Switzerland
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
Commercial disputes can be resolved, outside ordinary court proceedings or arbitration, by means of mediation. Mediation has a legal basis in the Federal Code of Civil Procedure. According to the law, there are two points of application. Either mediation takes the place of conciliation, which must always be conducted in the context of ordinary court proceedings with an amount in dispute of less than CHF 100,000 and is considered the first step in court proceedings. Or, alternatively, mediation can be conducted during ongoing court proceedings at the request of the parties or based on a court order.
Mediation is a structured, voluntary process in which the parties themselves work out a mutually agreeable solution and are guided through the process by an impartial third party. Mediation is used in particular for family disputes, but also occurs in the economic/commercial sphere.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
If mediation is conducted during ongoing court proceedings, the court proceedings are usually suspended so that the outcome of the mediation can be awaited. In principle, however, the mediation process is independent of any court proceedings. Furthermore, the Swiss Code of Obligations states that any statute of limitations shall stand still during the duration of a mediation procedure, provided that the parties have agreed to this in writing.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
In Switzerland, there is an obligation (with some exceptions) to conduct a so-called conciliation procedure before the actual court proceedings in front of a judge. This conciliation procedure is intended to help the parties come to an agreement and prevent costly court proceedings. Often, however, the conciliation procedure is simply a path prescribed by law, that does not lead to an agreement or after which the complaining party receives permission to file the lawsuit with the ordinary court. The conciliation procedure, therefore is not an effective (or real) ADR procedure, especially since it has to be done in order to be allowed before the official barriers at all. ADR in the sense of mediation is not compulsory and there are no current efforts to make it compulsory.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
It is possible for the parties to contractually agree that in the event of a dispute, the parties will first initiate mediation proceedings and only if these fail they will take legal action. The consequences for breach of an ADR clause is controversial and depends on how the mediation clause was formulated (mandatory or optional conduct of mediation proceedings). If the mediation clause is drafted in such a way that it expressly provides for mandatory mediation before bringing the matter before a court, the conciliation court must also wait for the mediation to take place if the defendant opposes the conciliation and demands mediation. Ultimately, a mediation clause is a contractual agreement that must be observed. Therefore, in the case of mandatory mediation, the conciliation court should ask the plaintiff whether it does not wish to conduct mediation first. As this is a contractual agreement, the parties may also provide for a contractual penalty in the event of a breach.
When does ADR generally take place?
In principle, mediation proceedings can take place at any time, as long as the parties voluntarily wish to undergo such proceedings, whether before the initiation of ordinary or arbitration proceedings or even during such proceedings. However, it is important that any court proceedings already initiated can be suspended in order to give the parties the chance to actually find an amicable solution.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
The mediation process is confidential and is conducted by an impartial mediator. At the beginning, the mediation agreement is negotiated or discussed, which stipulates the confidentiality and impartiality of the mediator.
Does the output from ADR create precedents?
The solution agreed during a mediation process is recorded in writing and is thus binding between the parties, just like any other agreement concluded. It can be submitted during ongoing court proceedings and the court can then state that a binding settlement has been reached and thus end the proceedings.
Who bears the costs of ADR?
At the beginning of the mediation, the division of costs is agreed upon. Usually, the costs are divided equally between the parties. This avoids the impression that if only one party pays, it can influence the mediation.
Is your jurisdiction subject to any specific rules for cross border ADR?
In Switzerland there are no special rules concerning cross border ADR. For example, Switzerland is not a party to The United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention).
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
The term mediator is not protected in Switzerland, which is why mediators in Switzerland often take additional certification from the umbrella association or, for example, the lawyers’ association, which then identifies them as recognized by the relevant association.
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