Commentaries

Switzerland's four largest gold importers can rest assured: tax secrecy should (again) prevail over transparency, according to Federal Administrative Court ruling A-741/2019 of March 16, 2022. At the root of this case is the Society for Threatened Peoples. In 2018, this association submitted a request to the Federal Office of Customs and Border Protection (FOCB) based on the Transparency Act (LTrans). It wished to obtain complete statistics on gold imports by the four largest importers, including quantities, broken down by[...]

How should a bank react to contradictory instructions issued within hours of each other by the joint account holders? In whose hands must it act? In ruling 4A_630/2020, the Swiss Federal Supreme Court clarifies the rights and obligations of a bank receiving contradictory transfer orders relating to a joint account. A father and son opened a joint account with a bank, on which each had individual signing authority. The assets in this account amount to around EUR 20,000,000. On the[...]

The Swiss Federal Audit Office has carried out an audit to assess the effectiveness of MROS's work. The report focuses on three areas: the organization of MROS ; the processing of information by MROS; and collaboration with other stakeholders in the fight against money laundering (private sector, supervisory and prosecuting authorities, and other financial intelligence units). With regard to the first point, the audit concludes that the integration of MROS into fedpol is appropriate, but recommends that internal regulations be[...]

On March 24, 2022, the International Organization of Securities Commissions (IOSCO) published a report on decentralized finance (DeFi). This report aims to present and analyze the functioning of DeFi in terms of technology, products and services, and key participants, while taking into account various risks. The report, although relatively succinct, is relatively dense. This commentary is limited to some of the salient points. Between questions and recognition The main objective of DeFi, recognized by IOSCO in its report, is to[...]

At its meeting of March 11, 2022, the Federal Council approved a revision of the Ordinance on the Organization of Government and Administration (OLOGA). A new art. 24a OLOGA has been adopted to specify the Federal Council's tasks in terms of "supervision and control" ("Aufsicht und Steuerung") of the federal administration's autonomous entities ("Verselbstständigte Einheiten"). Could this revision - which comes into force on July 1, 2022 - undermine FINMA's independence? The current framework governing the supervision of entities made[...]

India requests information from Switzerland about Anne. Anne is said to hold an account with bank ‘B.’ through trust structures (Truststrukturen). After a procedural mishap, the FTA agrees to pass on to its counterpart the information that the person concerned is a ‘beneficiary of the overlying trust of the company holding the account with the number xxx […]’. Anne challenges this decision before the Federal Administrative Court, which partially upholds her appeal. Still dissatisfied, she appealed to the Federal Court[...]

In rulings 4A 365/2021, 4A 366/2021, 4A_367/2021 and 4A 368/2021, the Federal Court looks at the contractual relationship between an asset management company and external managers: in this case, it will be categorised as an employment contract, despite the employer's attempt to attribute a different assessment to it from the perspective of the delegation of tasks. Four managers approached an asset management company with a view to a collaboration agreement for the creation and management of an investment fund. The[...]

Following the US sanctions against Russia for its annexation of Crimea, the Federal Supreme Court, in its ruling 4A_84/2021, examined the scope of the grounds justifying a refusal of the payment services falling under the universal service of the Post Office. In April 2018, Viktor Vekselberg, a Russian citizen and Swiss resident, was placed on the list of Specially Designated National and Blocked Persons (SDN) by the US Office of Foreign Assets Control (OFAC) as part of the sanctions against[...]

In its report on digital finance, the Federal Council defines the fields of action in the domain for the coming years. It notes that the digital transformation of the financial sector represents a strong potential for growth for Switzerland as a business centre. This transformation can lead to an improvement in the efficiency of the financial markets, increased transparency, better matching of customer services and a reduction in costs. However, the Federal Council notes that the use of new technologies[...]

Can a bank be guilty of unfair management in the context of the realisation of assets following a margin call? Do the transaction confirmations provided by the bank constitute evidence with increased probative value under Art. 251 PC? In the 6B_1381/2021 ruling, the Federal Court answers both questions in the negative. A client entered into an execution only options and futures trading contract with his bank in 2015. This contract obliged the client to meet the margin requirements that the[...]

