SWITZERLAND Trends and Developments Contributed by: Anna Neukom Chaney, Julien Boulter, Rolf Schuler and Marco S. Meier, Binder Legal
The FSC affirmed that attorney–client privilege applies to internal investigation reports by external counsel that combine factual findings and a legal assessment. The decisions were made in the context of criminal proceedings (acts of unfair competition), but this core finding also applies to attorney–client privilege in civil proceedings. Further, the FSC ruled that the voluntary disclosure of privileged information to a third party (in this case, FINMA) with a selective waiver of the attorney–client privilege does not make the informa - tion generally known and, therefore, lead to the loss of a party’s right to invoke attorney–client privilege towards other third parties (in this case, the public prosecutor). However, the FSC also ruled that this does not lead to the attorney–client privilege extend - ing to the third party and that this third party, therefore, is allowed to share this information (eg, in an own report). This is unsatisfactory and puts companies in a complex dilemma. In short, companies must ask themselves whether they shall be co-operative with a government authority and risk privileged information getting into the hands of third parties (eg, law enforce - ment) or consistently invoke attorney–client privilege and risk receiving harsher treatment by the govern - ment authority. In-House Counsel Privilege Until recently, attorney–client privilege did not apply to communication exchanged with in-house counsel or the work products of in-house counsel. Therefore, internal investigation reports drafted by in-house counsel were not protected by attorney–client privi - lege, even when the in-house counsel in question was a licensed attorney. As of 1 January 2025, legal privilege may apply to the activities of in-house counsel, but in civil proceed - ings only. Pursuant to the new provision in the Swiss Civil Procedure Code, the company, as a party in civil proceedings, may refuse to co-operate and to hand over documents in connection with the activities of its in-house counsel if all the following requirements are met. • The company is registered as a legal entity in the Swiss commercial register or in a similar foreign register.
• The company has a “legal service” that is headed by an attorney who is licensed in Switzerland or who would be qualified to practise law in their country of origin. The courts will have to clarify several questions in this regard, especially whether a separate business must be set up to constitute a legal service and if a legal service may be shared in group structures. • The activity in question is considered typical for attorneys. As mentioned, internal investigation reports with factual findings and a legal assess - ment of these facts fall within this scope, but this does not necessarily apply to other activities when conducting an internal investigation (eg, fact find - ing without legal assessment). Further uncertainties remain, especially regarding mixed activities. The legal privilege for in-house counsel is a welcome change for companies operating in Switzerland, but the exact applicability and scope thereof have yet to be determined by the courts. Continued Importance of Data Protection Law Since the entry into force of the totally revised Federal Act on Data Protection on 1 September 2023 (FADP), data protection law stepped into the spotlight with newly introduced fines of up to CHF250,000. The pub - lication of the first fines and the increased activity of the Swiss data protection supervisory authority have made data protection an increasingly important and considered factor, particularly in the context of internal investigations. Internal investigations regularly involve the processing of various types of data, including personal data of employees, such as emails, chats or other messaging applications, documents stored by employees con - cerned, log files and others. The following highlights the most important data protection principles and duties to comply with. • Duty to inform the employee(s) concerned – Inter - nal investigations always raise the question of whether and when to inform the employees con - cerned about the investigation. Each investigation starts with the collection of data and pre-informing the employee(s) concerned carries the risk of data being deleted or evidence destroyed. Under the
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