RE: Requirements and Procedure for securing an attachment of a debtors assets in Switzerland
A. Grounds for Attachment in Switzerland
Pursuant to the Swiss federal statute of Debt Collection and Bankruptcy (LP), an Order of attachment against assets located in Switzerland will be granted if the following prerequisites are met:
1. The debtor is not a resident of Switzerland (attachment is also available against a Swiss resident debtor if he is away from his Swiss domicile, or is suspected of evading his obligations, or if the debtor has no fix place of residence); and
2. The debtor has assets within Switzerland, even if those assets are in the control of a third party. Therefore, if the assets of a debtor are deposited with a Swiss bank, they are attachable. Furthermore, all claims of a foreign resident debtor against his own debtors domiciled in Switzerland are attachable in this country; and
3. The creditor can make a prima facie case showing that he has a claim; and
4. The claim is for money which is due; and
5. The debt is unsecured (absence of a pledge).
All that the Plaintiff needs to do to meet the legal requirements is to make a prima facie case showing that he has a cause of action for a money judgment and to set forth the facts which bring the case within one of the conditions of art. 271 LP, e.g. that the debtor is a non resident. In other words, the creditor does not need to present substantial or conclusive evidence establishing the merits of his claim.
He may for instance produce an agreement and prima facie evidence that this agreement has been breached by the debtor.
Attachment is not available in Switzerland if the debt is already secured by a mortgage equal to or exceeding the debt in value. Attachment is available, however, to secure that portion of the debt which exceeds the value of the mortgage.
B. Procedure to obtain attachment
Application for an Order of attachment will be made without notice to the Defendant and the Order is obtained ex parte. Thus, the debtor will have no opportunity to appear and be heard prior to the issuance of the attachment Order. The Swiss Court in its discretion will determine whether the Plaintiff has sufficiently established his claim on the basis of his presentation alone. It appears that in practice, attachments are rather freely permitted if the required statutory prerequisites are met.
The creditor files with the appropriate authority at the place where the assets to be attached are located an application stating:
1. The names and addresses of the creditor and the debtor;
2. The nature and amount of the claim in Swiss francs, supported with prima facie evidence;
3. A description of the property to be attached, precisely designating the location of property such as money.
C. Jurisdiction for attachment
The Swiss Court is competent to deliver an Order for attachment on the sole basis that the assets to be attached are alledgedly located in Switzerland within the jurisdiction of the Court to which the request is submitted.
If the authority determines that an attachment Order should be issued, it may require the creditor to post a bond for any damages sustained by the debtor if the creditors claim on the merits is eventually not upheld. While in practice bonds are seldom required in some places (like Zurich), they are automatically required in other cantons (like Geneva) in an amount corresponding to 10% of the value of the attached assets.
E. Appeal against an attachment Order
The debtor has only limited rights of appeal from an attachment Order; in particular, he cannot challenge it on the ground that the claim is non-existent or unjustified. He can only contest the issuance of the Order on the ground that the debtor has a residence in Switzerland or that the claim has not yet matured or that it is secured by a pledge.
F. Attachment of assets in bank accounts
A writ of attachment is executed by the local Office of Debt Collection.
Credit balances in Swiss banks accounts are subject to attachment, but the creditor must be able to identify the bank where the account is located. If the debtor has assets at several Swiss banks and if the creditor wishes to attach them, it is not necessary for him to file a separate application for each bank and for each branch of each bank, in order to reach all such assets. But of course, all banks must be mentioned in the application and in the attachment Order.
The creditor has to file a separate application only if the banks are located within the jurisdiction of different Debt Collection Offices.
An Order attaching money held in banks is not difficult to enforce as the banks have to follow the Order. But the banks may invoke banking secrecy and cannot be forced at this stage of the procedure to disclose whether they actually have any assets to be attached.
Though required by the LP to make such disclosure the banks almost always refuse to do so.
The creditor does, however, have an action for damages against the banks for refusing disclosure. (In case of a criminal attachment, the banks have the duty to disclose any information on the attached assets without having the possibility of invoking banking secrecy.)
