ICC – FRAUDNET       Developments in the new Swiss Codes of Civil      and Criminal Procedure Affecting Fraud Recovery    ...
Overview1.1 General introduction: The New Federal Code of Civil Procedure and the   New Federal Code of Criminal Procedure...
From 27…                  27In the 1874 Swiss constitution, bothjjudicial organization and p           g              proc...
… to 1On 8 October 1999 the Federal               1999,Constitution was amended, attributing theConfederation exclusive co...
Swiss Code of Civil Procedure      Principal characteristics:a. Encouragement of mediation and conciliation; simplified   ...
Swiss Code of Criminal Procedure     Principal characteristics:a.a Prosecutor model: conducts both the investigation and  ...
2. Aspects of the Swiss Code of      p   Criminal Procedure relevant for   fraud ictims   fra d victims
InvestigationProsecutor has the power (without courtorders) to:       )• interrogate witnesses• i  issue production orders...
Freeze ordersFreeze order issued to guarantee:• forfeiture of crime proceeds or  replacement assets• not compensation of t...
Forfeiture of assetsCompulsory forfeiture of:• crime proceeds or assets intended to reward or bring  about an offence• whe...
Third parties protectionThird parties are only protected fromforfeiture if both:–i ignorant of their criminal origin;     ...
Forfeiture procedure• Together with a conviction.• Non conviction based forfeiture:       conviction-based  compulsory whe...
The plaintiffUpon declaration any individual or legal       declaration,entity whose rights were directly affectedupon the...
Plaintiff’s right to participate in          the investigation:• Right to consult the file and levy copy, granted at the  ...
Plaintiff’s right to sue for              damages:• Plaintiff has the right to sue the accused  for damages before the cri...
Plaintiff’s right to the allocation      of the forfeited assets• Article 73 of the Penal Code: If a felony or an offence ...
3.   Changes affecting banking secrecy     in the Swiss Code f Civil Procedure     i th S i C d of Ci il P        d
Current situation• Today most Swiss cantonal codes of civil  Today,  procedure do not allow production orders  against thi...
General obligation to cooperate• Article 160 SCCP introduces a general  obligation for p      g          parties and third...
Relative right of refusal:Art.A 163 para. 2 SCCP:                  SCCP   “[Parties] privy to other secrets that are prote...
Lifting of banking secrecy is the rule:• Bank secrecy is lifted unless the party or  third party barred by secrecy law fro...
Consequence on domestic         proceedings• In the less complex cases criminal                      cases,  proceedings m...
Consequences on civil international         judicial assistanceRequests for taking evidence sent to Switzerlandare governe...
Law applicable  to the execution of the request:• Today, requests are executed in  accordance with the code of procedure o...
Elements to provide in the request:• Facts of the case sufficiently detailed to  allow the Swiss court to effect a balance...
4.4    Taking of evidence:     "Discovery" in Swiss proceedings?
Taking of evidence: "Discovery" in                   Swiss proceedings?• Ad i ibl t  Admissible types of evidence under A ...
Differences to common law system•    Th concept of pre trial discovery or gathering of evidence prior t th     The        ...
Codified duty of the parties to           produce documents•   Art. 160 sec. 1 (b) SCCP contains a general obligation for ...
Legal Privilege?•   Art.    Art 160 sec. 1(b) newly introduces the concept of legal privilege:            sec•   NOT ONLY ...
Rights of Refusal of Parties and              WitnessesAbsolute d Relative Right f Refusal of P ti andAb l t and R l ti Ri...
Discovery without teeth against      parties (Art. 164 SCCP)• U j tifi d refusal BY PARTY t produce  Unjustified f     l  ...
Discovery with teeth against third     parties (Art. 167 SCCP)• Unjustified refusal by third party to produce  documents u...
5. Use of illegally obtained evidence in   Swiss i il   S i civil proceedings                      di
Use of illegally obtained evidence in Swiss civil         proceedings (Art. 152 sec. 2 SCCP)• Art. 152 sec. 1 SCCP gives b...
Balance of interest between „illegal    act“ and „finding the truth“• J d h t b l  Judge has to balance th interests      ...
