Switzerland
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
Switzerland is not a member of the European Union (EU), and thus, EU directives, including the EU Directive on Representative Actions, are not directly applicable in Switzerland. Consequently, there is no formal transposition of the Directive into Swiss national law.
However, Switzerland often aligns its legislation with EU standards, particularly in areas related to trade, consumer protection, and competition, through bilateral agreements and voluntary harmonization efforts. That said, as of now, no specific national regulation in Switzerland directly transposes the EU Directive on Representative Actions. Instead, Switzerland uses its Civil Procedure Code (“CPC”) and other laws for limited forms of representative action or collective redress.
Switzerland has been considering reforms to introduce class action mechanisms in specific areas of law – mainly in the fields of banking and finance law, consumer protection, data protection and gender equality – but these reforms are still under discussion.
Who is entitled to bring a representative action?
The Swiss legal system allows for collective actions by representative bodies under certain conditions. Representative actions can be brought by associations or other organisations of national or regional importance that are authorized by their articles of association to protect the interests of a group of individuals according to Article 89 para. 1 of the CPC.
Additionally, special legal provisions exist which permit associations to file claims to defend their members under the Swiss Workers’ Participation Act, the Unfair Competition Act and the Trademark Protection Act, as well as organisations pursuant to the Gender Equality Act.
Furthermore, under certain conditions, a right to appeal is also given to organisations by the Federal Act on the Protection of the Environment, the Federal Act on the Protection of Nature and Cultural Heritage and the Federal Act on Non-Human Gene Technology.
There is a noteworthy provision for collective redress under Swiss law which closely resembles a “class action”. Article 105 of the Swiss Merger Act (“SMA”) provides compensation for damages for any company member/shareholder who has been disadvantaged during a transaction (merger, split or change of corporate form). The decision of such a claim has legal effect for all company members/shareholders who have the same legal status as the plaintiff regardless of whether they were subject to the claim or not. A prominent example is the ongoing litigation surrounding the UBS/Credit Suisse merger, where shareholders are invoking Article 105 SMA to seek redress for perceived disadvantages.
Furthermore, according to the Collective Investment Schemes Act (Article 86), a representative individual may represent a group of investors and claim in the name of the group. Such a judgment has a binding effect on all affected investors.
What can be the subject matter of a representative action?
Since the new CPC entered into force there are no limits in respect of certain areas of law (e.g., the Unfair Competition Act, Trademark Protection Act etc.).
However, outside the special legal provisions, claims are limited to violations of the personality rights of the members of the group.
With regard to associations that may file a claim, the remedies are limited to injunctive and declaratory claims and actions to restrain interference. Furthermore, interim measures are possible (Article 261 et seq. CPC). Claims for monetary compensation (e.g., compensation of damages, satisfaction, taxing away surplus profits) are not admissible.
Which individual consumers are represented in a representative action?
Consumers whose rights have been violated may be represented by associations and organizations that are authorized to protect the interests of a certain group of individuals. These individuals must belong to the group the representative body is defending.
In the case of actions under Article 105 SMA, all shareholders with the same legal status as the plaintiff are automatically bound by the decision.
What will be the outcome of a representative action?
As representative actions in Switzerland are generally limited to injunctive or declaratory relief, the outcome is usually a court ruling that prohibits a company from continuing its unlawful practice or declares that the company’s behavior was unlawful.
However, under certain laws such as Article 105 SMA, monetary compensation is available.
Are there particular rules for the disclosure of evidence?
Discovery as understood in the US legal context is not permitted in Switzerland. Evidence is generally taken by the court, and pre-trial depositions do not exist. Witnesses are questioned individually by the court and the parties can ask supplementary questions. Witnesses must be excluded from the rest of the trial before giving their testimony, to prevent them being influenced by the course of the trial.
Before court proceedings are commenced, a so-called “precautionary taking of evidence” may be possible under Article 158 CPC. The court is permitted to take evidence at any time (before and during the proceedings) if the law grants the right to do so or if the applicant credibly shows that the evidence is at risk, or that it has there is a legitimate interest.
The condition of a “legitimate interest” is to ensures that the plaintiff assesses its chances of success in future proceedings and/or the possibility of obtaining evidence. It is intended to avoid cases where a plaintiff has little or no reasonable chance of success. If the applicant applies for a “precautionary taking of evidence”, they must name the evidence as precisely as possible. So-called “fishing expeditions” are not allowed under Swiss law.
Furthermore, for cases involving financial institutions, for example, financial institutions, clients of such institutions may also exercise their right to obtain access to information under the Data Protection Act.
Is third party funding possible?
Third-party funding is permitted in Switzerland. Legal expenses are often covered by a legal expenses insurance policy, and; there is commonly a maximum limit to the cover provided. If costs for a plaintiff’s proceedings are paid by an insurance company, the plaintiff is not entitled to receive legal assistance.
Furthermore, there is the possibility of process financing in Switzerland. The litigation funders will finance the process and take the risk of litigation in return for a share of positive process results.
Conclusion
The Swiss framework for collective actions is narrower in scope compared to the EU Class Action Directive, with no direct equivalent to class actions, though certain forms of representative actions are possible, particularly for shareholders or consumer protection organizations. While Swiss collective actions allow for injunctive or declaratory relief, they generally do not offer mechanisms for collective monetary compensation. Individual consumers seeking financial damages must file separate lawsuits.
Reforms have been proposed to introduce more comprehensive collective redress mechanisms in Switzerland, but these are not yet in place.
Contact
Peter Haas
T: +41 58 255 56 00 E: peter.haas@eversheds-sutherland.ch
Nathalie Kaufmann
T: +41 58 255 56 00 E: nathalie.kaufmann@eversheds-sutherland.ch
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.