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 court of jurisdiction are of great importance, because both questions stand at the very beginning of all legal considerations.

Applicable law

In a case between parties from the same country, the national law of that country applies. An agreement on the applicable law is not necessary.

If the parties come from different countries, the first question is which country’s law applies. The easiest answer: the parties have made a choice of law in their contract. If not, the question is answered by the national conflict-of-laws rules – in Switzerland by the Federal Act on Private International Law (PILA). The PILA provides different rules for different legal relationships. For contracts without a choice of law, Art. 117 PILA applies the law of the state with which the contract has the closest connection. This is presumed to be the state where the party that has to perform the characteristic obligation (e.g. the seller, the service provider) has its habitual residence or its business establishment.

Court of jurisdiction

In this publication, the term «court of jurisdiction» is used for the place of jurisdiction, i.e. the seat of the court that decides the case.

Even in national disputes, agreeing on a court of jurisdiction is important. Example: if a party from German-speaking Switzerland and a party from Ticino are in dispute and the law places the court in Ticino, the first party must travel to Ticino and, because the proceedings are held in Italian, instruct a lawyer there – time-consuming and costly. It is therefore highly advisable (!) to explicitly agree on a court of jurisdiction, in national and above all in international contracts, and to do so at one’s own place whenever possible. The applicable law should then be the law of that place.

If no court of jurisdiction has been agreed, the answer depends from the Swiss perspective on where the other party comes from:

Switzerland–EU: the Lugano Convention

Between Switzerland and the EU states (plus Norway and Iceland), the court of jurisdiction is determined by the Lugano Convention (LugC; English translation), a treaty between Switzerland and the EU*. According to Art. 2 LugC, individuals and companies must be sued before the courts of the state where they are domiciled or have their seat, regardless of their nationality. There are special rules for special relationships: according to Art. 5 LugC, a claim arising from a contract may also be brought before the court of the place of performance. Since Brexit, the United Kingdom is no longer part of the Lugano Convention (since 1 January 2021); the EU has blocked its re-entry (Federal Office of Justice).

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

Switzerland–rest of the world: the PILA

In a relationship between a Swiss party and a party from outside the Lugano area – e.g. the UK, the USA or China – the PILA applies from the Swiss perspective (a foreign court, of course, applies its own rules). According to Art. 2 PILA, the Swiss courts at the defendant’s domicile have jurisdiction. Again, there are special rules: according to Art. 112 f. PILA, claims arising from a contract go to the Swiss court at the defendant’s domicile or, if the characteristic obligation is performed in Switzerland, to the Swiss court at the place of performance.

Choice-of-court agreements: the Hague Convention

What if the parties have agreed on a court – does a foreign court respect that? Within the Lugano area, yes. Beyond it, the Hague Convention on Choice of Court Agreements helps: it obliges the courts of all member states to respect an exclusive choice-of-court agreement and to recognise the judgment of the chosen court. Switzerland has been a member since 1 January 2025; other members include the EU, the United Kingdom, Singapore and Mexico (status table). This closes part of the gap left by Brexit – but only if the contract contains a choice-of-court clause. One more reason to agree on a court (!).

Special case: the consumer’s court of jurisdiction

Since we are all primarily consumers, the consumer’s court of jurisdiction is of general interest. Under both the Lugano Convention (Art. 15 ff. LugC) and the PILA (Art. 114 PILA), Swiss consumers can regularly sue foreign companies at their Swiss domicile and demand to be sued only there – provided the company directs its business to Switzerland, which is normally the case with an online offer (prices in CHF, delivery to Switzerland, international phone number). The European Court of Justice decided this in the case of an Austrian hotel that a German guest had booked by e-mail: the mere accessibility of a website is not enough, but the typical signs of an international business are (Pammer and Hotel Alpenhof, C‑585/08 and C‑144/09, 7 December 2010). This is a forceful procedural tool to protect consumers!

05 International Litigation and Alternative Dispute Resolutions