Switzerland updates

Arbitration & ADR

Contributed by Tavernier Tschanz
First annulment of investment arbitration award by Supreme Court
  • Switzerland
  • 02 July 2020

In a recently published decision, the Supreme Court – for the first time – partially annulled an arbitral award issued in an investment arbitration. A Geneva-based arbitral tribunal, which was constituted under the United Nations Commission on International Trade Law Arbitration Rules, had wrongly declined jurisdiction to decide an investment treaty claim brought by Clorox España SL against Venezuela.

One transaction but multiple arbitration agreements: extent of jurisdiction
  • Switzerland
  • 07 May 2020

The Supreme Court recently confirmed an arbitral tribunal's broad interpretation of the objective scope of an arbitration agreement contained in a quality assurance agreement (QAA) to cover disputes which were unrelated to the QAA but arose within the contractual relationship of the parties thereto.

Partial annulment of award based on ultra petita grounds
  • Switzerland
  • 20 February 2020

A recent case addressed the partial annulment of an award which granted damages where the prayer for relief sought only a declaration (ultra petita). In addition to confirming the well-established line of decisions on penalty and substantive public order, this decision is among the few annulments, albeit partial, of an international award by the Supreme Court.

State-owned entity's consent to arbitrate does not bind state – in principle
  • Switzerland
  • 19 December 2019

According to a recent Supreme Court decision, the fact that a party to an arbitration agreement is fully owned by a state is insufficient grounds to have that agreement extended to said state. Therefore, an arbitration agreement concluded by a state-owned entity does not necessarily bind the state itself. In order to do so, the arbitration agreement must be extended to the state.

Supreme Court annuls award for second time in same arbitration dispute
  • Switzerland
  • 29 August 2019

In principle, if an application for an annulment of an arbitral award is upheld, the Supreme Court may cancel only the award (the so-called 'cassatory' nature of the setting aside proceeding). However, as shown by a recent decision, the Supreme Court's findings underlying a cancellation for the violation of a party's right to be heard seem to qualify as directions for the arbitral tribunal which must remake the decision.


Aviation

Contributed by Proton Legal LLC
EU drone regulations will apply in Switzerland
  • Switzerland
  • 24 June 2020

In 2019 the European Union issued a package of regulations relating to the use of drones. Although Switzerland is not a member of the European Union, both the EU Commission Implementing Regulation and the EU Commission Delegated Regulation will be adopted into Swiss law. The current Swiss regime on the operation of drones will remain in force until the end of 2020.

Federal Administrative Court weighs in on penalty levied on airline for carrying inadmissible persons
  • Switzerland
  • 04 March 2020

'Inadmissible persons' ('INADs') is a term used for passengers who are or will be refused admission to a state by its authorities. Pursuant to Article 122a of the Foreign and Integration Act, a violation of airlines' duty of care is presumed if the airline carries INADs. However, Article 122a departs from the presumption of innocence by requiring airlines to prove specific matters in order to avoid conviction. The Federal Administrative Court recently ruled on the matter.

Supreme Court acquits air traffic controller
  • Switzerland
  • 08 January 2020

The Supreme Court recently upheld an appeal against the conviction of an air traffic controller who had cleared two aircraft in quick succession to take off from two crossing runways at Zurich airport. The decision is welcome news and contrasts with recent convictions of air traffic controllers handed down in Switzerland for operational incidents that resulted in neither injury nor damage.

Supreme Court upholds air traffic controller conviction
  • Switzerland
  • 14 August 2019

The Supreme Court recently dismissed an appeal against the conviction of an air traffic controller for negligent disruption of public transport. In so doing, the court established a new precedent that allows for criminal prosecution and conviction for operational incidents that result in neither injury nor damage. As this decision makes it difficult for aviation professionals to treat their mistakes as learning opportunities, it is a major step backwards for aviation safety.

Air traffic controller convictions draw criticism
  • Switzerland
  • 15 May 2019

Air traffic controller and pilot organisations have criticised recent convictions handed down in Switzerland for operational incidents that resulted in neither injury nor damage. Critics have asserted that criminal prosecutions in the aviation sector tend to do more harm than good. Further, there is widespread concern that criminalisation leads to a loss of cooperation from individuals who could provide the most critical insight into the circumstances of an incident.


Banking & Financial Services

Contributed by Meyerlustenberger Lachenal
Execution-only relationship – transactions without mandate and calculation of damages
  • Switzerland
  • 21 July 2020

A recent Supreme Court decision concerned a case in which a relationship manager with a Swiss bank left said bank without the relevant bank's client being informed. The relationship manager continued to act on the client's behalf and gave investment orders to the bank, which the bank followed. The bulk of the court's decision discussed how the relevant damages suffered by the client must be alleged, contested and determined.

FINMA brings more clarity to transition regimes for financial service providers
  • Switzerland
  • 14 July 2020

The new Financial Services Act and Financial Institutions Act came into force on 1 January 2020 together with their implementing ordinances. These laws oblige the Swiss Financial Market Supervisory Authority to license several new bodies, such as supervisory organisations responsible for supervising portfolio managers and trustees, as well as registration bodies responsible for maintaining client advisory registers.