6. Conservatory measures;   The new grounds for attachment;   New possibility of freezing state   assets o the bas s o a e...
Conservatory Measures   New Safeguarding Measures under Art. 261 SCCP                                   ArtSafeguarding Me...
Conservatory measuresType of measures pursuant to Art. 262 SCPP (coupled with threat of criminalsanction under Art. 292 PC...
Monetary Claims: The Attachment           ProceedingsIf a claim for money is involved, the classic interlocutory order des...
Presently: 5 reasons for attachment(1) the defendant has no fixed place of residence or abode anywhere                    ...
Attachments in fraud litigations:              Difficulties•   In an international context the principal ground usually re...
Application for attachment•   The application for an attachment order is filed ex parte in    summary proceedings•   Writt...
New Ground for Attachment     under Art. 271 sec. 6 DCBComing into force as fC i i t f                from 1 t J          ...
Novelties provided under sec. 6 of           Art. 271 DCB• „Lugano“ court judgments are equivalent to Swiss   Lugano“  jud...
Novelties provided under sec. 6 of           Art. 271 DCBNEW IS:      IS  - No absence of Swiss residence (Assets of Swiss...
Freezing of State assets?•The new ground for attachment gives the possibility, on Th              df    tt h       t i    ...
Outlook•   Non Lugano-judgments need fi t t go th    N L           j d      t      d first to through (i t                ...
No security for attachments under      Sec. 6 of Art. 271 DCBSecurityS      it• The applicant who obtains an attachment or...
Developments In The New Swiss Codes Of Civil And Criminal Procedure Affecting Fraud Recovery, Michele Caratsch & Yves ...
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Developments In The New Swiss Codes Of Civil And Criminal Procedure Affecting Fraud Recovery, Michele Caratsch & Yves Klein, Calgary 01.10.10

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This presentation made at the ICC-FraudNet meeting in Calgary on 1 October 2010 concerns a description of the new tools available for the recovery of fraud proceeds since the entry into force on 1 January 2011 of the Swiss codes of criminal procedure and of civil procedure.

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Developments In The New Swiss Codes Of Civil And Criminal Procedure Affecting Fraud Recovery, Michele Caratsch & Yves Klein, Calgary 01.10.10

  1. 1. ICC – FRAUDNET Developments in the new Swiss Codes of Civil and Criminal Procedure Affecting Fraud Recovery Palliser Hotel Alberta Room Hotel, th 133 – 9 Ave SW, Calgary, Alberta Friday, October 1, 2010 Yves Klein, Monfrini Crettol & Associés, Geneva, Switzerland Michele Caratsch, Baldi & Caratsch, Zurich, SwitzerlandBaldi & Caratsch, Zeltweg 44, CH- 8032 Zurich Monfrini Crettol & Associés, 3, place du Molard CH-1204 GenevaTel: +41 44 205 25 25 Fax: +41 44 205 25 00 Tel: +41 22 310 22 66, Fax: +41 22 310 24 86e-mail: mcaratsch@bclaw.ch e-mail: yklein@mcswisslaw.com
  2. 2. Overview1.1 General introduction: The New Federal Code of Civil Procedure and the New Federal Code of Criminal Procedure2. Principal aspects of the new Code of Criminal Procedure affecting Fraud Recovery3. New Code of Civil Procedure: changes affecting banking secrecy issues4. Taking of evidence: "Discovery" in Swiss proceedings?5. Use f illegally obtained evidence i S i civil proceedings5 U of ill ll b i d id in Swiss i il di6. Conservatory Measures: the new grounds for attachment; new possibility of freezing state assets on the basis of an enforceable award under the new Lugano Convention
  3. 3. From 27… 27In the 1874 Swiss constitution, bothjjudicial organization and p g procedure werewithin the competence of the 26 cantons,each of which had its own codes of civiland of penal procedure. In addition, theConfederation also had its own codes ofcivil and of penal procedure, leading to t othe existence of 27 distinct sets of rules,more than in the whole European Union. p
  4. 4. … to 1On 8 October 1999 the Federal 1999,Constitution was amended, attributing theConfederation exclusive competence overcriminal and civil procedure (judicialorganization and administration of justice fremain within the competence of cantons). p )
  5. 5. Swiss Code of Civil Procedure Principal characteristics:a. Encouragement of mediation and conciliation; simplified proceedings for small cases (below CHF 30’000).b. Enhancement of third party intervention.b E h t f thi d t i t tic. Investigation entirely conducted by the judge.d. Power t issue production orders t thi d parties.d P to i d ti d to third tie. Lifting of bank secrecy as the rule.f. No discovery or pre-trial dif N di i l discovery.g. No class action (judge may consolidate actions).
