Class actions in Switzerland

  1.  Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.
  2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.
  3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.
  4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?
  5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.
  6. What types of relief are available, i.e., damages and/or injunctive relief? 
  7. On what basis are damages calculated i.e., compensatory and/or some other basis?
  8. Are punitive or exemplary damages recoverable?
  9. Will domestic law need to be changed to comply with the Representative Action Directive?
  10. Are there special rules for settlement of class actions, e.g., requirement for court approval?
  11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?
  12.  Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?
  13. Do you have specialist courts for these procedures?
  14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?
  15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?
  16. Can arbitration clauses lawfully contain class action waivers?
  17. Are contingency fee agreements permissible?
  18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?
  19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

1. Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.

In general, collective actions are not permitted under Swiss law. There are other, albeit less powerful, mechanisms for a group of claimants to cooperate in order to reduce or share the costs of litigation and to increase their negotiation power (see subsections 1.1 to 1.6 below). In only a few limited areas, in particular in certain actions under the Swiss Merger Act, Swiss law provides for redress that comes close to a class action (see below subsection 1.7 on ‘Action under the Swiss Merger Act’ and subsection 1.8 on “collective investment schemes”).

Simple joinder of parties

According to article 71 of the Swiss Civil Procedure Code (CPC), two or more persons whose rights and duties result from similar circumstances or legal grounds may jointly appear as claimants.
Hence, within the framework of a simple joinder of parties, claimants may bring proceedings together if they have claims arising from the same or similar legal and factual basis, so that a joint assessment of the case is warranted in order to avoid conflicting judgments.

In the simple joinder of parties, each party files the claim in its own name and is entitled to be heard. The claimants are individually identified, there is no representative litigation. Any party may withdraw its claim at any time or reach settlement with the respondent, without consent of the other joint litigants. There is no unilateral right to “opt-in”: third parties may not join proceedings on their own initiative; rather, the consent of all parties to the proceedings is necessary.

Besides the similarity of the claims, the procedural prerequisite for a simple joinder of parties is the availability of a court that has international, geographical and subject-matter jurisdiction over all claimants. In most cases, the court at the seat or residence of the respondent has jurisdiction over all claimants. Many advantages attributed to the collective action can also be achieved with a simple joinder of parties. In particular, the legal costs and court fees for each party involved will be reduced. The value of the dispute is increased and, as a result, the profitability as well as the claimants’ negotiating power. For the respondent, the possibility of an overall and final settlement of a matter may be beneficial. Finally, the joint claim avoids the risk of conflicting judgments.

When considering the filing of a claim by simple joinder of parties, the impact on cost and compensation should be carefully examined by each claimant. As a general rule, if the claim is unsuccessful, Swiss courts will hold the claimant jointly liable for all court fees and also the recoverable costs of the defendant(s) (see article 106(3) of the CPC and also the response to Q18 below). This may pose a considerable risk for a claimant with deep pockets, and might deter such claimant from joining forces with other less well financed claimants.

Contrary to a class action, the simple joinder of parties is of limited use in case of scattered and relatively low-value damage suffered by many claimants. In such cases, it will hardly be possible to join forces with all affected parties prior to the filing of the claim, and the unilateral “opt-in” option does not exist. 

Consolidation of claims

The seized court may order the consolidation of separate claims that have the same or a similar factual and legal basis. This consolidation can be ordered at a party’s request or on the court’s own initiative, in order to simplify the procedure (article 125 of the CPC). Such consolidation can be particularly helpful for a court flooded with a multitude similar cases.

Furthermore, where factually connected cases are pending before different courts, the court subsequently seized may transfer the case to the court first seized if that court agrees to accept it (article 127 of the CPC).

Test case

The test case, also referred to as bellwether trial or model suit, is based on an agreement between the claimants and the respondent, whereby one case that shares the same or similar facts and questions of law is tried. The outcome of certain defined issues of such test case shall then be binding for all other cases. Limitation for the other claims is delayed for the duration of the test case. 

