In the previous posts, the recovery of debts in Switzerland has been examined in a summary and simply descriptive way, focusing on what the legislation provides for and what procedures have to be followed.

1. How to enforce a foreign judgment in Switzerland

We here address the question: of how a creditor in possession of an enforcement order obtained abroad can enforce it in Switzerland. This is specifically a matter of cross-border law, which is governed by, among other rules, the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, better known as the Lugano Convention, concluded in that city in Canton Ticino city on 30 October 2007.
All EU and EFTA member states participated in this convention, including Switzerland, which ratified it in 2009 and brought it into force on 1 January 2011.

2. The 2007 Lugano Convention

Enforcement in Switzerland of a foreign judgment: the Lugano Convention

The 2007 Lugano Convention updated and replaced the 1988 Convention of the same name and regulates civil and commercial matters, with the exclusion of certain areas, mostly relating to personality rights, family law, and bankruptcy, etc. It also covers only the judgments that have been made by the courts.
A creditor in possession of an enforceable court decision must therefore first obtain a declaration of enforceability of the decision from the court that issued it. Once in possession of such a declaration, the foreign state must declare the enforceability of the judgment in its own country: this procedure (known as exequatur) is streamlined, since the foreign court does not have to enter into the merits of the judgment, but only to check that all the formal requirements for recognition laid down by the Lugano Convention are met.
In particular, the foreign state’s decision may be recognised:
– (positive requirement) if the formal requirements laid down in the Convention are met (e.g. presence of the declaration of enforceability, authenticity of the copy of the judgment,).
– and if (negative requirement) no serious violations are found (e.g. contravention of the decision to the public policy of the recognising state, failure to ensure adequate adversarial proceedings in the foreign state, contravention of the decision to another issued and final one).
The foreign judgment is recognised as enforceable by the court delegated to do so (in Switzerland, the district court). Once exequatur has been declared, the foreign judgment is to all intents and purposes equated with a domestic court decision of the “host” state and is therefore subject to that state’s rules on the enforcement of an enforceable title: Switzerland’s Enforcement and Bankruptcy Act LEF.

3. Seizure and precautionary measures

During the exequatur procedure, i.e. pending the procedure for recognition of the enforceability of a foreign judgment in his own State, the creditor may apply for protective measures, of a conservative nature, in accordance with the domestic law of the State in which the foreign judgment is to be recognised.

Enforcement in Switzerland of a foreign judgment: the Lugano Convention - Studio Ciamei 3

In this respect, there is a particularity in the enforcement in Switzerland of foreign judgments recognised under the Lugano Convention. Swiss law provides for an autonomous cause of seizure in the LEF linked solely to the creditor being in possession of a judgment recognised under the Lugano Convention. A creditor who has obtained an exequatur decision in Switzerland may therefore proceed directly with the attachment against the debtor domiciled there, regardless of the grounds of periculum in mora and fumus boni iuris ordinarily required (i.e. danger of delay and prima facie case).
It is a highly effective instrument for debt recovery in Switzerland, as it allows the creditor to obtain, in a short time and without excessive formalities, an immediate enforcement instrument of particular strength against the debtor domiciled abroad.

4. How much does it cost to have a foreign judgment recognised and enforced in Switzerland?
For this type of procedure, it is highly recommended that creditor consult a lawyer, as the matter involves international law. Therefore, in addition to the costs of justice, which are linked to the value of the claim asserted, there are also legal fees to be paid.
As for the costs of justice, these are advanced by the creditor, but are then placed by the court entirely at the debtor’s expense and then recovered in the actual enforcement phase. Legal fees are also recovered in part.
What is more important is that the chances of recovering the debt are very high in Switzerland, as can be seen from the preceding practice and considerations.
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Studio Legale Ciamei deals with such matters and is available to be contacted.