  6. 6. Swiss Code of Criminal Procedure Principal characteristics:a.a Prosecutor model: conducts both the investigation and the prosecution (no more Investigating Magistrates).b. Enhanced rights of the defence. gc. Enhanced rights of the victim.d. No jury.e. Possibility of default judgments.f. Plea bargaining through simplified procedure and sentencing orders.gg. Since 2000, compulsory federal j , p y jurisdiction over money y laundering, corruption and organized crime, when mainly carried out abroad or in several cantons.
  7. 7. 2. Aspects of the Swiss Code of p Criminal Procedure relevant for fraud ictims fra d victims
  8. 8. InvestigationProsecutor has the power (without courtorders) to: )• interrogate witnesses• i issue production orders ( b ki d ti d (no banking secrecy)• issue freeze orders to guarantee forfeiture• iss e MLAT letters of req ests issue requests
  9. 9. Freeze ordersFreeze order issued to guarantee:• forfeiture of crime proceeds or replacement assets• not compensation of the victim’s damageFreeze orders may be generic and may takethe form of blanket orders in cases oforganized crime & grand corruption
  10. 10. Forfeiture of assetsCompulsory forfeiture of:• crime proceeds or assets intended to reward or bring about an offence• when crime proceeds are no longer available, forfeiture of replacement assets of the same owner (beneficial ownership test; no privilege towards other creditors)• assets under the control of a criminal organization; g assets beneficially owned by persons who participated in or supported a criminal organization are presumed to be controlled b th organization until proof of th contrary t ll d by the i ti til f f the t (either proof of lack of control or of legitimate origin)
  11. 11. Third parties protectionThird parties are only protected fromforfeiture if both:–i ignorant of their criminal origin; t f th i i i l i i and– provided adequate consideration for the assetsForfeiture may be waived if it wouldrepresent an excessive h d hi on th t i hardship thethird party.
  12. 12. Forfeiture procedure• Together with a conviction.• Non conviction based forfeiture: conviction-based compulsory when no trial takes place; forfeiture order issued by prosecutor; no other condition than proof of the criminal origin of the assets and Swiss juridiction over the offences.
  13. 13. The plaintiffUpon declaration any individual or legal declaration,entity whose rights were directly affectedupon the commission of a crimecrime.Not the shareholder or the assignee (rightslimited to civil action in subrogation).
  14. 14. Plaintiff’s right to participate in the investigation:• Right to consult the file and levy copy, granted at the latest when the suspect has been examined for the first time (may be limited to prevent abuses) abuses).• Right to use evidence in domestic & foreign proceedings.• Right to request freeze orders orders.• Right to request investigative measures and participate in the examination of witnesses or suspects suspects.• Right to appeal against the prosecutor’s decision and to support the prosecutor’s decision in case of appeal by prosecutor s the suspect or a third party.
  15. 15. Plaintiff’s right to sue for damages:• Plaintiff has the right to sue the accused for damages before the criminal court. g Civil law (including level of proof) applies (court fee must only be paid at that stage) stage).• Plaintiff may support the prosecution in the criminal trial and reserve its right to sue before Swiss or foreign civil courts, using g g the evidence obtained in the criminal proceedings.
  16. 16. Plaintiff’s right to the allocation of the forfeited assets• Article 73 of the Penal Code: If a felony or an offence has caused damage not covered by insurance and if it must be presumed that the offender will not compensate it the it, injured person is entitled to receive, upon request, request up to the amount of the damages established by a judgment or by agreement the forfeited assets, the replacement assets and the assets fines paid by the offender.
