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Case-law

Loan agreement

No misappropriation if the use of assets is not sufficiently defined

A borrower who uses the loaned funds for a purpose other than that specified in the contract may exceptionally be found guilty of breach of trust (Art. 138 para. 1 of the Swiss Criminal Code). For this to happen, the purpose for which the assets were lent must be clearly defined in the contract, which was not the case in ruling 6B_240/2024 of 9 January 2025. On the basis of a loan agreement , a company lends USD 300,000 to[...]

Transfer stamp tax

A Tax Confronted with Its Primary Purpose

In a ruling intended for publication, the Swiss Federal Supreme Court, against the advice of the Federal Tax Administration, exempts a holding company from stamp duty (i) in the case of an intra-group transfer of shareholdings that do not meet the restructuring conditions set out in the LIFD and (ii) following the granting of shareholdings to employees free of charge (9C_168/2023, 9C_176/2023 of 25 November 2024). The case concerns a holding company carrying out two transactions which the Federal Tax[...]

Enforcement and international sanctions

According to the Obergericht from Zurich, the freezing of assets under the LEmb takes precedence over the LP

In judgment PS240181 of 14 November 2024, the ZurichObergericht ruled that art. 44 of the Swiss Criminal Code applies by analogy to asset freezing measures taken under the Embargo Act and its implementing ordinances, despite the absence of any reference to the Embargo Act in art. 44 of the Swiss Criminal Code. It follows that realisation under the LP is not possible as long as the assets are frozen. On 6 June 2023, a creditor with an enforceable judgment from[...]

Event advertising

The CEO’s sentence must be announced

Following a merger, the acquiring company may be condemned by the SIX for a violation committed by the transferring company. In addition, the CEO's conviction must be announced, even if it concerns acts committed within another company (award (final) by the SIX Court of Arbitration of August 26, 2024). A managing director and CEO of a company listed on the SIX is convicted of professional fraud and disloyal management within another company. The listed company merges with another company (acquiring[...]

Fraudulent banking orders

The judge must examine all the circumstances

The Swiss Federal Supreme Court recently handed down a new ruling on the subject of fraudulent bank orders, in which it annulled a cantonal decision on the grounds that it did not address all the issues raised by the plaintiff (ruling 4A_135/2023 of October 16, 2024). Although this ruling mainly concerns questions of civil procedure, it nevertheless serves as a useful reminder of the scope of the examination that the court must undertake in the presence of fraudulent orders. In[...]

Sealing of evidence

Business secrecy and banking secrecy are no longer enough (at all)

In our last commentary on a Federal Court ruling on sealing (7B_313/2024, intended for publication), we stated that ‘banking secrecy no longer constitutes a ground for sealing where it is invoked by a third party, i.e. a person not involved in the criminal proceedings’ (Villard, cdbf.ch/1383). Following the publication of judgment 7B_976/2024, which is commented on here, the second part of the statement should be deleted: banking secrecy no longer constitutes a ground for sealing. Ruling 7B_976/2024 was not concerned[...]

Fraudulent bank orders

The inattentive lawyer is responsible

A lawyer specializing in banking law, who agrees with his client that he will receive banking correspondence on his behalf, should be able to detect the unusual nature of fraudulent orders. If he fails to do so, he may incur contractual liability and must compensate the client (4A_269/2024). A Geneva lawyer specializing in banking law sets up and manages a Panamanian company for a French businessman. The company opens a bank account in Geneva. The contract stipulates that correspondence is[...]

Cross-border financial services

Jurisdiction of French courts notwithstanding a choice-of-court clause

On September 18, 2024, the First Civil Chamber of the French Court of Cassation handed down ruling no. 23-13.732, which addresses the notion ofactivity directed towards a Member State within the meaning ofart. 17, § 1, c) of the Brussels I bis Regulation (RBI bis), in the context of banking services rendered by a Lebanese bank to a customer resident in France. This decision confirms that customers based in the EU who enjoy “consumer” status may bring their claims before[...]

Sealing of evidence

Banking secrecy is no longer enough

Since the revision of the Code of Criminal Procedure, which came into force on January 1, 2024, banking secrecy no longer constitutes a ground for sealing documents when invoked by a third party, i.e. a person not involved in the criminal proceedings. The Swiss Federal Supreme Court ruled to this effect in its ruling 7B_313/2024 of September 24, 2024, intended for publication. The Office of the Attorney General of Switzerland was conducting criminal proceedings for fraud and money laundering against[...]

Sanctions

The clear-case procedure is closed to unblock a payment

In ruling 4A_394/2024 of 18 September 2024, the Federal Supreme Court confirms the inadmissibility of a clear-case application to debit the account of a client subject to sanctions, in order to pay his lawyer's fees. A client held several bank accounts in Switzerland, in particular with a bank whose group was also active in Europe and the United Kingdom. The client is subject to sanctions in connection with the conflict in Ukraine, and his assets have been frozen by Switzerland,[...]

