Introduction of international commercial courts in Switzerland
Homburger AG, Zurich, Switzerland
Homburger AG, Zurich, Switzerland
The Swiss Parliament has passed legislation that will permit Swiss cantons to establish international commercial courts, before which international disputes can be litigated in English. In the future, parties to a contract will therefore be able to stipulate that a specific international commercial court in Switzerland has jurisdiction to adjudicate any disputes in connection with the contract, and that the proceedings are to be conducted in English. The legal basis for these international commercial courts is expected to enter into force on 1 January 2025.
On 17 March 2023, the Swiss Parliament passed a revision to the Civil Procedure Code. A central point of the contemplated revision is that, in the future, Swiss cantons will be allowed to establish so-called international commercial courts (ICCs). As of the coming into force of the new Civil Procedure Code and the introduction of international commercial courts by the cantons interested in doing so, contracting parties may thus stipulate in a jurisdiction clause that a particular international commercial court in Switzerland shall adjudicate any disputes arising out of or in connection with the contract.
The revised Civil Procedure Code is expected to come into force on 1 January 2025, if no referendum is lodged against it. If there is a referendum, the Swiss electorate will have to vote on the proposed legislation.
The newly created international commercial courts will have jurisdiction if (1) the dispute concerns the commercial activity of at least one of the parties, (2) the amount in dispute is at least CHF 100,000, (3) the parties consent to the jurisdiction of the court, and (4) at the time of this consent at least one of the parties is domiciled or has its registered office outside Switzerland. The chosen commercial court may not decline jurisdiction. The parties may also agree that the proceedings shall be conducted in English before the international commercial courts. In this case, any appeal against the first instance decision to the Supreme Court can also be made in English.
So far, at least the cantons of Zurich and Geneva have expressed interest in establishing international commercial courts in accordance with the revision. It can therefore be assumed that such courts will indeed be available in the future. Moreover, the judges at the already existing commercial court in Zurich have stated that they are willing to implement such a project and to adjudicate international disputes in English.
The choice of a Swiss commercial court is likely to be of particular interest to parties who also subject their contract to Swiss law. However, the courts in Switzerland are accustomed to applying foreign law as well, so that the jurisdiction of a Swiss international commercial court can be agreed upon even if another law applies.
We expect that international commercial courts will have many of the same advantages and be as well received as Swiss-based international commercial arbitration. In fact, Switzerland has long been a well-known seat for international commercial arbitration. This is in part because Switzerland is neutral, stable and has an excellent infrastructure. This also applies to the Swiss courts, which are independent and enjoy a good reputation. Like for Swiss arbitral awards, there is only one legal remedy available against judgments of the Swiss commercial courts and the newly introduced international commercial courts, namely an appeal to the highest Swiss court, the Supreme Court. Unlike arbitration proceedings, however, in court proceedings, hearings are public and judgments are published, although the names of the parties are anonymised. Conversely, the publication of Swiss court judgments helps to make the law transparent and predictable, as compared with arbitration. Moreover, when a court is chosen rather than an arbitral tribunal, the time-consuming constitution of the arbitral tribunal falls away. Judges also rarely have conflicts of interest. Finally, Switzerland's commercial courts – which will now include the newly introduced international commercial courts – are part of the higher cantonal courts (although they act as courts of first instance). This has the advantage that these commercial courts are staffed with experienced judges.
As in many other civil law jurisdictions, there is no discovery in Swiss court proceedings, only a general duty to cooperate in the collection of evidence and to hand over precisely identified documents. This generally saves time and leads to efficient proceedings. Moreover, the Zurich Commercial Court holds a settlement hearing after the parties have filed their complaint and answer, both of which require the parties to state fully their respective positions and submit available evidence. Although requiring the parties to state their positions early in the proceedings can disadvantage plaintiffs, it enables judges to provide detailed assessments of a claim's prospects of success at the settlement hearing. As a result, approximately 75 per cent of all cases before the Zurich Commercial Court settle. Further, because the court follows a tight schedule and generally sets only one non-extendable deadline of two months for filing an answer to a complaint, most disputes before the Zurich Commercial Court settle after only six to nine months. To avail themselves of these efficiencies, contracting parties may want to include a jurisdiction clause in favor of the Zurich Commercial Court – or the future Zurich International Commercial Court.