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Private Client & Offshore Services
The COVID-19 pandemic has placed issues of life and death at the forefront of people's minds, with many people requiring intensive medical care which may deprive them of their capacity of judgement and require others to take decisions for them. This time of significant change is an opportune moment to consider the importance of taking preventive steps before a state of incapacity arises to ensure that individuals' wishes are respected, as well as the various means available to do so.
With COVID-19, investors who are facing cash calls and liquidity squeezes in other asset classes might be looking to realise some liquidity from their unsecured, unleveraged artwork collections; despite valuation risks, this could therefore be a time when investors turn to art loans to provide them with much-needed liquidity. Concluding an art-based loan agreement under Swiss law offers many advantages, and it will be interesting to see how this loan product fares in the aftermath of the COVID-19 crisis.
Private clients who want to resort to the services of Swiss free ports are facing greater transparency. They should be aware of the anti-money laundering obligations imposed on the dealers and financial intermediaries with which they trade, particularly regarding due diligence enquiries to which they could be subject. However, despite stricter regulation, Swiss free ports continue to offer many advantages.
From 1 January 2020, the Swiss Financial Institutions Act and the Swiss Financial Services Act will become law and introduce a regulatory regime for trustees operating in Switzerland, obliging them to obtain an authorisation to carry out their activities. The new regime should reinforce the general reputation and competitiveness of Switzerland as a financial centre and boost the Swiss trust industry's quality, integrity and accountability.
Art collectors' alert – landmark Supreme Court ruling on returning artworks illicitly exported to country of originSwitzerland | 29 August 2019
Estimated at $67.4 billion, the art market has become a global playing field for ultra-high-net-worth and high-net-worth individuals to invest their assets. Yet, lack of harmonisation of national legislations on the protection of cultural property may hamper collectors' pleasure in moving their art around the world. In a recent decision, the Swiss Supreme Court clarified the requirements to be met by countries of origin when requesting the return of artworks allegedly illicitly exported by their legitimate owners, thus absent any issues of ownership.
While trusts have not been incorporated into the Swiss legal system, Switzerland ratified the Hague Trust Convention with effect from 1 July 2007 and adapted its conflict of laws provisions – in particular, Articles 149(a) to 149(e) of the Private International Law Act. As a result, foreign trusts are fully recognised and implemented under Swiss law. Although discussed controversially, legislative initiatives to introduce trusts into the Swiss legal system are ongoing.