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Debt collection in Switzerland

Anyone who believes that they have a claim against a person, whether a natural or legal person (companies, bodies, etc.), can enforce their right in Switzerland through a number of very efficient instruments which lead, more often than not to successful collection , as will be shown below.

1. The procedure: from application for enforcement to attachment / bankruptcy

The procedure may be initiated by the creditor on simple request, which itself initiates execution without the need for the provision of reasons. The debtor who receives the notice to pay, known as an “enforcement order”, has a term of 10 days in which to lodge an opposition and also in this case does not have to provide a reason.

In the face of opposition, the creditor has one year to ask the court to reject it. The administrative procedure provides for two routes:

the creditor may initiate the procedure for final rejection of the challenge if they are in possession of a final rejection title (art.80 LEF). This refers to enforceable judicial decisions and all equivalent measures such as judicial settlements, judicial acknowledgments of debt, enforceable public documents, or decisions of the Swiss administrative authorities, etc.
the creditor may also initiate the procedure for the provisional rejection of the challenge if they are in possession of an acknowledgment of the debtor’s debt established by a public or a private deed (Art. 82 LEF). In this case, the debtor may only raise such objections that invalidate the acknowledgment of the debt.

If, on the other hand, the aggrieved party is not in possession of either of the above-mentioned types of documents in support of the claim, it must initiate a court case under to the ordinary rules of the Code of Civil Procedure (CPC) . In the final judgment, the judge, in granting the plaintiff’s claim, will declare the opposition to be definitively rejected.

Once the creditor has obtained the rejection of the opposition, they can ask the enforcement office to proceed with the enforcement. The procedure is entirely handled by the debt enforcement office if the debtor is a natural person, or by the bankruptcy office if the debtor is a legal person or one otherwise registered in the Commercial Register. In the latter case, it will be necessary that the bankruptcy be first decided by the competent Pretore [Magistrate].

Subject to the particularities of the two different enforcement procedures, they will end with the identification of some or all of the debtor’s assets necessary to satisfy the claim, with a positive or negative outcome depending on the debtor’s state of solvency.

2. How much does it cost to recover a debt?

The creditor is obliged to advance the costs of enforcement, which are requested from time to time by the debt enforcement office and which are proportionate to the value of the claim (see tables of enforcement costs here). The creditor must also advance the costs of the rejection procedure . If the rejection judge accepts the application, the court will then charge the debtor with all the enforcement and court costs advanced by the creditor.

Enforcement proceedings present numerous pitfalls, especially if the debtor is a person who knows the law, as is generally the case with companies or those that are instructed by lawyers. The assistance of a lawyer is therefore strongly recommended.

Lawyers’ fees in Switzerland are generally regulated according to an hourly rate system, ranging from a minimum of CHF 200 per hour to a maximum of CHF 350 per hour, or even more if the claim is particularly large. The lawyer and the client may also agree on a flat fee and also on a percentage fee: in the latter case, there is always a minimum fixed amount to which the percentage is added and which, as a rule, decreases as the claim increases.

The execution judge may award the creditor a repeatable indemnity, i.e. an indemnity for the advocacy costs the creditor has to bear. These amounts generally cover part of the amounts actually incurred by the creditor for the assistance of a lawyer.

3. What are the chances of a successful recovery.

Apart from the ordinary risk of insolvency of a person or company, the chances of a positive outcome are generally high in Switzerland. There are a number of factors that contribute to this:

on the one hand, the intervention at the enforcement phase of a public office with full powers of investigation over all the debtor’s assets;
on the other hand, the highly competitive court time (two to three months in the case of an administrative rejection procedure, one to two years for an ordinary court case);
the strict application by judges of the principle of awarding costs to the winning party.

These are all factors that induce the debtor in most cases to reach an agreement with the creditor or, in any case, to pay what is owed at the latest before attachment or bankruptcy takes place.

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Ciamei Law Firm deals with such matters and is available to be contacted.

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Enforcement in Switzerland of a foreign judgment: the Lugano Convention