As we saw in our previous post, Switzerland affords award creditors with a clear legal framework that facilitates the recognition and enforcement of their claims in Switzerland. This legal regime varies depending on whether:
- The award was made, that is, the arbitration was seated, in Switzerland or abroad (Swiss or foreign arbitral awards).
- The award provides for monetary or non-monetary relief.
Article 29(1) of the Swiss Private International Law Act (PILA) entitles an award creditor to request the recognition of the award independently from any enforcement proceedings. This procedure can be particularly useful in cases of awards granting (positive or negative) declaratory relief. In other cases, the award creditor will generally request the exequatur of the award as a preliminary matter in enforcement proceedings, as we will see in further detail.
If the award creditor seeks to enforce monetary claims, it will have to initiate debt collection proceedings in accordance with the provisions of the Debt Enforcement and Bankruptcy Act (DEBA). Regardless of where the award was made, such proceedings are always initiated by filing an application with the relevant debt collection office, requesting that a summons to pay be served on the award debtor (Article 67, DEBA). It must be noted that, even if the award orders the debtor to pay in a foreign currency, the award creditor must convert his or her claim to Swiss francs (Article 67(1)(3), DEBA).
The award creditor can file this application at any time and without having to prove that its claim is enforceable. The creditor is therefore entitled to file the application with the relevant debt collection office before the arbitral tribunal has even issued the award.
The main issue will be whether a Swiss debt collection office has jurisdiction to make such a summons notifying the award creditor of the need to pay the award debtor (see Articles 46 to 55, DEBA). In short, the Swiss debt collection office has jurisdiction in the following cases:
- The award debtor is domiciled or has its seat in Switzerland (Article 46(1) and (2), DEBA).
- The award debtor, which has its seat abroad, has a branch in Switzerland and the claim is derived from the operations of its Swiss branch (Article 50(1) DEBA).
- In cases where the debt is secured by either a pledge or a mortgage, the proceedings can be initiated at the situs rei, that is, the place where the collateral or the real estate is located in Switzerland (Article 51, DEBA).
- The award creditor was able to obtain an attachment order on assets held by the award debtor in Switzerland. This forum is of great practical relevance for enforcement proceedings against foreign award debtors (who have no domicile or seat in Switzerland). Provided that the award creditor manages to identify specific assets belonging prima facie to its debtor in Switzerland, it allows the creditor to obtain an attachment order and, consequently, to confer jurisdiction to the Swiss authorities over its foreign debtor. The requirements and procedure to obtain an attachment order will be examined in further detail in a later post.
If it has jurisdiction, the relevant Swiss debt collection office will then serve the award debtor with a payment order. The latter can file an opposition within ten days upon notification (Article 74(1), DEBA), or longer if the debtor is domiciled abroad (Article 33(2), DEBA).
If the debtor files a timely opposition to the summons to pay, the award creditor will have to apply to the competent enforcement court to set aside the opposition (see Article 80(1), DEBA). This application will be heard in summary proceedings in accordance with Article 251(a) of the Swiss Code of Civil Procedure (CPC). This means that the creditor is, in principle, limited to adducing documentary evidence. The creditor will need to file a copy of the arbitral award, the summons to pay, as well as any other document allowing it to show that the award is enforceable and that the summons to pay has been validly notified to the debtor. In particular, in cases where the creditor relies on a foreign arbitral award, it will have to show that all requirements set out in the New York Convention are satisfied.
Absent any timely opposition from the debtor, or if the court sets aside its opposition, the award creditor can request that the debt collection office take the necessary enforcement measures to satisfy its claim.
Should the award entitle the creditor to specific performance, it will have to apply to the courts to request enforcement measures. The creditor must apply to one of the following fora (Article 339(1), CPC):
- The court at the domicile or seat of its debtor.
- The court where the measures are to be taken.
- If the award has been made in Switzerland, the court at the seat of the arbitral tribunal.
Prior to, or together with, its application, the award creditor can request interim measures from the Swiss court of competent jurisdiction to safeguard its claims. Furthermore, the award creditor may request one (or more) of the enforcement measures provided in Article 343(1), CPC. This provision lists a number of (direct or indirect) coercion measures, such as the threat of criminal sanctions, administrative fines, and the use of force to either take away a movable good, vacate real estate or (in some cases) substitute performance by a third party. If the enforcement measures fail, the award creditor can request the court to convert its claim for specific performance into a monetary claim (Article 345, CPC).
In any event, regardless of whether the award creditor is seeking monetary or non-monetary relief, the court of competent jurisdiction will hear the application inter partes. This is so that the award debtor will have the opportunity to answer the creditor’s request and to challenge the enforceability of the award. If the arbitral award has been made outside Switzerland, the award creditor will be entitled to rely on all the grounds provided in Article V of the New York Convention to resist enforcement. Furthermore, the court will rule on the recognition of the award as a preliminary matter, before either granting or rejecting the creditor’s application. In such cases, the court will generally not rule on the recognition and enforceability of the award in the operative part of its decision. Under Swiss law, this means that the exequatur decision will not have res judicata effects with respect to subsequent enforcement proceedings.
Now that we have seen the various procedures available to an award creditor to enforce its claim, we will consider the defences that are available to the award debtor under Swiss law in our next post.