June 9th, 2010

Continental European Legislative and Judicial Trends: Toward a Unified Swiss Code of Civil Procedure

Posted at 2:00 AM ET

2010_legislative_thumb-2David Lewin, Managing Director

On January 1, 2011 the new Swiss Code of Civil Procedure (CCP) will finally come into law. For the first time in history, Switzerland will have a unified civil procedure law. This development will end a unique situation in Europe, where 26 separate cantonal codes of procedure co-exist.

In this short report we provide an overview of the CCP and highlight several key points. Our goal is not to provide an exhaustive examination of the CCP but to point out issues that may be of particular interest to the casualty insurance industry.

Need for Renewal

Currently, each of the 26 cantons of Switzerland has its own laws on civil procedure,
creating a scenario where legal action is both onerous and expensive. The federal regimes currently need to adjust and update each of the separate cantonal codes to reflect new developments and requirements that emerge from new national legislative regulations. This process is a product of the strong role of federalism in the Swiss political system. In order to provide the Swiss Confederation with the legislative power to draft the CCP, it was necessary to modify the Swiss Constitution.

The new code was drafted with the intent of incorporating the established and well proven provisions of cantonal law, rather than drafting a newly-created civil procedure code. An important decision was also made to reject the incorporation of foreign legal concepts that were not part of Swiss law. For example, the introduction of the foreign legal concept of the “class action” was reviewed and then rejected for the new law on the grounds that the existing concepts of “association” claims and general consolidation of claims in Swiss law were already adequate. The same applies to the legal concept of “pre-trial discovery,” which was not added to the CCP.

There was also no intent to reregulate the organization of the judiciary system. When the CCP comes into law the cantons will organize their own cantonal judiciary systems. The cantonal system activities will include the continuation and formation of specialized courts, such as the commercial courts. However, the cantons will remain responsible for the establishment of chargeable costs and attorneys’ fees for all courts.

Characteristics of the New Code

The CCP strengthens the procedure allowing for amicable settlements. Therefore, prior to the filing of a lawsuit, the CCP demands - as a basic principle - mandatory conciliation. Taking a legal action basically requires an initial attempt at conciliation or mediation. This rule is not mandatory if the amount in dispute exceeds SFR100,000.  

The CCP specifies different types of legal procedures for different types of disputes.
The Simplified Procedure (Vereinfachtes Verfahren) is applicable to lawsuits where the amount in dispute does not exceed SFR100.000 or the proceedings concern “social” matters, such as equal rights or employment. In the simplified procedure the judge has an extensive right to interrogate the parties and is enforced to act bona fide, giving the parties the opportunity to bring an action to court even without an attorney. As a result, the judge is legally obliged to ensure that the parties provide evidence and bring the full circumstances to court. The judge also is required to provide notice to the parties regarding the kind of evidence that is needed to substantiate the claim.

Cases where the disputed amount is in excess of SFR100,000 are conducted according to the Ordinary Procedure (Ordentliches Verfahren). Commercial disputes, such as those involving commercial contracts, corporate intellectual property or competitive issues also will use the Ordinary Procedure. In these proceedings, the parties are required to use the classic and complete civil procedure framework.

Finally, the Summary Procedure (Summarisches Verfahren) applies to proceedings where the facts are clearly stated and immediate jurisdiction is needed in order to ensure a legal position.

The implementation of a protective brief (Schutzschrift), accepted only in certain cantons, is intended to improve the legal position of a defendant who fears that a
provisional measure, such as an injunction, will be ordered against him/her.

Because of Switzerland’s role as a global venue for legal disputes, the concept of
arbitration requires different rules for domestic versus international proceedings.
The CCP does not change the fact that the rules for international arbitration are part of Chapter 12 of the Private International Law Act. But, the rules for domestic arbitration have been revised and are integrated into the third part of the CCP. The need to strengthen the role of arbitration in Switzerland and to create a real alternative compared to ordinary procedures was the rationale for the change in domestic arbitration rules.

Of particular importance for the casualty insurance industry is the new remedy of the Streitverkündungsklage, which entitles the defendant to give a third party notice and, most importantly, to assert a claim against the third party if the initial proceedings were not successful. Additional requirements are a connection between the main procedures, recourse and indemnity claims. For example, a salesperson who is sued for damages by a consumer would be entitled to take recourse from the distributor under the remedy of Streitverkündungsklage. The same would apply to a situation where an insurance company is sued for compensation and then seeks recourse from a third party. 

In Summary

The CCP brings a far-reaching modification to the Swiss justice system. By harmonizing
the different cantonal procedural laws, the CCP will end the fragmentation and the associated legal uncertainty that currently exists. Foreign companies doing business in Switzerland are among those entities that may profit most from the introduction of the CCP. 

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