FINMA: temporary exemptions for banks due to COVID-19 crisis
  • Switzerland
  • 15 May 2020

The Swiss Financial Markets Supervisory Authority (FINMA) recently provided banks with clarifications on dealing with COVID-19 credits with federal guarantees within the framework of the capital and liquidity requirements and temporary exemptions relating to the leverage ratio. FINMA will likely further specify these guidelines or issue additional rules depending on the development of the current crisis.

Transaction-related investment advice under FinSA
  • Switzerland
  • 08 May 2020

The Swiss Financial Services Act's more liberal approach to transaction-related investment advice is a significant facilitation for financial service providers, but may also lead to uncertainties regarding its actual scope. This article aims to give some clarity on the sometimes difficult differentiation between the different types of investment advice and on the regulatory consequences of this categorisation.


Competition & Antitrust

Contributed by Lenz & Staehelin
Secretariat of ComCo advises on obligation to notify concentration
  • Switzerland
  • 28 May 2020

Under Swiss law, a proposed concentration triggers a mandatory pre-merger notification if one of the undertakings concerned has been held to be dominant, irrespective of the statutory turnover thresholds. It was previously unclear whether this criterion had to be met at the time of signing or at the time of closing. The Secretariat of the Swiss Competition Commission has now clarified this question.

COVID-19 crisis: guidelines for dealing with antitrust risk
  • Switzerland
  • 23 April 2020

Companies in a wide range of industries are facing major challenges due to the COVID-19 crisis. Such challenges include strongly increased or decreased demand, possible supply chain bottlenecks and even supply shortages. Although the situation is exceptional, antitrust rules still apply. The only exceptions are if the government and authorities order measures to combat the COVID-19 crisis that restrict competition.

Federal Supreme Court examines margin squeeze under Swiss competition law
  • Switzerland
  • 20 February 2020

The Federal Supreme Court recently confirmed that Swisscom had abused its dominant position by charging abusive prices for wholesale broadband services between 2001 and 2007. Swisscom was found to have left its competitors no possibility to gain a sufficient profit margin between the wholesale prices charged by Swisscom and their retail prices (so-called 'margin squeeze'). This was the court's first judgment where it examined a margin squeeze under Swiss competition law.

Low fine for vertical price fixing against Swiss ski manufacturer after leniency application
  • Switzerland
  • 14 November 2019

The Competition Commission (ComCo) recently fined a Swiss manufacturer of skis and other sporting goods Sfr140,000 for vertical price fixing with its dealers. The fine was rather low, as the manufacturer had filed a leniency application and entered into an amicable settlement with ComCo. This settlement decision underscores ComCo's strict approach vis-à-vis hardcore vertical agreements and sheds light on how ComCo views restrictions of selective (online) distribution in Switzerland.

ComCo reduces antitrust fines due to damages compensation paid to cartel victims
  • Switzerland
  • 26 September 2019

The Competition Commission (ComCo) recently closed its investigations into bid rigging in the construction industry and issued fines of Sfr11 million, an amount which would have been much higher had the commission not deducted the damages compensation paid by the cartelists to the victims from its claims. By introducing the possibility of compensating cartel victims for damages in antitrust proceedings, ComCo has chosen to advocate civil antitrust law to the detriment of its leniency programme.


Corporate & Commercial

Contributed by Badertscher Attorneys at Law
Federal Supreme Court: negative interest in loan agreements
  • Switzerland
  • 13 April 2020

The Federal Supreme Court recently dealt with the question of whether the interest payment obligation in loan agreements can be reversed due to the introduction of negative interest. For the first time the court has held that, unless the parties have agreed otherwise, the obligation to pay interest under a loan agreement cannot be shifted to the lender.

Enforcing board members' information rights
  • Switzerland
  • 25 March 2019

The Federal Supreme Court recently considered – for the first time – whether board members' rights to information, inspection and insight can also be asserted on an appeal basis. The court also commented on the type of procedure applicable in such cases. This decision should be taken into account by board members who lack evidence or knowledge of important or necessary information, particularly if it relates to the organisation of or disputed relationships within the board of directors.

Shareholders' agreements for closely held companies under Swiss law
  • Switzerland
  • 13 November 2017

Shareholders of closely held companies often mutually agree on additional contractual rights and duties. However, the company itself cannot be a contract party to a separate shareholders' agreement. Apart from that legal restriction, such shareholders' agreements usually benefit from the contractual freedom of the parties. A recent Federal Court decision confirmed that such agreements may be recharacterised as abusive or contrary to the principle of good faith.

Interpretation of company articles in Sika takeover battle
  • Switzerland
  • 22 May 2017

A recent Zug Cantonal Court decision sheds light on the way that Swiss company articles of association must be interpreted under Swiss company law in cases in which they are not only applicable internally among a few shareholders, but also have an effect on third parties. The decision confirms that the observation of merely the letter and not the spirit of company articles by a company board or majority company shareholders in a general meeting can even amount to an abuse of law.

New Federal Court decision on business judgement rule
  • Switzerland
  • 05 September 2016

A recent Swiss Federal Court decision clarified the circumstances under which the personal liability of board members or managers of a Swiss company for their business decisions and omissions can be reduced by applying the so-called 'business judgement' rule or, if the related prerequisites are not met in a particular case, based on other grounds.