SWITZERLAND Law and Practice Contributed by: Jodok Wicki, Daniel Zemp, Fabienne von Moos and Doruntina Dembogaj, CMS von Erlach Partners Ltd
Arbitration offers confidentiality and procedural flexi- bility, and is particularly relevant in construction, finan- cial institutions professional indemnity (FIPI), D&O, W&I and reinsurance matters. The choice of forum can materially influence both the procedural dynam- ics and the cost exposure, particularly in cross-border disputes involving several jurisdictions. 2. Jurisdiction and Choice of Law 2.1 Choice of Law in Insurance Contracts Party Autonomy and the PILA Under the Swiss Federal Act on Private International Law (PILA), parties enjoy broad autonomy in choosing the governing law of their contracts (Article 116, PILA). The choice must be express or clearly result from the contract or its circumstances. This principle applies equally to insurance and reinsurance contracts. Where no choice of law has been made, the contract is gov- erned by the law of the state with which it is most closely connected, which is presumed to be the habit- ual residence or establishment of the party effecting the characteristic performance – in insurance con- tracts, this is typically the insurer (Article 117, PILA). Insurance For commercial and industrial insurance, party auton- omy is broadly respected in practice. Swiss law and English law are the most common choices in the Swiss market, depending on whether the programme is domestic or international. For consumer insurance qualifying as a consumer contract under Article 120 of the PILA, choice of law is excluded altogether: the contract is governed by the law of the consumer’s habitual residence, and that protection cannot be contracted away. Where Swiss law governs, the ICA is applied by default, along with its mandatory and semi-mandatory provisions, subject to the applicable rules on professional policyholders. Reinsurance Reinsurance contracts are not governed by the ICA and are governed primarily by the parties’ contractual arrangements, supplemented where relevant by the general provisions of the Swiss Code of Obligations (Article 101, ICA). Broad party autonomy applies with- out consumer protection restrictions. Swiss law and
English law are common choices in the reinsurance market. Where Swiss law applies and the contract contains ambiguity or gaps, reinsurance custom and usage play an important role. The parties’ choice of governing law will generally be respected by Swiss courts and arbitral tribunals, subject to the applicable rules of Swiss private international law. 2.2 Jurisdiction and Forum Selection The Lugano Convention Framework For cross-border insurance disputes involving parties domiciled in Lugano Convention states, jurisdiction is governed by the special insurance provisions of Arti- cles 8–14 of the Lugano Convention. These rules are protective in nature: an insurer domiciled in a contract- ing state may be sued either at its own domicile or at the domicile of the policyholder, insured or beneficiary. Jurisdiction agreements are subject to significant restrictions under Article 13 of the Lugano Conven- tion: they are generally only enforceable if concluded after the dispute has arisen, or if they extend the poli- cyholder’s forum options rather than restricting them. However, for certain large risks falling within Article 14, the parties may agree on jurisdiction with greater freedom. In practice, jurisdiction clauses selecting a Swiss forum are common in large-risk policies and are upheld where validly agreed. Where a party is domiciled outside Lugano territory – including the United Kingdom since Brexit and the United States – jurisdiction falls back on the PILA, with the defendant’s Swiss domicile as the default forum (Article 2, PILA). Domestic Practice and Sectors In purely domestic disputes, jurisdiction clauses are widely used and generally respected within the limits of the Swiss Code of Civil Procedure. Where the statu- tory requirements are met – notably registration in the commercial register and an amount in dispute over CHF30,000 – insurance disputes involving corporate policyholders are frequently heard by cantonal com- mercial courts, where a canton has established one (Zurich, Berne, Aargau and St Gallen). The Commer- cial Court of the Canton of Zurich is a frequent forum, reflecting the fact that many of the larger insurers are domiciled in Zurich.
228 I NSURANCE L I T IGATI O N 2026
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