  17. 17. 3. Changes affecting banking secrecy in the Swiss Code f Civil Procedure i th S i C d of Ci il P d
  18. 18. Current situation• Today most Swiss cantonal codes of civil Today, procedure do not allow production orders against third parties or the lifting of bank secrecy.• Consequence: criminal proceedings are necessary to obtain evidence.
  19. 19. General obligation to cooperate• Article 160 SCCP introduces a general obligation for p g parties and third p parties to cooperate with the civil trial.• In principle banking secrecy cannot be principle, opposed (contrary to attorney-client confidentiality). f )• Consequence both on domestic and civil mutual assistance proceedings.
  20. 20. Relative right of refusal:Art.A 163 para. 2 SCCP: SCCP “[Parties] privy to other secrets that are protected by law can refuse to cooperate if they show that the interest in maintaining secrecy p y g y overrides the interest in discovering the truth.” Consequence of unjustified refusal: taken into account when weighing evidence (art 164 SCPP) (art. SCPP).Art. 166 para. 2 SCCP: “Other persons aware of statutorily p p y protected secrets can refuse cooperation if they show prima facie that the interest in maintaining secrecy overrides the interest in discovering the truth.” Consequence of unjustified refusal: fine threat of imprisonment fine, imprisonment, order compliance by force, costs (art. 167 SCPP).
  21. 21. Lifting of banking secrecy is the rule:• Bank secrecy is lifted unless the party or third party barred by secrecy law from disclosing the information or d di l i th i f ti document t can show that there is an overriding interest to maintain secrecy.• However banks have declared that they However, will systematically exert their right of refusal to make sure that they have a court f lt k th t th h t decision protecting them from liability.
  22. 22. Consequence on domestic proceedings• In the less complex cases criminal cases, proceedings may no longer be necessary.• Criminal p oceed gs still necessary for C a proceedings st ecessa y o transnational, complex cases.
  23. 23. Consequences on civil international judicial assistanceRequests for taking evidence sent to Switzerlandare governed by:• The Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters (Swiss declaration under article 23: limitations on pretrial discovery)• Th Hague Convention relating to civil The H C i l i i il procedure of 1 March 1954 (applies also when the th requesting St t has no treaty with ti State h t t ith Switzerland)
  24. 24. Law applicable to the execution of the request:• Today, requests are executed in accordance with the code of procedure of p the canton of execution (art. 11 PILA).• From 2011 on, the Swiss Code of Civil on Procedure shall apply.• By providing sufficient elements in the request, bank documents may be obtained in Switzerland (see 4A_399/2007).
  25. 25. Elements to provide in the request:• Facts of the case sufficiently detailed to allow the Swiss court to effect a balance of interest between secrecy and truth.• Specify which documents are requested (no discovery-like exploratory requests).• Parties may participate in the examination of witnesses but not in the production of documents.
  26. 26. 4.4 Taking of evidence: "Discovery" in Swiss proceedings?
  27. 27. Taking of evidence: "Discovery" in Swiss proceedings?• Ad i ibl t Admissible types of evidence under A t 168 SCCP: f id d Art. SCCP (1) Witness evidence (2) Documentary evidence (3) Inspection by court (4) Expert evidence (5) Written request by the court (6) Parties’ interrogation by the court and testimony under oath
  28. 28. Differences to common law system• Th concept of pre trial discovery or gathering of evidence prior t th The t f pre-trial th i f id i to the trial by way of taking depositions of witnesses or mandatorily exchanging or producing documents is completely unknown and will continue to remain unknown under the new code of civil procedure. p• Affidavits or witness statements filed by a party have no evidentiary value unless backed up by “live” evidence given in front of the court.• Evidence is taken by the court after the parties have submitted in full, usually by exchange of written briefs, their allegations of facts. The court will take evidence on all of those facts which are either alleged or disputed. disputed• The administration of the evidence, including the questioning of the relevant witnesses, is reserved to the court. Parties counsels may ask additional questions to any witnesses which are being questioned by the court, but this only after the court h made i own enquiries and authorizes parties l f h has d its ii d h i i counsels to proceed. NO concept of cross-examination.
