130 of the CO). The limitation period is interrupted if the debtor acknowledges the claim and, in particular, if the debtor makes interest payments or partial payments, or if debt enforcement or judicial proceedings are initiated by the creditor (article 135 of the CO). The effect of such interruption is that a new limitation period commences as of the date of the interruption (article 137 of the CO).
If a claim has been acknowledged by public deed or confirmed by a court judgment, the new limitation period is always 10 years (article 137(2) of the CO).
There is, however, no statutory limitation regarding the enforcement of a judgment (Swiss or foreign).
In what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?
Civil courts mainly have jurisdiction for contentious civil matters, court orders in non-contentious matters and court orders in matters of debt collection and bankruptcy law, as well as arbitration (article 1 of the SCCP).
The court examines ex officio whether the procedural requirements of a claim are satisfied. This includes, in particular, the subject matter, the territorial jurisdiction of the court seized (articles 59 and 60 of the SCCP) as well as the immunity defence. A party can, however, object to the jurisdiction of the court as a preliminary matter. The court can thereupon decide to clarify this issue before entering into the merits of the case as a means to simplify the proceedings (article 125 of the SCCP).
If the court decides that it lacks jurisdiction, it closes the proceedings by deciding not to consider the merits of the case (article 236 of the SCCP). This decision is subject to either appeal (article 308 of the SCCP) or objection (article 319 of the SCCP), depending on the circumstances of the case. Conversely, the court may confirm its jurisdiction either in the final judgment on the merits or by way of an interim decision (although rare in practice) if a contrary appellate decision could end the proceedings and thereby save substantial time or cost. The interim decision can be challenged separately, but cannot later be challenged as part of the final judgment (article 237(2) of the SCCP). Facts that are relevant both for jurisdiction and the merits of the case are generally considered in the decision on the merits only, and will not be considered in a preliminary decision on jurisdiction.
Civil asset recovery – procedure
Admissibility of evidence
What rules apply to the admissibility of evidence in civil proceedings?
Under civil procedural rules, each party is entitled to have the court accept evidence that it offers in the required form and time frame (article 152 of the SCCP).
As to the form, the SCCP provides an exhaustive list of admissible means of evidence, which encompasses witness testimony, documents, expert opinions, inspection, written statements from official authorities or individuals (if witness testimony appears to be unnecessary) and interrogation of the parties (article 168 of the SCCP). Documentary evidence comprises audio recordings, films, electronic files and similar materials (article 177 of the SCCP).
Illegally obtained evidence is only considered by the court if there is an overriding interest in finding the truth (article 152(2) of the SCCP).
What powers are available to compel witnesses to give evidence?
Witnesses, as third parties, must cooperate in the taking of evidence. In particular, they must make a truthful witness statement, produce physical records (except for correspondence with lawyers provided that such correspondence concerns the professional representation of a party or third party) and allow an examination of their person or property by an expert (article 160 of the SCCP).
In certain cases, witnesses may, however, refuse to cooperate. Witnesses have an absolute right to refuse to cooperate if they have a family link or a close personal relationship with one of the parties (article 165 of the SCCP). In other specific cases, witnesses only have a qualified right to refuse to cooperate, which must be justified (article 166 of the SCCP). This relates, for instance, to cases where witnesses would, in establishing facts, expose themselves or a close associate, as specified by law, to criminal prosecution or civil liability, or where a witness is bound by professional secrecy (eg, lawyers and clerics).
Further, confidants of other legally protected secrets may refuse to cooperate if they credibly show that the interest in keeping the secret outweighs the interest in establishing the truth (article 166(2) of the SCCP). This provision could apply, for instance, to bankers who are otherwise bound by banking secrecy (article 47 of the Swiss Federal Act on Banks and Saving Banks). If a witness refuses to cooperate without justification, the court may impose a disciplinary fine of up to 1,000 Swiss francs, threaten sanctions under article 292 of the Swiss Criminal Code (SCC), order the use of compulsory measures or charge the third party with the costs caused by the refusal (article 167 of the SCCP). There is, however, no such sanction as contempt of court under Swiss law.
