SWITZERLAND Law and Practice Contributed by: Shelby R du Pasquier, Patrick Hünerwadel, Valérie Menoud and Marcel Tranchet, Lenz & Staehelin
(b) the costs for the safekeeping of the assets are unreasonably high; (c) the assets have a market price (ie, are traded on a stock exchange); or (d) all parties agree to the private sale. • Second, where the collateral consists of pledged claims, movables or security papers (including mortgage notes), the parties are to a certain extent free to agree on a private foreclosure mechanism. Private enforcement is generally preferred in prac- tice, as it can be processed more expediently and simply than enforcement pursuant to the DEBA. By contrast, if a security right consists of a secu- rity assignment or transfer, enforcement can only be effected by way of private enforcement, as title to the collateral has passed to a secured creditor precisely with such purpose. Private enforcement can be achieved through a public auction, public offering or a private sale. If a private sale has been agreed upon in the relevant security document, it is advisable to arrange expressly in the security document for the right of a secured creditor to purchase the collateral itself. The value of the col- lateral will be determined based on fair market value and any surplus remaining after application of the pro- ceeds to the secured amount would be paid out to the security provider. Private enforcement of a right of pledge is, subject to exceptions (eg, for intermedi- ated securities), only available as long as no official enforcement proceeding under the DEBA has been initiated. 6.2 Foreign Law and Jurisdiction A choice of a foreign law as the governing law of a contract is generally possible under Swiss law, save for specific contracts such as contracts with consum- ers. A choice of law to govern security documents, although binding for the parties, will not bind third parties. Swiss courts will generally refuse to apply provisions of foreign law if this would lead to a result that would be incompatible with Swiss public policy. In addition, a Swiss court may apply provisions of a different law from the one chosen by the parties if important rea- sons call for it and if the facts of a case have a close connection with that other law.
Similarly, jurisdiction clauses are also generally bind- ing, subject to certain exceptions. With regard to immunity, if and to the extent a person is subject to immunity, waivers are generally not pos- sible. 6.3 Foreign Court Judgments As a rule, Swiss courts will generally recognise a final and conclusive judgment of a competent foreign court. Recognition of a foreign decision may, however, be denied if: • such a decision is manifestly incompatible with Swiss public policy; • a party establishes that it did not receive proper notice; • the decision was rendered in violation of funda- mental principles of procedural law; or • if the principle of ne bis in idem has been violated. Where proceedings in relation to the same subject matter and between the same parties have been start- ed earlier in another competent court, Swiss courts tend to neither enforce a judgment nor take up the case until a decision capable of being recognised in Switzerland is rendered by the foreign court. As for arbitral awards, Switzerland is a signatory to the New York Convention on the Recognition and Enforce- ment of Foreign Arbitral Awards and will recognise and enforce foreign arbitration awards pursuant to and to the extent provided for by that convention. 6.4 A Foreign Lender’s Ability to Enforce Its Rights As mentioned in 3.2 Restrictions on Foreign Lend- ers Receiving Security , the purchase of Swiss real estate by foreign or foreign-controlled investors might be subject to approval by the Swiss authorities under the Lex Koller. Any acquisition of residential real estate assets in Switzerland by foreign or foreign-controlled investors, in particular, is subject to restrictions and permit requirements. If certain loan-to-value thresh- olds are exceeded, such restrictions and requirements can also apply to financings secured by Swiss real estate assets.
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