  29. 29. Codified duty of the parties to produce documents• Art. 160 sec. 1 (b) SCCP contains a general obligation for the parties and third parties to cooperate with the courts, including the duty to produce documents at the request of the court. q• General guideline: IBA Rules on the Taking of Evidence in International Commercial Arbitration of 1999:• Documents to be released must be in possession, custody or control of the party from which they are requested• The documents must be sufficiently identified by the requesting party – no fishing expedition• Request must be formulated during the p q g proceedings – no pre-trial discovery g p y• Order of production is issued by the Court – release of documents only to the Court, not directly to the requesting party.• Side note: A defendant cannot be compelled by either the court or the adversary t disclose it assets. Di l d to di l its t Disclosure of assets presupposes a fi l f t final judgment or enforcement document against the defendant, and is only possible within the framework of compulsory enforcement under the DCB.
  30. 30. Legal Privilege?• Art. Art 160 sec. 1(b) newly introduces the concept of legal privilege: sec• NOT ONLY ATTORNEYS CAN REFUSE TO PRODUCE THEIR OWN PRIVILEGED DOCUMENTS, BUT ALSO CLIENTS CAN DOCUMENTS REFUSE TO PRODUCE COMMUNICATION WITH THEIR ATTORNEY WHICH IS PRIVILEGED.• NOT PRIVILEGED IS:• Activity of a lawyer as member of the board of directors of a company;• Activity of a lawyer when performing fiduciary services e.g. for offshore entities• Activity of a lawyer as asset manager• In-house counsel of a corporation cannot invoke legal privilege!
  31. 31. Rights of Refusal of Parties and WitnessesAbsolute d Relative Right f Refusal of P ti andAb l t and R l ti Ri ht of R f l f Parties d Witnesses (Art. 163, 165, 166 SCCP)• Witnesses or third parties holding documentary evidence may refuse to cooperate with the court to the extent that the disclosure of a business or other secret would be punishable pursuant t article 321 of th P i h bl t to ti l f the Penal C d l Code.• The third party submitted to an obligation to report or released from the obligation to keep the secret has a duty to cooperate, unless it renders likely that the interest of the protection of secret is stronger than the interest t th manifestation of truth (art. 166 para. 1 b i t t to the if t ti f t th ( t SCCP).
  32. 32. Discovery without teeth against parties (Art. 164 SCCP)• U j tifi d refusal BY PARTY t produce Unjustified f l to d documents upon order of the Court• Consequence: NO CRIMINAL PENALTY; NO ENFORCEMENT OF THE COURT ORDER• Art. 164 SCCP: The Court shall take (the refusal) into account when weighing the evidence• Example: Court, if satisfied that document is in possession of the party, shall assume that the document has those contents as described by the counterparty; also applies to documents which have been unjustifiedly destroyed.
  33. 33. Discovery with teeth against third parties (Art. 167 SCCP)• Unjustified refusal by third party to produce documents upon order of the CourtConsequences:• Administrative fine of CHF 1‘000.—; 1 000. ;• Order of the court to comply with criminal sanctions if failure to do so;• Forceful enforcement of court;• Bearing of court cost resulting from the failure to comply.
  34. 34. 5. Use of illegally obtained evidence in Swiss i il S i civil proceedings di
  35. 35. Use of illegally obtained evidence in Swiss civil proceedings (Art. 152 sec. 2 SCCP)• Art. 152 sec. 1 SCCP gives both parties the right to have all „ g „suitable“ evidence timely submitted admitted and accepted by the court court.• Art. 152 sec. 2 introduces a right to have evidence illegally obtained considered by the court, to the extent that the interest in „finding the truth“ is predominant.
  36. 36. Balance of interest between „illegal act“ and „finding the truth“• J d h t b l Judge has to balance th interests the i t t• Irrelevant, whether the breach committed to obtain the evidence is being investigated or not• If illegal act led to a breach of the physical or p y psychological integrity, then judge is unlikely to consider g g y j g y it• If illegal act was a breach of an absolute or relative right to refuse giving evidence – judge will weigh these interest very high.• Open question: Private investigator obtains information from Swiss banker in breach of banking secrecy laws: Can this information be used?
