14 December 2017

Basel Swiss Civil Procedure Code (CPC) Day: News in Civil Procedure and Enforcement Law

The Basel CPC-Day 2017 held on 3 November 2017 (see here for the program - in German only) dealt with current practical questions and news concerning the various kinds of civil procedures and enforcement. Particularly important for both creditors and debtors are that an element of risk is no longer required for an attachment based on a judgment and that there are new trends regarding interrupting the statute of limitations by debt enforcement.

No element of risk required for an attachment based on a judgment:
At the Basel CPC-Day the discussions on attachment mainly revolved around the latest Federal Supreme Court rulings on the grounds for attachment based on a definitive legal title (FSC, 5A_228/2017, judgment of 26 June 2017 - in German only). "Definitive Legal Titles" in terms of Article 271 para. 1 (6) Debt and Bankruptcy Act (DEBA) are enforceable Swiss judgments, enforceable Lugano judgments, i.e., foreign judgments from the contracting states of the Lugano Convention), as well as other foreign judgments, including arbitration awards (cf. BGE 139 III 135, E. 4.4 - in French only). The latter must not only be enforceable, but also be in legal force, since the applicable requirements for recognition under Article 25 et seqq. Swiss Private International Law Act (PILA) must be met. Enforceable authentic instruments from Switzerland and from the contracting states of the Lugano Convention are then treated as equivalent to the judgments.

It is interesting to note that the Federal Supreme Court does not require any element of risk for this ground for attachment (FSC, 5A_228/2017, judgment of 26 June 2017, E. 3.4). This is in contrast to other attachment grounds (e.g., if the debtor has no fixed domicile or has a foreign domicile, insolvency of the debtor, malicious concealing of assets or absconding of the debtor).

This means that upon the issuance of an enforceable judgment, the creditor need not require the debtor to pay or give him the opportunity to make a voluntary payment, but may instead initiate a request for attachment. This applies, for example, even after the issuance of a first-instance decision that is only challengeable by complaint (i.e., subsidiary form of appeal) or a second-instance judgment against which an appeal to the Federal Supreme Court is open.

Consequently, from the point of view of the debtor, when confronted with an enforceable Swiss or Lugano judgment or a judgment from a non-Lugano country that is in legal force, it is worthwhile to immediately contact the creditor and reach a settlement about the debt in order to prevent an immediate attachment of assets.

Interruption of the statute of limitations
In a recent decision of the supervisory authority for enforcement and bankruptcy matters for the canton of Bern, the interruption of the statute of limitations by debt enforcement (in German only) was discussed. According to Article 135 para. 2 of the Swiss Code of Obligations (CO), the statute of limitations is interrupted, inter alia, by debt enforcement.

This is unproblematic if the creditor, for the purpose of interrupting the statute of limitations, submits a request for debt enforcement and (because he does not want to assert the claim for the time being) withdraws it after the order for payment has been delivered to the debtor. However, the debtor is given notice of the debt enforcement through the delivery of the order for payment and, in addition, an entry is made in the debt enforcement register.

In practice, therefore, another approach is widespread: The creditor submits a request for debt enforcement, presenting also a declaration of withdrawal by which he withdraws the request for debt enforcement at the same time as it is submitted. As a result, the creditor incurs fewer costs because the issuance and delivery of the order for payment do not take place and the debtor is spared an entry against him in the debt enforcement register. However, this approach also means the debtor does not become aware of the enforcement and the interruption of the statute of limitations.

According to the settled case law of the Federal Supreme Court, the statute of limitations is interrupted by this procedure. The mailing of the request for debt enforcement is sufficient to initiate debt enforcement (BGE 104 III 20, E. 2 - in French only). The Federal Supreme Court in BGE 114 II 261, E. a)  (in German only) explicitly confirmed for the conciliation procedure (what is a an analogous situation) that in the case of interruption of the statute of limitations by summons to attempt conciliation, the statute of limitations is interrupted at the time of the mailing of the request for conciliation. The Federal Supreme Court did not consider it necessary for there to have actually been a summons to the conciliation hearing, although in the then applicable legal text of Article 135 para. 2 CO the "summons for an official conciliation attempt" was expressly stated as the reason for interruption.

At the Basel CPC-Day speakers argued that the Federal Supreme Court's case law means that the statute of limitations is interrupted only if the non-delivery of the order for payment was due to a reason for which the creditor is in no way at fault. Various doctrines that suggest that there is no interruption of the statute of limitations if the enforcement request is withdrawn simultaneously with the submission were referred to. Furthermore, the mentioned recent decision of the supervisory authority for enforcement and bankruptcy matters for the canton of Bern was discussed, in which the supervisory authority stated that only the judge of fact in a later procedure can decide whether the statute of limitations was interrupted by a simultaneous withdrawal of the request for debt enforcement. However, nothing in favour of the above-mentioned critical position can be inferred from this reference by the supervisory authority since it is always the judge of fact who has to decide on the question of the limitation period in any subsequent legal proceedings.

Therefore, it does not change the fact that the submission of a request for debt enforcement with the simultaneous withdrawal of the claim still has the effect of interrupting the statute of limitations, according to the practice of the Federal Supreme Court. The fact that the Federal Supreme Court could change its practice in the future cannot be ruled out. However, at the present time we do not consider it particularly probable. In addition, the current practice is appropriate because business practice requires a simple procedure for interrupting the statute of limitations. This is even more appropriate now that the Federal Supreme Court has lowered the hurdles for negative declaratory actions in response to debt enforcement (cf. BGE 141 III 68 - in German only). If the statute of limitations were only interrupted on delivery of the order for payment and the corresponding entry in the debt collection register, this would probably result in numerous negative declaratory actions.

If you have further questions, please do not hesitate to contact our Litigation Team and our Insolvency Law Team.

Authors: Anela Lucic, Claudia Walz

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