Publicly available information
What sources of information about assets are publicly available?
A number of publicly available sources provide information on assets located in Switzerland, in particular, the following:
- the commercial register provides information on companies (eg, share capital, legal seat, address and corporate purpose). Each canton maintains a commercial register, which is freely accessible. A summary version of the commercial register is available online;
- the Swiss Official Gazette of Commerce, in addition to gathering some of the information published in every cantonal commercial register, provides information regarding bankruptcies, composition agreements, debt enforcements, calls to creditors, lost titles, precious metal control, other legal publications, balances and company notices;
- the land register records every single plot of land in Switzerland, except those in the public domain. Each canton maintains its land register, which can be consulted upon proof of a legitimate interest (eg, for purposes of contractual negotiations for the purchase of a property);
- the SIX Swiss Stock Exchange (through its reporting platform Six Exchange Regulation (SER)) and BX Berne Exchange provide online information on listed companies, including on their shareholdings (eg, significant changes in ownership and voting rights that are reported pursuant to article 120 of the Financial Market Infrastructure Act);
- the Swiss aircraft register contains the records of all Swiss-registered aircraft and provides detailed information regarding the owner and the holder, the type of aircraft, its year of construction, the serial number, the maximum take-off weight, and the fee according to its noise level;
- the debt enforcement and bankruptcy register records all debt collection proceedings filed against a debtor and can be consulted upon request by anyone showing a prima facie legitimate interest;
- an official will register records wills and other testamentary dispositions. This register is, however, not exhaustive and only contains information that has been provided freely;
- in certain cantons (eg, Bern, Fribourg, Neuchâtel, Saint-Gall, Valais, Vaud and Zurich), it is possible, under specific conditions, to access information contained in a person’s tax certificate; and
- judgments rendered by criminal and civil courts on the merits are accessible to the public (article 54 of the SCCP) either on the website of the relevant court in anonymised format or for consultation at the same upon request (in which case a copy thereof can be provided after having been anonymised depending on the practice of the court). Third parties may also request access to no-proceedings orders and rulings of abandonment of proceedings (see the aforementioned question ‘confiscation procedure’), which are not final as well as to rulings that were annulled by appeal courts, possibly subject to anonymisation requirements.
There is no register of bank accounts in Switzerland. Swiss banking secrecy protects the privacy of banks’ clients. However, banking secrecy is not unlimited and can be lifted in the context of criminal proceedings, among others.
Cooperation with law enforcement agencies
Can information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?
A civil court may obtain information in writing from all official authorities (article 190 of the SCCP). There is no list of entities falling under the definition of official authorities, but it should be interpreted broadly as encompassing every entity financed or subsidised by a public agency. Moreover, courts are obliged to provide mutual assistance to each other (article 194 of the SCCP). A party to civil proceedings may request the civil court in charge of the matter to order the adverse party or another authority to provide specific information. Also, a civil court may be requested to take evidence at any time (namely, even before the initiation of proceedings) if the law grants such right to do so and the applicant credibly shows that the evidence is at risk or that it has a legitimate interest (article 158 of the SCCP).
Information may be obtained from the Debt Collection Office regarding the debt enforcement and bankruptcy register records, as well as from civil courts. Moreover, a party to a civil dispute that is also a party to criminal proceedings on the same facts, if granted the right to access the criminal file, can use such information in the context of civil proceedings.
How can information be obtained from third parties not suspected of wrongdoing?