  37. 37. 6. Conservatory measures; The new grounds for attachment; New possibility of freezing state assets o the bas s o a e o ceab e on t e basis of an enforceable award under the new Lugano Convention
  38. 38. Conservatory Measures New Safeguarding Measures under Art. 261 SCCP ArtSafeguarding Measures under Art. 261 et seq. SCCP Art seqThe court can issue the necessary precautionary measures if the applicant canmake plausible:(1) that a claim or right has been breached or a breach is to be expected; and(2) the breach will cause a damage which is not easily remediable.Negative injunction preventing the defendant from changing the status quo andprotecting an alleged right of the claimant in order to secure an effectiveenforcement in the future, once the disputed matter is determined on its merits(such as preservation orders restraining the defendant from disposing of realproperty)•(i) the likelihood that the claim in the main trial is justified () j•(ii) the existence of an impending and not easily remediable damage, if theinjunction is not granted•(iii) urgency in granting the provisional remedy
  39. 39. Conservatory measuresType of measures pursuant to Art. 262 SCPP (coupled with threat of criminalsanction under Art. 292 PC if not complied with – NO CONTEMPT OF COURT) p )(a) Prohibition( )(b) An order to set aside an illegal situation g(c) An order directed at a registry or at a third party to refrain from allowing oreffecting any disposal - Order to bank to freeze a certain account respectively to maintain status quo - Prohibition to bank to release certain securities to one of the parties(d) The intermediate payment of a certain sum in the cases provided by law - Support p y pp payment under family law for children…but y …might apply e.g. to Dutch orders to effect certain contractual payments pending the final determination of the case (Articles 289 to 297 of the Netherlands Code of Civil Procedure deal with a form of procedure knownas `kort geding which allows the President of the Arrondissementsrechtbank to grant enforceable kort geding,measures `in all cases which, having regard to the interests of the parties, require an immediatemeasure on grounds of urgency (Article 289(1)).
  40. 40. Monetary Claims: The Attachment ProceedingsIf a claim for money is involved, the classic interlocutory order designed to secure itsenforcement is the attachment order order.The attachment order (Séquestre, Arrest, Sequestro) is the classic interlocutory orderdesigned to secure the enforcement of a claim for money.•It causes a temporary freezing of assets located in Switzerland in order to secure abasis for subsequent enforcement, pending a final determination of the litigation on themerits in respect of a monetary claim only.•A claimant will usually apply for an attachment as a pre-trial interlocutory order beforea claim is filed, but attachments may also be obtained at any time after the filing of themain action in Switzerland or abroad as an ancillary remedy. The monetary claim forwhich an attachment order is sought must be prima facie due and payable•The statutory basis for attachments is laid down in the Federal Act on Debt Collectionand Bankruptcy of 11 April 1889 ( p y p ("DCB"), specifically articles 271 to 281 DCB. ), p y•To obtain an attachment order over assets of a defendant, an applicant must mandatorilyshow any of five conditions or reasons (Cas de séquestre, Arrestgründe, Cause disequestro) allowing an attachment p q ) g pursuant to article 271 DCB, namely: , y
  41. 41. Presently: 5 reasons for attachment(1) the defendant has no fixed place of residence or abode anywhere anywhere, in Switzerland or abroad;(2) the defendant has dissipated assets, flees or prepares to flee in order to defeat enforcement of undischarged debts;(3) the defendant is in transit or is a person visiting markets or fairs, provided the relevant claim is of a nature that requires immediate p y payment; ;(4) the defendant has no residence in Switzerland, no other reasons for an attachment are fulfilled, but the claim has a sufficient nexus with Switzerland or is based on an enforceable judgment or a written acknowledgment of debt; itt k l d t f d bt(5) the creditor holds certificates of unsuccessful former enforcement in respect of undischarged debts of the debtor.
  42. 42. Attachments in fraud litigations: Difficulties• In an international context the principal ground usually relied upon context, is the absence of Swiss residence.• The additional requirement of a sufficient nexus with Switzerland has not been defined by the legislator Court practice has developed legislator. a number of factual circumstances which are deemed sufficient to establish such a nexus. If the claim is based on contract, then a nexus would be established if the contract was negotiated, concluded or performed, wholly or i part, i S it l d or S i l d d f d h ll in t in Switzerland, Swiss law or an arbitration clause with seat in Switzerland was determined to be applicable to the contract or to any disputes arising out of it.• In tort cases the claimant would have to show that the activities cases, leading to the tort claim were carried out, at least in part, in Switzerland.• A fraud victim might not be able to obtain an attachment if the only nexus to Switzerland is constituted by the existence of a Swiss bank account, without any apparent evidence that any fraudulent activities were carried out in the country.
