05 October 2016

How can I claim against an insolvent Swiss debtor?

What if my agreement provides for a foreign jurisdiction?
It is customary, and indeed recommended, that agreements between parties having their seats in different countries determine which court is competent to decide on any dispute. Often, the court chosen by the parties is given exclusive jurisdiction either by the parties themselves or the law (see, e.g., Art. 25 of the EU Regulation 1215/2012 and Art. 23(1) of the Lugano Convention). If one of the parties becomes insolvent, the other party is faced with the following questions: Am I still bound by the exclusive jurisdictional clause? Can I still rely on it? Can I bring proceedings at the seat of the insolvent party instead? Do I need to do so?

What do I need to do to file my claim?
If a Swiss debtor becomes insolvent, there is no need to commence court proceedings immediately. Quite the contrary: Pursuant to Swiss insolvency law, an administrator is appointed and will call for the submission of all claims. Thereupon, the administrator will decide whether or not to admit each individual claim. On the basis of these decisions, the administrator issues the schedule of claims (also referred to as the collocation plan, "Kollokationsplan"). Only if a claim is rejected, does the creditor need to turn to the courts with a so-called action for challenging the schedule of claims (also referred to as collocation action, "Kollokationsklage"). As a general rule, this needs to be done within 20 days. The time-limit may be extended under certain restrictive conditions for parties having their seat abroad.

Before which court do I need to bring the collocation action?
Before which court can such a collocation action be brought? The answer of the Swiss Supreme Court, developed in a number of recent decisions concerning the Swissair and the Lehman Brothers insolvencies, is straightforward: The Swiss courts have mandatory exclusive jurisdiction to decide upon claims against an insolvent Swiss debtor (so-called lex attractiva concursus). This includes the decision on the existence of a claim governed by foreign law and covered by an exclusive jurisdictional clause in favour of foreign courts.

Can I nevertheless go to a foreign court?
Foreign courts are often not bound by the fact that the Swiss debtor has become insolvent. In this case, they will accept jurisdiction on the basis of a jurisdictional clause in their favour despite that fact that the Swiss respondent is bankrupt. However, as a consequence of the lex attractiva concursus, the judgment of such a foreign court rendered after the date of the insolvency will neither be recognised nor enforceable in Switzerland. The Swiss judge, when deciding on the existence of the claim, will not be bound by the foreign judgment. He needs to decide the question on the basis of the facts and the law pleaded before him. This means that bringing an action before a foreign court will lead to duplication of efforts and costs without any added value in the Swiss insolvency proceedings.

Can I at least continue foreign proceedings commenced before the Swiss debtor became insolvent?
According to the Swiss Supreme Court, the lex attractiva concursus also applies if the foreign proceedings were brought before the Swiss debtor became insolvent, but the judgment was only rendered thereafter. Hence, there is no point in continuing foreign proceedings in such circumstances unless there are other reasons to do so. One (exceptional) reason may be that the foreign judgment may be enforced in a third country (e.g., if the insolvent Swiss debtor has assets in such country not affected by the Swiss insolvency). Interestingly, the Swiss judgment on the collocation action will not interfere in such a case. It cannot be enforced abroad.

Our Dispute Resolution Team and our Insolvency Law Team will be happy to assist you with any further questions you may have.

Author: Christian Oetiker

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