Third parties are subject to the same rules as witnesses for the taking of evidence. Separately, pursuant to the rules of the Swiss Federal Act on Data Protection, any person may request access to the information on his or her personal data that has been collected by a data controller (eg, the origin of the data that has been processed, the purpose of the data processing, the type of personal data concerned and their recipients). Access may, however, be denied, restricted or deferred by data controllers if permitted by law (eg, professional secrecy) in the case of an overriding third party or public interest, or of an ongoing criminal investigation. The Swiss Federal Act on Data Protection, however, does not apply to civil, criminal, administrative and mutual assistance proceedings that are pending.
Civil asset recovery – remedies and relief
Non-compliance with court orders
How do courts punish failure to comply with court orders?
If the court order provides for an obligation to act, to refrain from acting or to tolerate something, the enforcement court may do as follows:
- issue a threat of criminal penalty under article 292 of the Swiss Criminal Code (SCC), which can give rise to a fine in the case of non-compliance;
- impose a disciplinary fine not exceeding 5,000 Swiss francs;
- impose a disciplinary fine not exceeding 1,000 Swiss francs for each day of non-compliance;
- order a compulsory measure, such as taking away a movable item or vacating immovable property; or
- order performance by a third party (article 343 of the SCCP).
Courts can accompany their orders directly with these execution measures. Such measures can also be requested separately by one of the parties to the enforcement court if the other fails to comply with a court order.
Obtaining evidence from other jurisdictions
How can information be obtained through courts in other jurisdictions to assist in the civil proceedings?
Requests for judicial assistance for the taking of evidence abroad must follow the legal framework applicable between Switzerland and the requested state (eg, bilateral or multilateral treaties such as the 1954 Hague Convention on Civil Procedure or the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters). In Switzerland, in the absence of a specific international instrument, such requests must be addressed to the Swiss Federal Office of Justice, which then transfers the requests abroad (article 11 of the Swiss Private International Law Act (PILA)).
Assisting courts in other jurisdictions
What assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?
Swiss courts will assist foreign courts concerning proceedings of asset recovery (eg, service, taking of evidence, recognition and enforcement of foreign awards and interim measures) within the legal framework applicable between Switzerland and the requesting state. Save for the existence of other bilateral or multilateral agreements between the two states (eg, the 1965 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters or the 2007 Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters), by default, Switzerland will apply the 1954 Hague Convention on Civil Procedure to foreign requests for service and the taking of evidence (article 11a(4) of the PILA).
Service of judicial or extrajudicial documents from abroad in Switzerland and the taking of evidence in support of foreign proceedings are considered exercises of public authority on Swiss territory. Accordingly, the execution of such measures on Swiss territory, without passing through the channel of judicial assistance, constitutes a violation of territorial sovereignty and is a crime under Swiss law (article 271 of the SCC).
Causes of action
What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?
Under the law, a civil asset recovery action may be brought to court based on many different causes of action (eg, contract law, tort law, inheritance law and property law).
In particular, contract-based claims may be filed for breach of contract (article 97 of the Swiss Code of Obligations (CO)). If there is no contract between the parties and if a person unlawfully causes a loss or damage to another, a tort-based action may be lodged (article 41 of the CO). This applies particularly to cases of fraud. Proprietary claims are also possible, notably in the event that the owner has been deprived of its ownership (article 641 of the Swiss Civil Code (CC)). In insolvency and bankruptcy law, if the debtor has transferred assets or favoured certain creditors to the detriment of others, an avoidance action may be brought (article 285 et seq of DEBA).
What remedies are available in a civil recovery action?
Remedies available under the law generally depend on the cause of action.
In the context of a contract, the claimant may request that the defendant be ordered to perform the contract under its precise terms (specific performance) (article 107(2) of the CO). Instead of asking for specific performance, the claimant may also choose to claim damages (article 97 of the CO). Similarly, the remedy available for tort-based actions is damages.
The law provides for restitution in the event of unjust enrichment (article 62 et seq of the CO). In general, the claim for unjust enrichment is considered subsidiary to other, more specific claims. Restitution is also the remedy available to the owner of an object deprived of its ownership (article 641 of the CC).