  43. 43. Application for attachment• The application for an attachment order is filed ex parte in summary proceedings• Written submission that any one of the five conditions of article 271 DCB is met• prima facie case supporting a reasonable probability of a valid claim• Establish b way of doc mentar evidence the n mber and by a documentary e idence number denomination of the Swiss account/asset to be frozen• The jurisdiction ratione loci is the court at the registered seat of the bank• If an application is unsuccessful, the defendant is not notified, giving the applicant the possibility to improve his application by filing a second more documented version of it or by filing an second, appeal against the adverse decision of the lower court. As long as the applicant is not successful, the defendant is not notified of any applications filed
  44. 44. New Ground for Attachment under Art. 271 sec. 6 DCBComing into force as fC i i t f from 1 t J 1st January 2011 2011:New section 6:An attachment may be granted if the claimant disposes of atitle for final enforcement under the DCB (i) enforceable court awards (on payment of a sum of money); (ii) enforceable arbitration awards; (iii) Resolutions and decisions of cantonal and federal authorities (including uncontested tax decisions); (iv) enforceable public deeds.
  45. 45. Novelties provided under sec. 6 of Art. 271 DCB• „Lugano“ court judgments are equivalent to Swiss Lugano“ judgments. ( (The Lugano Convention on Jurisdiction and the g Enforcement of Judgments in Civil and Commercial Matters of 1988/2007, the latter applicable to EU including eleven new EU member states ( g (Czech Republic, Cyprus, Slovakia, Slovenia, Hungary, Malta, Estonia, Latvia, Lithuania, Bulgaria and Rumania) plus S Switzerland, Norway a d Iceland (ye to be ratified) e a d, o ay and ce a d (yet o a ed) Judge granting the attachment effects an exequatur of the Lugano-judgment in ex parte proceedings.
  46. 46. Novelties provided under sec. 6 of Art. 271 DCBNEW IS: IS - No absence of Swiss residence (Assets of Swiss residents might now become subject to attachment) - No nexus to Switzerland needs to be shown (but assets in Switzerland need still to be identified); ) - Urgency or threat of creditors‘ interest through a possible dissipation of assets by debtor no longer needs to be shown; - Order has Swiss-wide effect: Application might be brought in Zurich, but also address assets located in Geneva (but all assets still need to be identified
  47. 47. Freezing of State assets?•The new ground for attachment gives the possibility, on Th df tt h t i th ibilitthe basis of an enforceable judgment rendered in a Luganostate against a foreign state, to freeze the assets of a g g ,foreign State in Switzerland.•Conditions: – acta iure gestionis – assets to be attached are not used for any public purpose – thus far nexus to Switzerland was required far, required.This is no longer the case. Swiss Department of Justice ispresently drafting new guidelines on the procedure to beadopted, in line with Art. 2 1 sec. 6 DCB – during 2011 271 C
  48. 48. Outlook• Non Lugano-judgments need fi t t go th N L j d t d first to through (i t h (inter- partes) exequatur proceedings in order to be coupled with attachment proceedings p g• Increase of attachment proceedings expected in Switzerland, in particular:• - against Swiss citizens and residents;• - attachment by tax authorities for unpaid taxes now possible;• -against assets of foreign states• - Creditor might freely decide which assets should be frozen (improvement of negotiating position of creditors to obtain quicker discharge of debts)
  49. 49. No security for attachments under Sec. 6 of Art. 271 DCBSecurityS it• The applicant who obtains an attachment order is liable to both the defendant and to any third party affected for damages suffered as a result of an unjustified attachment.• It lays within the discretion of the judge to order the claimant to post a bond as a security against such potential damage (usually 10% of the claim for which attachment is sought, to be put up usually by way of a cash deposit or a bank guarantee.• Under the cases of sec. 6, unlikely that judges will ask for security from the applicant.

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