Lawyers only focus on the verb. The received idea is almost correct, but therefore false: they also become infatuated with deeds. Art. 18 para. 1 CO, central to our legal system, illustrates this when it states that the real and common intention of the parties takes precedence over their inaccurate expressions. The bias in favour of the primacy of will is, moreover, nothing specific to Switzerland. Inherited from Roman law, it is consequently one ‘of the dominant features of the[...]

In the 1B_537/2021 ruling, the Federal Court examines the question of whether, in the context of a transfer of assets within the meaning of art. 69 et seq. LFus, the acquiring company acquires the legal standing of the transferor's plaintiff. On 15 December 2017, a foundation filed a criminal complaint against its former secretary general for acts committed in the management of the foundation from 2012 to 2017. The public prosecutor's office then opened an investigation for unfair management (art.[...]

The sealing route is not open to the bank, some of whose employees are being prosecuted for violating the obligation to communicate (art. 9 and 37 LBA). The Federal Supreme Court (FSC) ruled in this way in two (surprisingly) similar cases, which were the subject of three rulings, the first dated 14 December 2021, the second two dated 20 December 2021 (1B_49/2021, 1B_461/2021 and 1B_243/2021). For ease of reading, the following lines focus on the first decision. On 7 November[...]

In response to the postulate of 16 August 2019 of the Council of States' Committee for the Environment, Spatial Planning and Energy (CEATE-CE), the Federal Council published its report “How can Switzerland make financial flows consistent with climate objectives?” on 17 November 2021. In it, the Federal Council examines various measures that could more effectively involve the financial sector in the transition to a ‘net zero’ economy. The conclusion of voluntary sectoral agreements and greater transparency are the approaches that[...]

In the judgement 4A_36/2021 intended for publication, the Federal Supreme Court considered the question of the creditor's standing to bring an action for liability (art. 754 CO). It considered, incidentally, the effects of the assignment of claims and the consequences thereof for the original holder of the claim. An open-ended investment company, based in the Cayman Islands, holds several sub-funds. These sub-funds are autonomous, but do not have legal personality. One of these sub-funds participates in real estate projects in[...]

What procedural protection can be granted to the minutes of the board of directors (and other internal information) of a bank? In ATF 148 III 84 (4A_58/2021), the Federal Tribunal specifies the scope of the measures that a civil court may order in order to protect the interests worthy of protection of a party. A Guernsey company is suing a Swiss bank for damages before the Zurich Commercial Court. In its response, the bank asks the court to prohibit the[...]

Should the use of an algorithmic trading programme be considered a substitution within the meaning of Art. 398 para. 3 CO ? Does the agent violate his duty to inform if he does not regularly inform his principal about the progress of market making? The Federal Supreme Court answers both questions in the negative in its judgement 4A_305/2021. A company incorporated under Israeli law enters into a mandate agreement with a Swiss bank. Under this agreement, the bank undertakes to[...]

India sends a request for administrative assistance to Switzerland. The request apparently concerns Alain, who has lost his father (the late Denis). This circumstance is going to be a source of confusion: is India interested in Alain or in the inheritance of the late Denis? Before delving into this question, let us note that three bank accounts have been identified as relevant in Switzerland. Alain and the late Denis were joint holders of account number 1. The company ‘C.’ is[...]

In the 4A_263/2021 ruling, the Federal Supreme Court analyses the liability of an asset management company under Art. 55 CO. The company had hired an asset manager as an external manager who had adopted a risky investment strategy. This strategy resulted in substantial losses for the client. In March 2008, the client opened an account with a first Swiss bank and entrusted the management of all his assets to a trader specialising in derivatives. In May 2008, the client suffered[...]

In a ruling dated 6 August 2021 (4A_659/2020), the Federal Court specified the cases in which a bank may invoke international sanctions not recognised in Switzerland to refuse to execute a client's instruction. On 6 August 2013, a Panamanian company opened a bank account with a Swiss bank. At the end of the company's chain of ownership is Mr Viktor Vekselberg, who indirectly controls the company. Furthermore, the company indicates that Mr Viktor Vekselberg is the beneficial owner of the[...]

