Freezing Orders in Switzerland
If a creditor decides to sue a defendant, an immediate problem arises: how can he prevent such defendant from taking his assets out of the country and thus making it impossible to satisfy the judgement? The solution is to obtain a court order freezing the defendant's assets. Attachment (or: "freezing") proceedings are of great interest in Swiss international commercial litigation, because Switzerland is the world’s biggest wealth management hub with USD 1.84 trillion international market volume (Deloitte 2018), meaning that many foreign creditors find the assets to satisfy their claims in this country.
A creditor seeking an attachment in Switzerland must apply to the cantonal court of first instance at the debtor’s ordinary venue for a debt enforcement or at the place where the assets are located. The competent court will issue an attachment order when three conditions are met. Namely the creditor must prove that he has a due and payable claim against the debtor, indicate assets which belong to the debtor and can be a subject to the attachment order, and show the existence of at least one of the statutory reasons for an attachment provided in art. 271 1st paragraph of the Swiss Debt Enforcement and Bankruptcy Act (DEBA):
1. the debtor doesn’t have a fixed place of residence;
2. the debtor is concealing his assets, absconding or making preparations to abscond so as to evade the fulfilment of his obligations;
3. the debtor is passing through or belongs to the category of persons who visit fairs and markets, for claims which by their nature must be fulfilled immediately;
4. the debtor does not live in Switzerland, and none of the other grounds for a freezing order is fulfilled, provided the claim has a sufficient connection with Switzerland or is based on a recognition of debt;
5. the creditor holds a provisional or definitive certificate of shortfall against the debtor from earlier unsuccessful debt collection proceedings;
6. the creditor holds an enforceable title to set aside the objection in debt enforcement proceedings.
The statutory reason described in no. 6 provides for the most significant ground for attachment requests in Switzerland. Attachments on that basis are this jurisdiction’s way to satisfy the requirements of art. 47 para. 1 of the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters. According to the present judicature, the condition of having an enforceable title must not be interpreted narrowly. In order to successfully obtain an attachment of assets, the creditor needs to possess a title which is enforceable in Switzerland. Such titles include foreign attachment orders (e.g. English Freezing Injunction, Italian “Sequestro Conservativo”, Greek Conservatory attachment).
If the creditor does not possess enforceable title and no other grounds are fulfilled, he can base his attachment request on statutory reason indicated in no. 4. Provided that the claim has a sufficient connection with Switzerland or is based on a signed debt acknowledgement and the debtor is not domiciled in Switzerland. In practice, the term sufficient connection with Switzerland implies certain interpretation problems. However, this condition should be met when the creditor will demonstrate certain connecting factor for instance, that the claim is governed by the Swiss law, the Swiss court has its jurisdiction, or a contract on which the claim is based was entered into in Switzerland. Nevertheless, whether the case has sufficient link with Switzerland depends on the circumstances of the given case.
It is sufficient that the debtor provides prima facie evidence of the relevant facts, which the judge considers as a credible upon initial examination. Attachment orders are always issued in summary proceedings and ex parte, which is required to surprise the debtor, so he does not get an opportunity to escape with his assets. Interestingly, the debtor will get to know about the proceeding only when the attachment order has been granted. He will not be informed about the dismissed attachment request.
At swisslitigator.com, a service by Advokatur GANZONI, we focus on international commercial litigation in Switzerland and we are keen to help foreign clients in securing their claims in this country.