G. Procedures after an attachment Order is obtained
Assuming the creditor obtains the Order of attachment, he will then have to file a request with the Debt Collection Office for a writ of payment within ten days of the receipt by him of the minutes of the attachment (except when a lawsuit is already pending: in that case, the request for a writ of payment has to be sent within ten days of the receipt of judgment). If this time-limit is not respected by the creditor, the attachment is automatically annulled.
If the Debt Collection Office serves upon the debtor an Order for payment, the latter will have ten days to object (opposition).
This opposition to the payment Order is made by a simple written statement on the Order itself, with the signature of the debtor and is then served upon the creditor.
The creditor then has again ten days to take further action by (i) filing an ordinary action for a money judgment at the place of attachment before any Court having jurisdiction over the debtor or (ii) by filing at the place of attachment what is called a motion in summary procedure in order to quash the debtors objection.
Attachment in Switzerland serves a jurisdictional purpose insofar as it creates the jurisdiction of Swiss Courts to decide on the merits of the claim. The claim in validation of the attachment has to be brought before the competent Court in the place where the attachment was obtained.
A motion in summary procedure may be granted if the creditors claim is evidenced by a written acknowledgment of the debt, or if the creditor has already obtained a final Swiss or foreign judgment against the debtor.
In some cases litigation has to be brought to another forum, namely:
(i) if there is an arbitration clause; or
(ii) if another forum has been provided for by a contract between the parties.
Also, the Plaintiff has the option to bring the case before the Court which has jurisdiction in personam over the debtor.
The creditor has then to institute an ordinary Court or arbitration procedure at the agreed forum again within the ten days time-limit.
All these proceedings will also serve to sustain the Swiss attachment which will remain in force until the end of such proceedings.
As soon as the ordinary lawsuit or the motion in summary procedure brought before the Swiss Court comes to a successful end for the Plaintiff, he may require the Debt Collection Office to levy upon the attached property. Actually he has to do this within the usual time-limit of ten days, otherwise the attachment is cancelled. The same rule applies if the creditor obtains a foreign judgment or an arbitration Award in his favour; he will then have to bring, within ten days a special request to the competent Judge to have his foreign judgment or arbitration Award enforced in the Canton where the attachment has been executed.
When the foreign judgment or arbitration Award is enforced, the Plaintiff has to request by way of a motion in summary procedure the lifting of the debtors opposition (in some Cantons, the request for exequatur of a foreign judgment can also be presented in the motion in summary procedure aimed at removing the debtors opposition). Once this opposition has been removed, the procedure goes on as explained above and the creditor has ten days to request execution and direct the Debt Collection Office to levy upon the attached property.
When the Debt Collection Office receives such request, it will convert the attachment into a definitive seizure and write to the bank to obtain full disclosure on the value of the attached assets. The bank where the assets are located will be forced to make the requested disclosure and to pay the seized amount to the Debt Collection Office. If they refuse to do so, the Debt Collection Office will bring a penal complaint against the bank to the competent General Attorney.
H. Attachment of a third partys assets and claim for property
There exists also the possibility to attach amounts which are deposited in the name of a third party but which are said by the creditor to belong to his debtor.
The creditor has in this case to mention in the application for attachment that he wants the attachment also to cover all assets in the name of X (third party) but belonging in reality to Y (the debtor).
The third party whose assets have been attached claims title on his assets by writing a letter to the Debt Collection Office within a reasonable time-limit. If he fails to do so, his assets will be deemed to belong to the debtor and will be subject to levy as the debtors assets.
When the Debt Collection Office receives such a claim of property from a third party, it will give to the Plaintiff a time-limit of ten days to challenge the third partys title on the attached assets before the competent Judge of the place of the attachment.
The Plaintiff has to institute ordinary proceedings against the third party in order to deny it any title on the assets attached in its name. He bears the burden of proof that those assets belong in reality to the debtor.
I. Possibility of attachment of the assets of a foreign State in Switzerland
In principle, States enjoy immunity from jurisdiction and from forced execution. However, this immunity is limited.
Debts resulting from an act carried out by the foreign State jure gestionis can justify attachment.