An example is the compensation claims that were raised by numerous landowners against the owner of Zurich airport due to the high level of noise pollution. The parties agreed that a crucial question for the entitlement to damage compensation - namely the year from when increases in noise were foreseeable - was to be examined in a test case. The Federal Supreme Court ruled in 2008 that the development was foreseeable from 1961 onward.

The test procedure requires the defendant to agree on the conduct of a bellwether trial. Even if this condition is met, there remains some uncertainty, as the judgment in the test case is binding on the other cases only as a result of the private agreement concluded between the parties, yet not on a statutory basis (no res judicata). For this reason, the mechanism has tended to be used where the defendant is perceived to be particularly trustworthy, such as the state of Switzerland or one of its cantons.

Assignment of claims

Subject to a contractual provision to the contrary, Swiss law permits the transfer of monetary claims to a third party by way of assignment, without the consent of the debtor.

Accordingly, instead of a joinder of parties, the claimants might also assign their claims to one party (e.g., to a consumer organisation or an ad hoc association founded for such purpose). Subsequently, the assignee files the claim in its own name.

However, an entity which makes itself available as assignee needs to ensure that such assignment of claims and the subsequent filing of the claim in its own name and that its corporate constitution permits this activity.

In December 2019, the Zurich Commercial Court refused to consider a damages claim filed by a Swiss consumer association (established as foundation) against Volkswagen and AMAG, a Swiss car importer for Volkswagen. The Commercial Court held that a legal entity cannot file a claim not covered by an assignee’s corporate constitution, and that the constitution of this foundation did not include the filing of a large damage claim, based on claims assigned to it. In 2020, the decision was confirmed by the Swiss Supreme Court (decision 4A_43/2020 dated 16 July 2020).

Ad hoc association

Where many parties with concurring interests are present, in spite of the unavailability of class actions, there is often a need for a common platform for cooperation. Sometimes the cooperation is informal, but quite often it also takes the form of a legal structure (association). On this basis, claims are filed separately but the claimants agree to cooperate to assist one another.

Such a common approach is interesting for several reasons. Knowledge can be shared with regard to both the facts and the legal procedure. A joint approach can also reduce costs. In addition, a common organisation increases the value of the claim and improves the bargaining power. Such an approach also attracts the attention of the public and the media, which often increases the pressure on the other side (reputation problem).

Finally, as mentioned above, the creditors might assign their claims to the ad hoc association that subsequently files an action in its own name.

An example in Switzerland, which gained much attention from the media, was a coordinated approach by a group of investors in Lehman financial instruments that had been actively marketed by Swiss banks. While the bank refused to communicate or enter into negotiations with the ad hoc association, arguably, the increased pressure and media attention prompted the banks to offer settlement proposal to many investors.   

Representative action

A representative action is a lawsuit lodged by a third party (e.g., a consumer organisation) in its own name for a group of claimants. In principle, Swiss law does not provide for the possibility of representative actions. Rather, a third party can only file an action for claims actually assigned to it (see above).

The most important exception to this rule is the association suit in case of “violation of personality rights”. Article 28 of the CPC protects against all unauthorised interference with personal integrity, including the freedom to do business. According to article 89 of the CPC, associations and other organisations of national or regional importance that are authorised by their statutes to protect the interests of certain groups of individuals (which need not be members of the association) may bring an action in their own name for a violation of the personality of the members of such groups of individuals.

In such an association suit, the court may be asked to prohibit an imminent violation, to put an end to an ongoing violation or to grant a declaration of infringement if the latter continues to have a disturbing effect. Hence, association suits related to the violation of personality rights are limited to the avoidance of such violation and the issuance of declaratory reliefs. In contrast, damage claims can be filed only by the individuals who incurred such damage.

A further barrier imposed by the legislator is the requirement that the association must have at least “regional importance”. This precludes the establishment of ad hoc associations in order to file an association suit.

Further to cases of violation of personality rights, specific legal provisions of Swiss law allow representative actions by associations also with respect to unfair competition cases and certain complaints about gender discrimination.