The law provides for an account of profits under specific circumstances. For instance, in the case of a contract of an agency without authority, the principal is entitled to appropriate any resulting benefits where the agency activities were not carried out with the best interests of the principal in mind, but with those of the agent (article 423(1) of the CO). An account of profits is also foreseen concerning profits realised by the infringement of personality rights (article 28a(3) of the CC).
Judgment without full trial
Can a victim obtain a judgment without the need for a full trial?
In certain circumstances, the law allows a judgment to be issued without a full trial. For instance, civil proceedings can continue and a judgment by default can be rendered even if the defendant is in default (articles 147, 206, 223 and 234 of the SCCP). In other specific cases, the trial is conducted pursuant to simplified or summary proceedings. Simplified proceedings apply, inter alia, to small cases (namely, where the value in a dispute is below 30,000 Swiss francs) (articles 243 to 247 of the SCCP). Summary proceedings go even further in terms of simplification and expediency. They apply, in particular, to urgent requests and requests for interim measures (articles 248 to 270 of the SCCP). They also apply to ‘clear-cut cases’, which are non-contentious matters or matters where the facts can be immediately proven, and where the legal situation is straightforward and non-disputable (article 257 of the SCCP).
What post-judgment relief is available to successful claimants?
The successful claimant of a monetary claim can launch debt collection proceedings under DEBA, which also allows for attachment proceedings depending on the circumstances.
For a non-monetary claim, if the judgment provides for an obligation to act, to refrain from acting or to tolerate something, the successful claimant may request the court for execution measures. If the judgment relates to a declaration of intent, the enforceable decision takes the place of the declaration. If the declaration concerns a public register, such as the land register or the commercial register, the court making the decision must issue the required instructions to the registrar (article 344 of the SCCP).
What methods of enforcement are available?
The successful party can request execution measures in support of a non-monetary claim, such as the issuance of a threat of a criminal penalty under article 292 of the SCC or performance by a third party (article 343 of the SCCP). Moreover, the successful party may demand damages if the unsuccessful party does not follow the orders of the court or conversion of the performance due into the payment of money.
In turn, monetary claims can be enforced under DEBA. Eventually, the procedure set forth by DEBA will lead to the seizure of any of the unsuccessful defendant’s assets as well as garnishes (article 89 et seq of DEBA) and their auctioning (article 125 et seq of DEBA). The seizure of a real estate property will be automatically registered in the land register (article 101 of DEBA).
Funding and costs
What funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?
The law does not prohibit litigation funding arrangements. Although a rather limited phenomenon in practice, litigation funding may be available through specialised litigation financing companies. The law further allows lawyers and their clients to negotiate fee arrangements to a certain degree. Though pure contingency fee arrangements are prohibited, arrangements according to which an incentive may be paid depending on the success of the case are allowed under certain conditions, namely, when:
- a proper base remuneration is guaranteed regardless of the proceedings’ outcome, which should cover actual costs incurred;
- the incentive does not exceed the base remuneration to avoid undermining the lawyer’s independence or being perceived as an undue advantage; and
- the arrangement is agreed before the beginning of the mandate or at the end of the proceedings (as opposed to within the course of the mandate).
In principle, the court will charge the procedural costs, which encompass court costs and party costs as determined by cantonal tariffs (article 95 et seq of the SCCP), to the unsuccessful party (article 106 of the SCCP). Party costs include the reimbursement of necessary outlays, the costs of professional representation and, in justified cases, compensation for personal efforts if a party is not professionally represented. In general, cantonal tariffs are established based on the value in dispute, the complexity of the matter and the time spent. Unnecessary costs are, however, charged to the party that caused them (article 108 of the SCCP). In practice, the party costs awarded by the courts to the successful party do not cover the full cost of the litigation, which usually acts as a barrier to malicious proceedings. Courts have, however, no power to issue cost-management orders.