In Switzerland, the main civil remedy for fraud claims is the liability in torts provided for by Article 41 of the Swiss Code of Obligations (SCO). This means that the claimant must prove the defendant committed an unlawful act, which includes deceit (Article 28, SCO), infringement of absolute rights such as property, or criminal offences where the goal is to protect assets or interests that were harmed.
Tort liability may also concur with liability for breach of contract (Article 97, SCO) or unjust enrichment (Article 62, SCO), in particular where they are combined with motives of impossibility (Article 20, SCO), unfair advantage (Article 21, SCO), misrepresentation (Article 23, SCO), or duress (Article 29, SCO). However, specific provisions of insolvency and criminal law are discussed separately.
Determining the Proper Forum for Claims
Switzerland is a Contracting State to the Lugano Convention, which governs jurisdiction and recognition of judgments in civil and commercial matters. The Convention applies to defendants domiciled in Switzerland and EU Member States or European Free Trade Association (EFTA) countries.
Article 2, section 1 of the Clug provides for a general forum in courts of the domicile of the defendant. Article 5, sections 3 and 4 provide for alternative forums for tort claims. A person domiciled in a state bound by this Convention may, in another state bound by this Convention, be sued: Parties may also agree, in writing, a prorogation of the Lugano Convention, if one or more party is domiciled in a state bound by the Convention (Article 23 section 1, Clug).
The Swiss Private International Law Act (SPILA) is used when defendants do not reside in an EFTA country or the EU. Furthermore, Article 129 of the SPILA states that Swiss courts can hear tort cases based on the habitual residence or domicile of the defendant.
Parties can select which court will resolve current or future conflicts from a particular legal relationship when an economic interest is involved. Such an agreement may be written or established through any method that provides textual evidence. The selected forum is exclusive, provided the parties have not decided otherwise.
Governing Laws and Conflict of Law Rules
Statutes provide the rules for conflicts of laws since Switzerland is a civil law jurisdiction. While the SPILA manages these conflicts, the Lugano Convention lacks rules regarding governing law. According to Article 132 of the SPILA, parties may decide to use the law of the forum at any point following the damaging event.
When no law is chosen, Article 133 of the SPILA dictates that the law of the state where the injured party and tortfeasor both habitually reside governs tort claims. Should they habitually reside in different states, the law of the state where the tort occurred will govern the claims.
All provisions relevant to a case are included when the SPILA refers to foreign law. A provision’s status as public law does not prevent that foreign law from being applied. If the law in question refers to another foreign law or Swiss law, this renvoi is only considered if the SPILA allows it.
Unless a law is chosen, the law indicated by the SPILA is ignored if the case is only loosely connected to it but has a significantly tighter link to a different law. Authorities will determine the content of foreign law on their own initiative, though they may ask the parties for help.
Related Post: Delhi court orders fresh review of Sonia Gandhi voter roll
If the content of foreign law cannot be determined, Swiss law is used. Foreign law provisions are not applied if doing so produces a result that conflicts with Swiss public policy. Consequently, victims of fraud often struggle to recover and trace assets, since Swiss law lacks constructive trusts and civil proceedings do not allow for tracing.
Criminal Redress and Asset Recovery Options
In fraud-related cases, criminal redress may be more efficient, as the forfeiture of assets acquired through the commission of an offense can be ordered. Restitution in favor of the person directly harmed takes precedence over forfeiture in favor of the state. If illicit and licit assets were mingled, restitution is still possible if a connection can be established between the offense and the bank account concerned.
Domestic debt collection can begin without a judgment on the merits by requesting an order to pay from the debt collection office where the debtor lives. Such actions do not freeze assets until the domestic process to validate the claim is finished. If the defendant does not reside in Switzerland, pre-trial attachment orders are possible provided the claim possesses sufficient ties with Switzerland.
Having assets in Switzerland alone does not satisfy the “sufficient ties” criterion. This standard is met if Swiss law governs the claim or if the claimant demonstrates that money laundering likely occurred in Switzerland, creating tort liability. Regardless of where the defendant lives, post-trial attachments can be granted for assets found in Switzerland.
As in rem orders, civil attachment orders only impact assets possessed at the time of notification. Banking secrecy remains in effect until the inter partes proceedings conclude, and the court will not mandate asset disclosure. Private searches are prohibited, and the claimant only learns the total of the attached banking assets if the inter partes attachment proceedings are successful.
Enforcing Foreign Interim Reliefs in Switzerland
Interim reliefs obtained abroad may be enforced in Switzerland, provided that the defendant received proper notice of the proceedings and was heard or had the effective possibility to be heard. Documents and information obtained abroad via gag and/or without notice disclosure orders are admitted as evidence in Swiss proceedings. In all cases of civil attachments, the claimant must show likelihood of the presence of assets in Switzerland and will not receive support of the civil courts in this respect.
Security for damages caused by unjustified attachment may be ordered ex officio or upon request of the respondent. Outside of insolvency and criminal proceedings, there are no disclosure tools available to identify assets, even in cases of fraud or dishonesty. Pre-action disclosure is not available in civil proceedings, subject to the narrow scopes of reedition of accounts and anticipated taking of evidence.
Article 400 of the Swiss Code of Obligations is limited to the performance of a contract of mandate, excluding disclosure in support of a claim in torts and information on third parties to the agreement. Article 158 of the Swiss Code of Civil Procedure provides for the possibility of taking evidence located in Switzerland at any time if the applicant can demonstrate a likelihood that the evidence is at risk or that it has a legitimate interest in obtaining the requested evidence.
Asset Discovery and Evidence Production
Switzerland does not apply the forum non conveniens exception.
No specific statutory regimes address fraud and asset tracing, subject to criminal law. Security for damages from unjustified attachments may be ordered by the court or the respondent.
Leave a Reply