Asset management

“Extremely passive” board of trustees liable under civil law

The members of the board of trustees of a pension fund must draw up the investment strategy and organise and supervise its implementation. If they fail to do so, in particular if they conclude a discretionary mandate without any investment strategy and without supervising the investment manager, the members will incur civil liability (9C_496/2022, 9C_503/2022, 9C_504/2022, 9C_505/2022). A pension fund for a nursing home in Fribourg decided to enter into a discretionary management contract with an asset management company. The[...]

Indirect naming and shaming

Federal Court confirms FINMA’s communication

FINMA may publish a press release concerning the closure of enforcement proceedings against a named subject, in particular to show the public that it is not inactive in the face of violations of financial market law (2C_682/2023 intended for publication). FINMA closes enforcement proceedings against a bank that has seriously violated money laundering regulations. A few weeks later, the regulator informs the bank of its intention to publish a press release on the proceedings six days later. The draft press[...]

Enforcement of a foreign arbitral decision

An interest rate of 24 % is not contrary to Swiss public policy

In ruling 4A_57/2024, the Swiss Federal Supreme Court held that an arbitration award ordering the debtor of an outstanding loan to pay interest at a rate of 24% was not contrary to Swiss public policy within the meaning of Art. V ch. 2 let. b of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC). Two Chinese companies had entered into a loan agreement for a period of 2 months, with an interest rate of[...]

Corporate liability

Succession in criminal matters

The question has long been posed by legal scholars: what happens to a criminal prosecution brought against a company when the latter, in one way or another, disappears? The Court of Appeal of the Federal Criminal Court addressed this issue in a decision dated August 19, 2024 (CN.2024.18). It ruled that the takeover of one company by another - i.e., a merger by absorption within the meaning ofart. 3 para. 1 let. a FusG - did not extinguish the criminal[...]

Retrocessions and execution only

Scope of information for early waiver

In ruling ACJC/1002/2024 of 19 August 2024, the Geneva Court of Justice considers that the question of the obligation to return retrocessions in an execution-only relationship, which is controversial in the legal literature and the subject of divergent cantonal rulings, may remain undecided due to a valid waiver by the client. Since 2008, a customer and a Geneva bank have been bound by a simple bank custody agreement (execution only). The bank amended its general terms and conditions several times[...]

Immediate dismissal

A bank manager tries to poach his team

The Swiss Federal Supreme Court has upheld the immediate dismissal of a Ticino bank manager, initially on the basis of mere suspicion, on the basis of formal procedural rules (ruling 4A_399/2022 of June 3, 2024). The employee had been working since June 2008 as investment manager of a bank's Lugano branch, and then as manager of the branch from June 2013. On that date, the parties agreed, among other things, a salary of CHF 400,000 per annum with a minimum[...]

Internal investigations

The asymmetrical contours of attorney-client privilege

Federal Court decisions 7B_158/2023 and 7B_874/2023 of 6 August 2024 were handed down in the same case, by the2nd Criminal Court, in the context of a sealing procedure. The first, intended for publication, seems convincing to us, unlike the second. For once - and this is important - the criminal proceedings were not opened for money laundering but for breach of the law against unfair competition. In short, the Zurich Public Prosecutor's Office suspects an individual, who is understood to[...]

Failure to repay

Several options available to the bank

In ruling ACJC/201/2024 of February 13, 2024, the Geneva Court of Justice confirms the validity of a clause excluding the benefit of real discussion (beneficium excussionis realis), under which the bank is free to choose between taking action against the customer personally (and thus attacking his entire estate) or realizing the pledged assets in his bank account. The facts are as follows: On May 4, 2013, a Saudi customer entered into a framework credit facility agreement and a deed of[...]

Supervision of insurance companies

Comparis must be classified as an insurance intermediary

The Federal Administrative Court (FAT) has confirmed that comparis.ch AG (Comparis) qualifies as an insurance intermediary within the meaning of Art. 40 para. 1 ISA on the basis of the services it offers and must therefore be entered in FINMA's public register of unrelated intermediaries (ruling B-5886/2023 of 5 July 2024). In September 2023, FINMA decided that Comparis was an insurance intermediary within the meaning of Art. 40 ISA and ordered it to be entered in the register of non-related[...]

E-forex contract

The bank must prove the customer’s losses

When the bank liquidates the customer's positions and the result is a negative balance, it is up to the bank to prove the losses. Otherwise, the bank does not prove the existence of its claim against the customer (judgment 4A_301/2023 of 16 July 2024). In 2011, a client used a Vaud bank's IT platform to speculate on fluctuations in the USD/CHF exchange rate. On 15 January 2015, the SNB announced that it was abandoning the CHF/EUR floor rate. This caused[...]