I. Litigation in Switzerland
While substantive law is mainly federal (i.e., governed by various federal statutes), the law of civil procedure - "litigation law" - is still governed by cantonal (state) law. A Federal Act on Civil Procedure is drafted. However, it still might take years until it is enacted.
A. Organisation of Cantonal Courts
Most trial courts are composed of three or more members. Cases where small amounts of money are at stake (usually below CHF 20'000) or which are subject to summary judgment are usually adjudicated by a single judge.
In addition to courts of general jurisdiction, some cantons have specialised courts, i.e., commercial courts, tenancy courts, labour courts or family law courts.
In general, a plaintiff cannot file an action without first going to a justice of peace. This official mediator has no competence to decide the case. His only responsibility is to try to settle the dispute. These mediators usually have no legal training or education.
B. Time Limits
Courts set time limits in order to speed up the trial procedure. For instance, both parties - plaintiff and defendant - have only a limited time period to file their motions with the court. Special rules apply to time limits set by courts or other government bodies. One speciality is that decisions setting time limits or extending time limits do not require a hearing where the parties are present. No hearings are held and the statutory and judicial time periods do not run between July 10 and August 20 (summer vacation) and between December 20 and January 8 (winter vacation). Extensions of time limits are usually granted three times (each for 20 days) unless in summary proceedings.
C. Presenting Facts and Arguments
A legal action is commenced by filing a complaint containing a statement of facts, together with any specific requests to be considered. The facts must be explained in detail. If the complaint is too general and does not list the facts in a detailed manner ("who did what when and where?") the court must reject the action. The plaintiff may request a declaratory judgment or the award of a specific amount of money. In the first or subsequent briefs, the plaintiff must list the available evidence.
II. Enforcement of Judgments in Switzerland / in the U.S.
Prior to executing an international business agreement, U.S. (or other international) companies doing business with Swiss companies should address legal issues especially important to international contracting parties. One of those issues involves a determination of the judicial forum for future disputes that may arise under the contract. Even though choosing a forum may not seem important when entering into a promising business venture, that may change dramatically in the event of an unforeseen conflict. At that time, either party may be practically precluded from a court review, or the national judgment obtained may be unenforceable in the foreign country.
Before entering into the international agreement with your Swiss respectively United States contracting party, one must understand the ramifications of electing the Swiss versus the United States forum dispute provision in the written agreement.
A. Validity of a Contractual Forum Choice Clause
United States and Swiss contracting parties may, among other options, choose either American or Swiss law to apply to disputes arising under their international agreement. Should the parties decide that American law applies, they may also contractually designate a United States court to hear future disputes arising under the contract. Similarly, if the parties opt for Swiss law to govern the contract, they may agree that the Swiss courts are the forums of choice for disputes.
Under Swiss law, such an explicit contractual forum choice in favor of a United States court is valid and binding, unless the parties have no reasonable interest in that jurisdiction.
Like their Swiss counterparts, United States courts have found that forum selection clauses are generally valid, unless it can be shown that enforcement would be unfair, unreasonable or unjust. The courts reason that freely negotiated international contracts, unaffected by fraud, undue influence or unequal bargaining power should be given full effect.
B. Absence of Treaty That Assures Enforcement of Foreign Judgments
When evaluating the enforceability of an international commercial agreement, one should first determine whether there is an applicable treaty to which the countries involved are signatories. There is no bilateral treaty between Switzerland and the United States regarding the recognition and enforcement of foreign country money judgments. In the absence of a treaty, recognition and enforcement of the foreign judgment is governed by each country's domestic laws and by their general principles of private international law or conflicts of law.
C. Recognition and Enforcement of a United States Judgment in Switzerland
Swiss law generally provides that to enforce the United States judgment in Switzerland, the creditor must have to enforce the judgement claim before a Swiss court. Swiss courts will recognize a foreign judgment if at least two conditions are met. First, the judgment must have resulted from proceedings compatible with Swiss concepts of due process, such as fair notice and a fair hearing. Second, the United States judgment may not be contrary to Swiss public policy. For instance, a U.S. judgment with a high damage award and without a proper motivation violated Swiss public policy and was refused recognition by the District Court of Zurich. In addition, a Swiss court held a United States judgment awarding excessive punitive damages also in violation of Swiss public policy, barring recognition and enforcement in Switzerland.
If a Swiss court recognizes a United States monetary judgment, the Swiss court may grant the same relief without re-litigation of the merits. A Swiss court would in that situation enforce the United States judgment while the creditor avoids the need and cost of a full-blown trial overseas.
D. Recognition and Enforcement of a Swiss Judgment in the United States
The majority of the states in the United States have adopted the Uniform Foreign Country Money-Judgments Recognition Act (the "Act"): Alaska, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Virgin Islands, Virginia, Washington.
If the United States judgment creditor is located in a state that has adopted the Act, said statute governs the recognition and enforcement of the Swiss judgment.
The Act provides for recognition of a Swiss money judgment that is final, conclusive and enforceable where rendered. The Act lists mandatory and discretionary grounds for non-recognition. The mandatory grounds include for example failure to provide impartial tribunals or procedures compatible with the requirements of due process of law. The discretionary grounds include things such as lack of notice, fraud and violation of public policy. The American court must thus recognize the Swiss money judgment unless one of the statutory exceptions applies.
Due to the absence of a treaty, a judgment obtained in the contracting party's local jurisdiction will not automatically be recognized and enforced by the United States or Swiss courts. However, case law and statutory law that has been developed in both the United States and Switzerland may allow for recognition and enforcement of the foreign judgment, thus avoiding a re-litigationof the merits. The standards that have been developed in both countries bear resemblance.