Switzerland updates

Arbitration & ADR

Contributed by Tavernier Tschanz
Investigating arbitrator bias: extensive screening of social media not necessarily expected
  • Switzerland
  • 18 March 2021

The Supreme Court recently granted a request for revision and annulled a Court of Arbitration for Sport award based on justifiable doubts as to the impartiality of the presiding arbitrator. This decision clarifies that while a party may be expected, depending on the circumstances, to examine arbitrators' presence on various social media platforms, it is not required to carry out extensive investigations in the absence of any specific circumstances indicating a potential risk of bias.

Supreme Court annuls award which extended arbitration agreement to third-party subcontractor
  • Switzerland
  • 04 February 2021

The Supreme Court recently annulled a partial award on jurisdiction in which an International Chamber of Commerce arbitral tribunal in Geneva had extended the arbitration agreement to a subcontractor based on its implied consent to arbitration. This decision provides some assurances to subcontractors that they will not easily be deemed to have provided implied consent to an arbitration clause contained in a main contract based on the performance of their obligations under a subcontract.

Article 6(1) of ECHR is not separate ground to challenge arbitral awards
  • Switzerland
  • 12 November 2020

In a recently published decision, the Supreme Court dismissed a challenge against an arbitral award issued by the Court of Arbitration for Sport on preliminary objections. The Supreme Court held, among other things, that Article 6(1) of the European Convention on Human Rights is not a separate ground to challenge arbitral awards rendered in Switzerland. The court also determined whether a violation of Article 2 of the Civil Code renders an award per se incompatible with substantive public policy.

Supreme Court will not review findings that parties lacked actual and common intent to arbitrate
  • Switzerland
  • 10 September 2020

In a recently published decision, the Supreme Court upheld an arbitral award in which the arbitral tribunal had declined jurisdiction in the absence of a valid arbitration agreement. The court confirmed that it does not review arbitral tribunals' findings as to the parties' actual and common intent to arbitrate. In addition, it held that it cannot review an arbitral tribunal's findings of fact and outlined the exceptional circumstances needed for it to review a challenge of jurisdiction.

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.


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
New DLT law in practice: tokenisation of rights
  • Switzerland
  • 06 April 2021

In 2020 Parliament passed a law to incorporate crypto assets and digital ledger technologies into Swiss law. This article focuses on the practical implementation of the recent changes to the Code of Obligations which provide for the introduction of ledger-based securities. This new form of dematerialised security enables the digitalisation and tokenisation of rights and financial instruments and digital transfers based on blockchain technology.

LIBOR transition challenges
  • Switzerland
  • 16 March 2021

The UK Financial Conduct Authority will stop supporting the London Interbank Offered Rate at the end of 2021. According to the National Working Group on Swiss Franc Reference Rates, the Swiss Average Rate Overnight is the proposed replacement standard. This article explores the challenges that the transition period poses for national and global market participants.

Risk profile, implied acknowledgment of transactions and how to set about starting litigation
  • Switzerland
  • 16 February 2021

The Federal Tribunal recently rendered a decision in a dispute between a bank and its client, a company, with regard to a (discretionary) wealth management contract. The claimant sought damages from the bank for a loss relating to the performance of the contract. This decision serves as a reminder of the fundamental issues of substantive law and gives food for thought in terms of the legal and strategic approaches to resolving a conflict.

New licensing requirement for investment managers
  • Switzerland
  • 19 January 2021

The Financial Institutions Act came into force on 1 January 2020. It is crucial that the top management bodies of independent and external investment managers which manage the portfolios of individuals recognise whether a licensing obligation exists and whether appropriate measures must be initiated, as they are responsible for compliance with and the implementation of licensing obligations.

New DLT law is just around the corner
  • Switzerland
  • 12 January 2021

In September 2020 Parliament passed a law to incorporate crypto assets and digital ledger technologies (DLT) into Swiss law. Once the law enters into effect, Switzerland's already high-quality regulatory framework for crypto will become one of the most advanced in the world. The government's explicit approach is to create the best possible framework conditions so that Switzerland can establish itself and evolve as a leading, innovative and sustainable location for fintech and DLT companies.


Competition & Antitrust

Contributed by Lenz & Staehelin
New unilateral conduct rules significantly broadened
  • Switzerland
  • 01 April 2021

Parliament recently approved a counterproposal to the Fair Price Initiative, thereby revising the Cartel Act and adopting the concept of 'relative market power'. Under the new law, prohibitions previously applicable only to dominant companies will be extended to companies with relative market power. The new law also introduces a geo-blocking ban.

New law prohibits online booking platforms from using price-parity clauses
  • Switzerland
  • 18 March 2021

The new law amending the Federal Act against Unfair Competition states that unfair competition occurs if an operator of an online platform for booking accommodation services uses general terms and conditions that restrict the pricing of accommodation facilities by means of price-fixing clauses, particularly price-parity clauses. The bill has been criticised for having been initiated not in the interest of consumers, but rather in the interest of the hotel industry, thus serving individual business interests.

ComCo's assessment of state aid for COVID-19-troubled airlines
  • Switzerland
  • 11 February 2021

Unlike EU competition law, Switzerland has no actual state aid regime. However, in the area of air transport, there is an exception. Until now, this provision had little significance in practice. Due to the ongoing downturn in air transport in light of the COVID-19 pandemic and the financial difficulties resulting therefrom, this is now changing and a practice regarding its application and interpretation from a Swiss perspective is being established for the first time.

Parliament agrees on stricter concept of market power
  • Switzerland
  • 14 January 2021

Parliament is currently debating the so-called 'fair price initiative' and an indirect counter-proposal by the government, both of which aim to tighten the Cartel Act. Among other new provisions, the concept of relative market power will be introduced to combat foreclosure of the Swiss market and price discrimination against Swiss corporate customers. Both chambers of Parliament have agreed that the concept of relative market power will apply not only to suppliers, but also to customers.

Federal Administrative Court adopts broad interpretation of merger notification obligation for dominant undertakings
  • Switzerland
  • 10 December 2020

Under Swiss competition law, a proposed concentration may trigger a mandatory pre-merger notification obligation if one of the undertakings concerned has been held to be dominant, irrespective of the statutory turnover thresholds. The scope of this provision is controversial. The Federal Administrative Court has now adopted a broad interpretation of the merger notification obligation for dominant undertakings, thereby exacerbating the issues associated with this provision.


Corporate & Commercial

Contributed by Badertscher Attorneys at Law
New gender quotas for publicly listed companies and transparency rules for commodity sector enter into force
  • Switzerland
  • 01 March 2021

On 1 January 2021, as part of the new corporate governance regulations, the new provisions regarding gender quotas and transparency rules for the commodity sector entered into force. Consequently, listed companies should elect more women to boards of directors and executive boards and stricter transparency rules will apply to commodity companies.

Liability of directors and board members in corporate groups
  • Switzerland
  • 14 December 2020

In practice, most large companies are structured as corporate groups. Corporate groups are recognised and in certain areas regulated by Swiss law (eg, accounting). However, there is little case law discussing the characteristics of corporate groups, particularly the liability of group executives. In a recent decision in the context of the collapse of the Swissair Group in 2001, the Federal Supreme Court commented on the liability of directors and board members in corporate groups.

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.