On 4 November 2021, the Takeover Committee issued Decision 795/01 in which an exemption from the mandatory offer was granted to the group of shareholders made up of the Hoffmann family (hereinafter: the applicants) in the context of a planned buyback of own shares relating to a block of Roche shares held by Novartis. In order to reduce its shareholding, Novartis entered into discussions with the Roche board of directors to buy back and cancel 53.3 million Roche shares. As[...]

The direct transfer of client data across the Atlantic by an asset manager in the context of the tax dispute between Switzerland and the United States constitutes an act performed without right for a foreign state, punishable within the meaning of Article 271(1) of the Swiss Criminal Code. The Federal Supreme Court ruled as such in a judgement of 1st November 2021 intended for publication (6B_216/2020). This is the second time that the judges of Mon Repos have considered this[...]

In a recent judgement concerning the interpretation of an insurance contract, the Federal Court was required to determine the extent of the insured risk in light of the concepts of ‘primary limitation’ and ‘secondary limitation of risk’ (TF 4A_72/2021 of 28 September 2021). A Swiss holding company provides financial services through its subsidiaries, including a US subsidiary. In order to protect itself against the civil liability risks associated with its commercial activity, the holding company has taken out civil liability[...]

In a judgment 1B_59/2021 of 18 October 2021 intended for publication, the Federal Supreme Court rules for the first time on the procedure to be followed by the criminal authorities when realising seized cryptoassets in advance. Criminal proceedings have been brought in the canton of Zurich against Alexis for money laundering (art. 305bis CP). In September 2019, the public prosecutor's office seized the defendant's cryptoassets deposited with B. SA with a view to their confiscation. A year later, the prosecution[...]

Is a customer who trades online a consumer? Is a bank that cannot immediately execute a stop-loss order when the market is illiquid liable for the losses incurred by the customer? In the 4A_54/2021 ruling, the Federal Court considered these two questions, but only ruled on one of them. In 2014, a client with some experience in the financial field used the IT platform of a bank in the canton of Vaud to speculate on the variation in the EUR/CHF[...]

In a ruling dated 19 August 2021 (2C_530/2020), the Federal Court reiterated the principles applicable to the calculation of confiscable gains within the meaning of Art. 35 LFINMA. A public limited company X authorised by FINMA as a manager of collective investments within the meaning of the LPCC (authorisation now known as manager of collective assets since the relevant provisions were transferred from the LPCC to the LEFin) had entered into business finder contracts with a public limited company Y[...]

The International Organization of Securities Commissions (IOSCO) recently published an update of the principles on outsourcing established in 2005 for market intermediaries and in 2009 for stock exchanges. This update is due to new technological developments and recent developments in the field of outsourcing. Firstly, the personal scope of these principles has been broadened. They apply not only to the aforementioned entities, but also to trading platforms (in particular multilateral trading facilities), participants in the financial markets acting on their[...]

On the sidelines of COP26, FINMA published a communication on supervision regarding the prevention of and fight against greenwashing. This document sets out FINMA's expectations for combating this practice in the investment fund sector. First of all, it reiterates that several initiatives have been taken at national and international level to increase sustainability transparency for investors and clients. Indeed, one of the main challenges in preventing and combating greenwashing is access to objective and accurate information on the sustainability of[...]

In judgment 6B 379/2020 intended for publication, the Federal Court details the conditions under which the intermediary's fees in the context of a corruption scheme may be subject to confiscation measures (articles 70 and 71 PC). The Brazilian and Swiss criminal authorities were each conducting proceedings against Alexis, a middleman in the context of the award by Petrobras of operating contracts to B. Inc. and C. BV. with a total estimated value of USD 2,680,000,000. Following solicitations from the directors[...]

In a decision of 24 November 2020 (ACJC/1653/2020), the Court of Justice of Geneva ruled on the validity of a request for payment made under a bank guarantee. The peculiarity of the ruling lies in the fact that the request did not come from the beneficiary itself but from a third-party assignee, which had then merged with the principal. The Court of Justice concluded in essence that, in addition to being formally non-compliant, the appeal to the disputed guarantee was[...]