SWITZERLAND Law and Practice Contributed by: Alexander Vogel, Marc Baumberger and Selina Bruderer, MLL Legal
Force Majeure Swiss law itself does not have a statutory definition of force majeure, but the concept is well recognised in Swiss case law as extraordinary, external events beyond the parties’ control that prevent or delay con - tractual performance and cannot be prevented by due care. Examples include natural disasters, war, civil unrest and other unforeseeable events. Under Swiss contract law, parties have broad freedom to define what constitutes force majeure in their con - tract and to specify the consequences of such events, including the suspension or termination of obligations. Because of this contractual freedom, force majeure clauses are often tailored and explicitly included in JV agreements to allocate risks related to extraordinary events that could impact the venture’s operations or performance. Common features in Swiss force majeure clauses include detailed definitions of events qualifying as force majeure, notification obligations and potential remedies like suspension of obligations or termina - tion rights if the force majeure event continues for a specified period. In practice, including a force majeure clause in Swiss JV agreements is prudent due to the potential opera - tional risks the JV might face from unforeseeable external events. The clauses provide a clear frame - work for risk allocation and performance relief in case such events occur. 5.4 Legal Formation and Capital Requirements In Switzerland, JVs are most commonly structured as contractual JVs in the form of a simple partner - ship. This flexible and unregulated structure is widely used – especially in construction projects and tempo - rary collaborations (commonly referred to as “ARGE” ( Arbeitsgemeinschaft ) in practice) – as it allows the parties to define their relationship contractually with - out the need for incorporation or capital requirements. Alternatively, parties may choose an incorporated JV, typically using a stock corporation (AG/SA) or, less frequently, a limited liability company (GmbH/Sàrl),
permissible for a listed entity to inform the market upon signing/closing – ie, after the term sheet/letter of intent stage. This would need to be assessed on a case-by-case basis. Obtaining necessary authority approval (eg, related to merger control) is usually necessary prior to establish - ing the JV. 5.3 Conditions Precedent, Material Adverse Change and Force Majeure Conditions Precedent Under Swiss law, JV agreements typically provide for a number of conditions precedent (CPs) that must be fulfilled (or waived) prior to closing. These CPs are generally tailored to the specific transaction but com - monly include: • corporate approvals – internal approvals by the boards or shareholders of the JV partners; • regulatory clearances – particularly competition law approvals (eg, from the Swiss Competition Com - mission) or, if applicable, sector-specific licences (eg, in banking, insurance or telecoms). • third-party consents – such as change of control consents under material contracts, lease agree - ments or financing arrangements; • contribution-related formalities – completion of any asset or share transfers to the JV vehicle, including notarisation or registration where required; and • capital contributions – payment or transfer of initial capital (in cash or in kind) by the JV partners. The satisfaction of these CPs can have a material impact on the timeline and feasibility of closing. Par - ties typically agree on a “long stop date” by which all CPs must be fulfilled. Material Adverse Change Material adverse change (MAC) clauses are quite sector-specific and less commonly used in JVs under Swiss law, as the legal framework allows significant contractual freedom in structuring the JV and allocat - ing risks. However, as a direct consequence of COV - ID-19, MAC clauses have become more frequent and more heavily negotiated in Swiss JV agreements.
168 CHAMBERS.COM
Powered by FlippingBook