SWITZERLAND Law and Practice Contributed by: Jodok Wicki, Daniel Zemp, Fabienne von Moos and Doruntina Dembogaj, CMS von Erlach Partners Ltd
histories. Cyber incidents, sanctions-related disputes and AI-related liability are emerging as further triggers. Defence Costs and Insurer Involvement Insurers most frequently fund defence costs under third-party liability, professional indemnity, D&O and cyber policies, subject to the policy terms and, typi- cally, the insurer’s prior written consent. Since the par- tial revision of the ICA on 1 January 2022, the direct action right under Article 60 (1bis) can bring insurers into disputes earlier, including in relation to counsel selection, settlement strategy and evidence preserva- tion. Whether defence costs erode the indemnity limit depends on the policy wording and must be checked against the applicable sublimits, deductibles and aggregation provisions. Regulatory investigations may trigger defence cost cover where the policy provides such cover, particularly in D&O and financial institu- tions matters. Environmental Claims as a Growing Watchpoint PFAS contamination is emerging as a significant exposure: it may generate claims by municipalities, landowners, neighbours, employees or consum- ers for remediation, water-treatment costs, property damage or health effects. Swiss private law case law on PFAS remains limited, and source attribution, delayed manifestation and causation present serious evidential challenges. Those evidential issues make early scientific investigation and co-ordinated defence particularly important. 5.2 Shifting Risk Landscape Shifting Risk Landscape The central development is that claims against insureds increasingly turn not only on whether a loss event occurred, but also on how the insured designed, supervised and documented the systems and pro- cesses that produced it. A cyber incident or AI-related failure will often be the trigger, but the legal debate may quickly shift to governance questions: who was responsible for oversight, what controls were in place, and whether records are adequate to reconstruct the decision chain. Swiss law addresses these disputes through exist- ing contract, tort, professional duty and data protec- tion principles rather than through a dedicated AI or
technology statute. The EU AI Act does not apply in Switzerland but may influence the standards and compliance expectations relevant to internationally active Swiss companies. Coverage and Defence Response The consequence for insurers is earlier involvement and a broader co-ordination task. Given that a single technology or governance failure can generate civil claims, regulatory and/or criminal proceedings, inter- nal investigations and reputational pressure simulta- neously, multiple policy lines may respond, and cov- erage analysis must be addressed early alongside the defence strategy. Insurers may become involved from an early stage, funding incident response, foren- sic work and specialised counsel from the moment a potential claim emerges, rather than waiting for formal proceedings. For insureds, the practical priority is to preserve logs, governance records and decision trails from the first notice of an incident. A reliable record of the process followed can be important alongside the substantive merits of the underlying claim. 5.3 Defence Costs and Litigation Complexity Where Costs Arise Defence costs in Switzerland can be significant, driv- en in part by the growing complexity and increased need of co-ordination of disputes. Multi-party claims may involve the insured, claimants, contractors, direc- tors and multiple insurers, each advancing different liability and limitation arguments across potentially overlapping policies and limits, often combined with parallel regulatory and/or criminal investigations. The direct action regime under Article 60, paragraph 1bis of the ICA can make early identification of the claimant population and potentially responsive policies more important. High-value or cross-border matters add further layers– technical experts, document preser- vation, document production or discovery, data pro- tection constraints and parallel proceedings – all of which increase costs. The Cost Gap Switzerland operates a loser-pays system under Article 106 of the CPC, but recoverable party costs are deter- mined by cantonal tariffs rather than by actual legal fees incurred. In practice, actual defence expenditure can substantially exceed tariff-based cost awards, so
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