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Employment & Labour

Switzerland

In recent years, an increasing number of companies have started to implement internal whistleblowing programmes, allowing employees to report confidentially any questionable practices concerning accounting or auditing matters. This has, in turn, provoked data protection concerns.

Environment

Switzerland

Overview
Including: New efficiency requirements for electric devices; New energy labelling for electronic devices; Extension of prepaid recycling fee to all types of battery; List of clean construction machine engines; Reduced fees for certain heavy vehicles; New energy labelling for passenger vehicles; Incentives to lower CO2 emissions of passenger vehicles; Amendments to Ordinance on Biocidal Products.

In two recent cases the Swiss Federal Supreme Court examined two important issues in environmental law: the right to complain and the precautionary principle. The decisions contribute to a better understanding of the scope of these fundamental principles in environmental matters.

Information Technology

Switzerland

The collection and use of personal data are mainly governed by the Federal Data Protection Act and its ordinances. This update considers the principles of data protection regulation and related issues, including the rights of individuals, processing by third parties and the transfer of data outside Switzerland.

Many companies with operations in Switzerland are not yet fully aware that Swiss law may severely restrict the use of emails and other electronic material in investigations and disputes, particularly when used for a foreign court proceeding. However, there are procedures to ensure compliance with Swiss data protection law in practice in such situations.

Companies in Switzerland that store business documents on IT systems abroad may be in violation of Swiss law and regulations, according to a circular issued by the Money Laundering Control Authority. Although the circular applies only to companies which are subject to Swiss anti-money laundering legislation, it raises questions concerning other international companies with operations in Switzerland.

The Swiss Parliament has partially revised the Federal Data Protection Act for the first time. The amended statute governing the processing of personal data is expected to become effective in Spring 2007. The revised act increases slightly the transparency of the processing of personal data for the benefit of data subjects, but at the same time makes privacy compliance more costly for private businesses.

No IT service provider wants to be subject to unlimited liability when entering into a contract with a customer. However, a well-prepared customer can poke holes in the limitation of liability provisions of a service provider during contractual negotiations, thus increasing the pressure on the service provider to perform its obligations in a diligent manner.

When negotiating an IT outsourcing deal, most people focus on getting the new relationship started and keeping it running. While most outsourcing contracts also regulate the termination of the service in one way or another, the consequences of such an incisive moment are often considered only when it is too late.

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Insolvency & Restructuring

Switzerland

In a recent decision the Federal Supreme Court specified the prerequisites for a restructuring measure that is often termed the 'restructuring harmonica'. In essence, the court ruled that if a harmonica by itself – and without giving credit to any subordination of claims by creditors – eliminates the over-indebtedness of a company, it is a permissible restructuring measure.

In a recent case the Federal Supreme Court has once again had the opportunity to establish the dos and don'ts for a foreign administrator acting in Switzerland. The court's main argument for not admitting the foreign administrator before the foreign insolvency decree was recognised in Switzerland was that such admittance would have led to deviation from a so-called 'mini-bankruptcy' proceeding.

The introduction of two new statutes has entailed various amendments to the Bankruptcy Code, particularly in respect of attachment or freezing orders. In particular, all kinds of executory titles, including enforceable Swiss or foreign judgments and Swiss or foreign arbitral awards, now allow for the at­tachment of assets of a debtor located in Switzerland, notwithstanding whether the debtor is domiciled in Switzerland.

In recent Swiss restructurings the question has arisen of whether a debt-to-equity swap, executed as a restructuring measure, can be challenged through an avoidance action or can constitute a prohibited – and thus voidable – set-off if the company becomes bankrupt upon execution of the debt-to-equity swap. This update elaborates on these risks.

In a recent Federal Supreme Court decision concerning the Swissair insolvency, the court loosened its strict application of the clawback rules and held that, in general, the payment of interest on a loan (even if made shortly before an application in an insolvency proceeding) is not a voidable transaction if interest is paid at market rates, unless certain specific circumstances require a decision to the contrary.

Recent case law underlines the Federal Supreme Court's strict interpretation of the avoidance rules. As a consequence, every payment of an outstanding debt by a debtor in financial difficulties is susceptible to subsequent avoidance action under bankruptcy law, should the debtor fall into bankruptcy. Hence, all such payments must be carefully scrutinized before execution.

