05.03 Applicable law and court of jurisdiction in international cases

05 International Litigation and Alternative Dispute Resolutions

Especially in international cases, the applicable law and the place/court of jurisdiction are of great importance. This is because the question of the applicable law and, in the case of a legal dispute, the place of jurisdiction are at the very beginning of legal considerations.

Applicable law

In a case between parties from the same country, the relevant national law usually applies. An agreement on the applicable law is not necessary in this case, indeed it is obsolete.

However, if the parties come from different countries, the first question that arises is which law of those countries applies to the case. There are two possibilities for answering this question. The easiest way to answer the question is if the parties have agreed or are in agreement on the applicable law. If this is not the case, the question must be answered based on the respective national rules on applicable law in international cases. In this case in Switzerland the Federal Act on Private International Law (PILA) is applied. The law provides for different legal relationships different applicable laws. For example, Art. 117 PILA provides for contracts (in the absence of a choice of law by the parties) the law of the state with which they have the closest connection. Such a connection is presumed to exist with the state of habitual residence of the party that has to perform the characteristic obligation or, if that party has concluded the contract in the exercise of a professional or business activity, with the state where such party has its establishment. In addition to this general rule, however, there are also rules for specific contractual relationships.

Court of jurisdiction

In this publication, the term «court of jurisdiction» is used for the place of jurisdiction (seat of the court having jurisdiction in a case).

Even in national legal disputes, the agreement of a court of jurisdiction is usually very important. For example, if a party from the German-speaking part of Switzerland and a party from the Ticino are fighting a legal dispute and the law stipulates that the court of jurisdiction is in the Ticino, the party from the German-speaking part of Switzerland must travel to the Ticino for the trial and, because the trial there is conducted in the Italian language, may also instruct a lawyer there. All this is time-consuming and costly for the party from German-speaking Switzerland. It is therefore highly advisable (!) to explicitly agree on a court of jurisdiction both in a national legal relationship and, above all, in an international legal relationship, and to do so at one’s own place whenever possible. Incidentally, the agreed applicable law should then be that of the place of jurisdiction.

If the court of jurisdiction has not been agreed in a legal relationship between a Swiss and a foreign party, the law distinguishes between a legal relationship with a party from the EU and a legal relationship with a party outside the EU for the purpose of determining it.

Court of jurisdiction in a relationship Switzerland-EU

In a Swiss-EU relationship, the court of jurisdiction is determined by the so-called Lugano Convention (LugC)*, an intergovernmental agreement between Switzerland and the EU (translation in English [2007]). According to Art. 2 LugC, persons and companies domiciled or having their seat in the territory of a state bound by the LugC must be sued before the courts of that state, regardless of their nationality. In the Lugano Convention, too, there are special jurisdictions for special legal relationships. For example, according to Art. 5 LugC, a party to a contract must be sued for claims arising from that contract in the court of the place where the obligation has been or would be performed.

*The Lugano Convention is a parallel agreement to the EU’s Brussels Regulation (s. «Brussels Regime» on Wikipedia).

Court of jurisdiction in a relationship Switzerland-«rest of the world»

In a legal relationship between a Swiss party and a party from outside the EU («rest of the world»), from the Swiss perspective, the PILA is again applied to determine the court of jurisdiction. Of course, a foreign court will apply its own law enacted for such cases. According to Art. 2 PILA, the Swiss courts or authorities of the defendant’s domicile generally have jurisdiction. Here, too, the law provides for special legal relationships special courts of jurisdiction. For example, according to Art. 112 f. PILA, the Swiss courts at the domicile of the defendant have jurisdiction to hear actions arising out of a contract. If the characteristic obligation of the contract is to be performed in Switzerland, the action may also be brought before the Swiss court at the place of performance.

Special case of consumer’s court of jurisdiction

Since we are all primarily consumers, consumer’s court of jurisdiction is of particular general interest. According to both the Lugano Convention (Art. 15 LugC ff.) and PILA (Art. 114 PILA), Swiss consumers can always sue foreign companies at their Swiss domicile and demand that companies also sue them at their domicile. This is a very strong procedural tool to protect the interests of consumers!

05 International Litigation and Alternative Dispute Resolutions