Action under the Swiss Merger Act

Under article 105 of the Swiss Merger Act, a minority shareholder can claim damages if he or she is disadvantaged in an M&A transaction. The judgment in such an action applies not only to the minority shareholder who has filed the action, but to all shareholders in a similar position, regardless of whether they have participated in the litigation. And even if the minority shareholder loses the case, as a rule, the costs of the court proceedings shall be borne by the acquiring company. This relieves the claimant from the risk of having to pay substantial court fees and lawyers’ fees to the acquiring corporation.

The procedure described above comes close to a class action as the claimant acts as a representative of the other minority shareholders 

Collective investment schemes

For claims related to collective investment schemes, the local court at the registered office of the licence holder has exclusive jurisdiction. Under article 86(1) of the Federal Act on Collective Investment Schemes, investors into an open-ended collective investment scheme who intend to pursue a claim for damages - for example, against the fund management - in favour of the investment scheme may request the court to appoint a representative for all investors.

The representative has the same rights as the individual investors and may file a damages claim in favour of the collective investment scheme. Once the representative has filed an action, the investors may no longer exercise their individual right to file such claim. Unless the court decides otherwise, the expenses incurred by the representative shall be paid by the investment fund, irrespective of the outcome of the case.

2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.

No. That said, claims brought under the Swiss Merger Act described above have some features in common with an opt-out class action mechanism in that judgments can bind parties that did not elect to join the claim, albeit there is no option for group members to opt-out.

3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.

Article 28 of the CPC provides for an association suit in case of violation of personality rights. According to article 89 of the CPC, only associations and other organisations that are authorised by their statutes to protect the interests of certain groups of individuals (which need not be members of the association) may bring an action in their own name for a violation of the personality of the members of such groups of individuals.

A further barrier imposed by the legislator is the requirement that the association must have national or at least regional significance. This precludes the establishment of an ad hoc association in order to file an association suit.

4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?

As the possibility for class action-like claims is very limited, class actions hardly exist in Switzerland. In particular, class actions for damages are not permitted under Swiss law. Only the damage claim filed under article 105 of the Swiss Merger Act by a minority shareholder disadvantaged in an M&A transaction comes close to a class action as the outcome of such claim applies to all shareholders in a similar position. 

However, in view of the developments in the European Union, the Swiss Federal Council proposed the introduction of a collective redress mechanism. In a first draft of an amendment to the CPC, as published in March 2018, the following instruments of collective redress were suggested:

  1. expanding the opportunity for organisations to file representative actions, including the filing of damage claims (with an “opt-in” rule); and
  2. introducing collective redress in the form of a collective settlement procedure (with an “opt-out” rule). 

However, in the second draft published in February 2020, the Swiss Federal Council removed all proposed collective redress mechanisms from its draft amendment. It was explained that this part of the draft had been considered controversial during the consultation phase. Therefore, in order not to put at risk the other parts of the amendment, unrelated to collective redress, the Swiss Federal Council decided to remove the proposed provisions regarding collective redress from the draft bill. 

The Swiss Federal Council added that it intends to return this topic separately, at a later stage. Accordingly, there will be no introduction of wider collective redress into Swiss law in the near future. However, the Swiss Federal Council is expected to present a new draft amendment to the CPC, with proposed provisions on collective redress, towards the end of 2021.

5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.

Article 28 of the CPC provides for an association suit in case of violation of personality. According to article 89 of the CPC, associations and other organisations of national or regional importance that are authorised by their statutes to protect the interests of certain groups of individuals (which need not be members of the association) may bring an action in their own name for a violation of the personality of the members of such groups of individuals.

In such an association suit, the court may only be requested to interdict an imminent violation, to put an end to an ongoing violation or to establish the unlawful character of a violation if the latter continues to have a disturbing effect. Hence, association suits related to the violation of personality rights are limited to interdictions and declaratory reliefs. In contrast, damage claims can be filed only by the individuals who incurred such damage.

Further to cases of violation of personality rights, specific legal provisions of Swiss law allow representative actions by associations also with respect to unfair competition cases and certain complaints about gender discrimination. Also in such cases, the associations’ suits are limited to the avoidance of a violation and the issuance of declaratory reliefs, while monetary claims must be levied by the individuals themselves.