To distinguish private acts from official ones, the Court must reflect not on their purpose, but on their nature, and decide if, in this respect, the act is official or if it resembles one that any individual might perform.
If a State has renounced its immunity from jurisdiction it may not object to an enforceable writ of execution, such as an attachment.
The attachment order can anyway be targeted at and freeze only the global or general and ordinary patrimony (assets) of a State and not these specifically individualized or indicated as being used for the performance of diplomatic or consular services in Switzerland.
The Federal Court has imposed a second supplementary condition, not contained in the law on debt collection and bankruptcy (LP), to obtain an enforceable writ of execution with regard to a foreign State: the contractual realtionship to which the State is a party should be linked to the Swiss territory, i.e. it should originate from the Swiss territory, or it should be performed there, or at the very least the debtor must have performed acts there of a nature that would create a place of execution.
IMPORTANT MODIFICATIONS DUE TO
THE NEW LAW ON DEBT COLLECTION AND BANKRUPTCY
IN FORCE SINCE THE 1st JANUARY 1997
The old law has been modified in many matters by integrating the juriprudential principles pronounced by the Swiss Supreme Court
(" Tribunal Federal").
INNOVATION REGARDING THE GROUNDS OF ATTACHMENT :
the requirement of a sufficient link with Switzerland
The main innovation for the grounds for attachement in Switzerland is provided by article 271 ch. 4 of the Law on Debt Collection and Bankruptcy (LP), which states that the creditor can petition for an attachement if the debtor is not domiciled in Switzerland, and only if no other case of attachment stated in article 271 ch. 1, 2 , 3, 5 Law on Debt Collection and Bankruptcy (LP) is fulfilled, as long as the claim shows a sufficient link with Switzerland or if the claim is based on an enforceable judgement or arbitral award, or on an acknowledgment of debt.
The new Law restricts the possibilities of an attachement againt the debtors domiciled outside Switzerland by introducing these peculiar conditions which the claim must satisfy.
The main new condition which is relevant is " a sufficient link with Switzerland" . This condition has previously been fixed by the Federal Tribunal in cases regarding the attachment of assets of foreign States and has now been made legally applicable to all types of attachments. In fact if the creditor does not hold a final judgement or an acknowledgment of debt, the attachment is only possible if the claim presents a sufficient link with Switzerland. The meaning of that requirement is not absolutely clear at the moment and we will have to wait for some decisions of the Supreme Court, which will issue principles helping to understand its precise meaning. The authors consider that " a sufficient link with Switzerland" will be admitted if the creditor is domiciled in Switzerland, or when a legal or contractual obligation must be performed in Switzerland, or a contract has been concluded in Switzerland, or if the seat of the Arbitral Tribunal is in Switzerland, or if the creditor conducts his business in Switzerland, and maybe if Swiss law is applicable to the contract claim. The initial wording of the Government's draft law was "tight link". The amendment by the Parliament from "tight" to "sufficient" in the final wording seems to indicate that the Courts should not adopt a too restrictive practice in the interpretation of the new legal condition.
INNOVATION IN THE PROCEDURE TO APPEAL AGAINST AN ATTACHMENT ORDER:
possibility to oppose and appeal
The attachement order is granted on the basis of the creditor's request, without hearing the debtor at this stage(art. 272 LP) ("ex parte").
The new law has introduced an opposition procedure against the attachment Order ( 278 LP). The aim of this new summary procedure is to allow the judge to verify within a short delay that the attachment is well-founded after having heard the opponent.
The parties can plead all the grounds related to the conditions of article 272 LP granting an attachment.
The opposition procedure must be requested by the opponent within 10 days since the day he acknowledged the attachment procedure.
The opponent can be the debtor or a third party whose assets have been affected by the attachment. The opposition must be adressed to the same judge that has granted the attachment. After hearing all the parties he has to pronounce a new decision against which an appeal is possible. The appeal procedure is also something new.
The judge or the appeal Court must pronounce a new decision which confirms or modifies the attachment Order. The opposition procedure has not a suspensive effect, so that the attachment continues to be in force until the decision on opposition is pronounced.
January, 6, 1998