Switzerland: new proposal to extend collective redress instruments

Switzerland: new proposal to extend collective redress instruments

This blog was written as part of the collaboration between Aston University and BIICL.

In May 2022, Switzerland's Committee on Legal Affairs of the National Council began to work on the revision of the Swiss Code of Civil Procedure to broaden the existing collective redress instruments.

The draft proposal was adopted by the Federal Council last December and aims at strengthening the protection of collective interests. The Federal Office of Justice noted that under the existing Swiss legislation, when a damage affects a large number of people in a similar way, each of them must in principle brings their claims individually. The result is that many parties do not exercise their rights, especially when the damage is limited.

The proposal would reform the existing association claim instrument provided by Art. 89 of the Swiss Code of Civil Procedure (CPC). Currently, associations and other organisations of national or regional importance that are authorised by their articles of association to protect the interests of a certain group of individuals may bring an action in their own name for a violation of the personality of the members of such group. They may request the court: (a) to prohibit an imminent violation; (b) to put an end to an ongoing violation; (c) to establish the unlawful character of a violation if the latter continues to have a disturbing effect. The current representative action is thus limited to violation of personality rights, and the remedy is solely injunctive.

Under the new proposal, the current limitation to personality rights is dropped. The scope of the representative action is extended to all types of unlawful violations. A broad range of areas could thus be covered by the new action, including consumer claims, financial services, antitrust, unfair competition, data protection, product liability or environment protection. In that respect, the scope of the Swiss proposal goes further than the EU Directive which applies solely to consumer claims.

Requirements apply as to standing. To be able to bring the claim, organisations must (a) be non-profit making, (b) have been in existence for at least twelve months at the time the action is brought (the proposal thus eliminates the possibility for ah-hoc organisations to bring the claim), (c) be entitled to defend the rights and interests of that group of persons by virtue of their articles of association or memorandum of association, (d) be independent and not influenced by the defendant (similarly to Article 4.3 (e) of the EU Directive).

As to remedy, similarly to the existing legislation, the organization may request the court (a) to prohibit an unlawful infringement if it is imminent; (b) to put an end to it if it is still continuing; (c) to establish that it is unlawful. The parties may also request that the decision be communicated to third parties or that it be published.

In addition to strengthening the existing association claim mechanism, the proposal introduces a collective compensatory claim. Under Art. 307b of the proposal, associations and other organisations may act in their own name to assert a right to compensation if the following conditions are met: (a) they are authorised to bring an action under Article 89(1) CPC or a special legal provision; (b) they are empowered to act by at least ten persons concerned, (c) and the claims raised are based on similar facts or legal grounds. The opt-in mechanism applies, with a minimum of three months from the date of entry in the register for interested parties to express their wish to join the action (Art. 307b).

The proposal also introduces a new collective settlement procedure. The parties may at any time submit a joint application to the court to declare a collective settlement binding on all persons affected by the infringement who have joined the organisation's action (Art. 307h of the proposal). The opt-in principle applies, however the opt-out principle can apply under specific circumstances. The parties may submit a request to the court to extend the binding effect of a collective settlement to all persons affected by the infringement who are domiciled or based in Switzerland and who have not joined the organisation's action, if they have not declared their intention to withdraw from the settlement within a period of at least three months set by the court, if the claim of an individual affected person is for such a small amount that it does not justify individual action, and if a significant proportion of the affected persons have not joined the action.

Switzerland is thus keeping up with the developments in the European Union in terms of collective redress. The broad scope of the proposal, along with the possibility for compensatory remedy and the availability of a collective settlement procedure with an opt-out mechanism, are certainly strengthening the protection of collective interests in Switzerland. Political opposition is however to be expected, and it remains to be seen how the proposal will be ultimately enacted.