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Intellectual Property

Switzerland

In the most recent revision of the Patent Act, Parliament has adopted a new bill which brings Swiss patent law into line with the latest technological progress and international developments. Its main focus is to ensure adequate patent protection for inventions in the field of biotechnology. In addition, the revision includes various amendments to a range of IP legislation.

Swiss trademark regulation is provided for by the Federal Act on Trademarks and Geographic Denominations. The administrative procedure before the Federal Institute of Intellectual Property and domestic questions of international registration of trademarks are governed by the Ordinance on the Protection of Trademarks. This update addresses the regulatory aspects of registering and maintaining trademarks.

The Federal Department of Justice and Police has elaborated on a draft revision of the Swiss Patent Act and, in the course of this revision, amendments to other laws including the Federal Act on Trademarks and Appellations of Origin are envisaged. The intended changes to this act represent measures to fight counterfeiting and would initiate a change of perspective in IP law.

The new Patent Act, which is not yet in force, includes two interesting provisions regarding the exhaustion of patent rights. The provisions set out exceptions to the principle of national exhaustion in regard to patented products that are also subject to other IP rights, and patent-protected agricultural means of production.

In a recent decision the Swiss Federal Supreme Court confirmed its longstanding practice with regard to the registration of trademarks containing geographical indications. The court held that where a mark has the potential to mislead, a restriction of the protection granted to the mark would represent an adequate and appropriate measure to prevent the public from being misled.

In a recent case involving name protection under the Civil Code, the Swiss Supreme Court held that US software association Business Software Alliance, Inc was to be enjoined from using the abbreviation of its name (BSA) in Switzerland without a distinctive addition - particularly in connection with use as domain name.

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Litigation

Switzerland

Overview
Including: Judicial Structure; Commercial Courts; Court Procedure; Appeals to Swiss Federal Court.

The Zurich Court of Appeal has rejected the concept of witness examinations conducted by the parties' legal counsel. Consequently, Swiss courts assume that if a witness has been contacted and interrogated prior to the proceedings by counsel, resulting in a written witness statement, the witness lacks credibility and the subsequent testimony before the competent Swiss judges cannot be taken into account.

Can a criminal court entertain a civil action, as a so-called 'adjoining procedure', arising from the same facts? The Supreme Court recently adopted a creative solution to this question in an international case involving a foreign defendant who was domiciled in Lithuania and sentenced for crimes which were committed in Switzerland, but not in the district of the sentencing district court.

The Federal Supreme Court has stated that parties are entitled contractually to waive their right to bring any federal appeal against a cantonal court decision, particularly when a choice of jurisdiction concluded between foreign parties describes the first instance judgment as final. As a result of the decision, forum selection clauses must be carefully reviewed and drafted.

The new Swiss Federal Supreme Court Act sets forth revised regulations governing access to and proceedings before the Swiss Supreme Court. The act, which replaces the Federal Judicial Organization Act, forms part of a larger, more comprehensive overhaul of the Swiss judicial system.

The Swiss Supreme Court recently denied a request for judicial assistance from the New York Supreme Court seeking to review certain documents and question witnesses in connection with divorce proceedings pending in New York. The tribunal upheld a lower court decision that Switzerland was not required to execute the request as it fell under a reservation to Article 23 of the Hague Convention.

In a case that is still pending, the Zurich courts are considering a request for the enforcement of three arbitral awards - more specifically, of three state court judgments that were rendered on appeal against the awards. The question before the courts is whether the original awards or the appeal judgments are the object of the enforcement proceeding.

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Trade & Customs

Switzerland

Amendments have been proposed to the Federal Act on Technical Trade Barriers to incorporate the Cassis de Dijon principle into Swiss law. This principle of EU law provides that a product manufactured according to regulations and permitted in an EU member state must be permitted in other EU member states. It is hoped that the amendments will ease imports and reduce discrimination against Swiss manufacturers.

White Collar Crime

Switzerland

Increasingly, Swiss companies have been the target of investigations by US regulatory authorities. Swiss companies are faced with several statutory provisions when responding to a foreign authority's request for information or document production. Those statutory obstacles need to be overcome irrespective of whether a Swiss company is fully (or even voluntarily) cooperating with a foreign authority.