6. What types of relief are available, i.e., damages and/or injunctive relief? 

See answer to Question 5.

7. On what basis are damages calculated i.e., compensatory and/or some other basis?

No class action is available for damage claims.

8. Are punitive or exemplary damages recoverable?

No.

9. Will domestic law need to be changed to comply with the Representative Action Directive?

Switzerland is not a member of the European Union. As such, there is no obligation to align Swiss law with the Representative Action Directive.

10. Are there special rules for settlement of class actions, e.g., requirement for court approval?

In general, class actions are not permitted under Swiss law. Therefore, the are no particular provisions in this respect.  As to the procedures outlined in the answer to Q1 above, settlement is reached through negotiations between the claimant(s) and the defendant(s) and/or their lawyers.  The court may or may not be involved in negotiations and settlement agreements do not need to be approved by the court.

11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?

In general, class actions are not permitted under Swiss law. Therefore, the are no particular provisions in this respect.  Please see our earlier answers in relation to the procedures outlined in the answer to Q1.

12. Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?

In general, class actions are not permitted under Swiss law. Therefore, the are no particular provisions in this respect.  Please see our earlier answers in relation to the procedures outlined in the answer to Q1.

13. Do you have specialist courts for these procedures?

No.

14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?

In general, class actions are not permitted under Swiss law. Therefore, the are no particular provisions in this respect. There are no special rules for discovery/disclosure in relation to the procedures listed in the answer to Q1. 

15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?

In general, class actions are not permitted under Swiss law. Therefore, the are no particular provisions in this respect.  There are no special rules for appeals in relation to the procedures listed in the answer to Q1.

16. Can arbitration clauses lawfully contain class action waivers?

In general, class actions are not permitted under Swiss law. Therefore, the are no particular provisions in this respect.

17. Are contingency fee agreements permissible?

For any type of action, pure contingency fee agreements are not permissible under Swiss law. Any fee agreement must be shaped in such a way that the lawyer can cover its costs and earn a modest profit. For example, the parties may agree on a reduced hourly rate, plus a modest success fee (e.g. 10 per cent of the amount awarded by the court).

18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?

In general, the ‘loser pays’ rule applies in Switzerland. Hence the losing party is liable for the court costs and must pay the other party its legal costs.

Court costs include the court fee and, where applicable, the costs of taking evidence or translations. The court costs are calculated based on a tariff. As these tariffs are subject to cantonal law, they vary from one canton (district) to the next. In most cases, the cost calculation will be determined according to a respective scale based on the amount in dispute. There are typically no caps, but courts usually have wide discretion to take into account the facts of the case, and the complexity and necessity of the proceedings.

Legal costs include compensation for professional representation and reimbursement of necessary expenses. The compensation for professional representation is set down in a separate tariff, issued by the cantons. The tariffs are usually based on the amount in dispute and the courts have wide discretion. In most cases, there is no cap but the recoverable amount typically covers only a small fraction of the successful party’s actual legal expenditure.

Special provisions in Swiss law applicable for certain claims depart from the “loser pays” rule. For example, the costs of a minority shareholder claim under article 105 of the Swiss Merger Act must be borne by the acquiring company, even if the minority shareholder loses the case (see “Action under the Swiss Merger Act” in question 1, section "Action under the Swiss Merger Act"). As a further exception, in the case of a claim filed by the representative on behalf of all investors of a collective investment scheme, the expenses incurred by the representative shall be paid by the investment fund, irrespective of the outcome of the case (see “collective investment schemes” in question 1, section "Collective investment schemes").

19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

Third-party funding is permitted in Switzerland, but the funder must not be directly or indirectly related to the claimant’s lawyer.

While litigation funding is permitted in Switzerland, it is not yet prevalent. There are about 50 court cases and arbitrations per year which are third-party funded. The rather limited significance of third-party funding in Switzerland is probably linked to the fact that collective redress is not available for damage claims at present.

See the Overview of the Representative Actions Directive >>
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Philipp J. Dickenmann, LL.M.
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