Product Liability & Safety 2020

Last Updated June 24, 2020

Switzerland

Law and Practice

Authors



Walder Wyss Ltd is a Swiss commercial law firm with offices in Zurich, Geneva, Basel, Berne, Lausanne and Lugano. Its 230 legal experts specialise in corporate and commercial law, banking and finance, intellectual property and competition law, industrial know-how, public and administrative law, dispute resolution and tax law. The firm's clients include national and international companies, publicly held corporations and family businesses as well as public law institutions and private clients. With regard to product regulatory and product liability matters, its experts advise and represent clients in administrative, civil and criminal proceedings, contract negotiations and regulatory compliance at all its locations.

The Swiss product safety legal framework consists of:

  • Sector-specific federal regulations for specific product categories, for instance:
    1. the Federal Act on Foodstuffs and Utility Articles and implementing ordinances, such as:
      1. the Federal Council’s Ordinance on Foodstuffs and Utility Articles;
      2. the Federal Department of Home Affair’s Ordinance on the Safety of Toys; or
      3. the Federal Department of Home Affair’s Ordinance on Cosmetic Products;
    2. the Federal Act on Medicinal Product and Medical Devices and implementing ordinances, such as the Federal Council’s Ordinance on Medical Devices;
    3. the Federal Council’s Ordinance on Machines;
    4. the Federal Act on Electrical Light and Heavy Current Installations and implementing ordinances, such as:
      1. the Federal Council’s Ordinance on Electrical Low Current Installations; or
      2. the Federal Council’s Ordinance on Electromagnetic Compatibility; or
    5. the Federal Act on Construction Products.
  • Horizontal framing regulations which are applicable cross-sectorally to all products, such as:
    1. the Federal Product Safety Act and the implementing Federal Council’s Ordinance on Product Safety – these regulations are applicable to the extent that a sector-specific regulation does not address product safety (eg, regarding post-market surveillance or competences of the enforcement authorities);
    2. the Federal Act on Technical Barriers to Trade and the Federal Council’s Ordinance on the Placing of Products on the Market according to Foreign Regulations – these regulations shall ensure free trade between Switzerland and its main trading partners by obliging the Swiss legislators to align product regulations with those of such partners, in particular with the European Union; and
    3. the Federal Act on Product Liability which provides for the strict liability (ie, not depending on the producer’s fault) of a producer for its defective products.

The enforcement of product safety regulation in Switzerland is generally sector-specific. This means that the enforcement authorities that are competent in a specific product sector are likewise competent to enforce the specific product safety regulations for that sector. Depending on the sectoral law, the enforcement either lies with the cantons or the federal government. The main regulators are the following.

  • The State Secretariat for Economic Affairs (SECO) co-ordinates the enforcement of Swiss product safety legislation in agreement with the competent sector-specific enforcement bodies and is, additionally, the surveying regulatory enforcement authority in several product sectors; the SECO also operates a product safety reporting and information centre together with the Federal Consumer Affairs Bureau (FCAB).
  • The Federal Inspectorate for Heavy Current Installations (ESTI) is responsible for the technical supervision and inspection of electrical installations and electronic devices.
  • The Swiss Council for Accident Prevention (BFU) is competent for personal protective equipment, specifically with regard to traffic, sport and household needs, and for machines, though with regard to recreational use only.
  • The Swiss Accident Insurance Institution (SUVA) is the competent enforcement body for personal protective equipment and machines, with regard to operational use.
  • The Swiss Agency for Therapeutic Products (Swissmedic) is competent for the market surveillance of therapeutic products and medical devices.
  • The respective cantonal bodies – eg, cantonal inspectorates/laboratories – are generally competent to enforce the Swiss Foodstuffs and Utility Articles legislation (including toys, cosmetic products or food contact materials).
  • The respective cantonal bodies – eg, cantonal inspectorates/laboratories – are generally competent to enforce Swiss chemical legislation.

Generally, for consumer products (ie, products that are intended for consumers or likely to be used by consumers under reasonably foreseeable conditions), the Swiss Product Safety Act obliges the producer or any other distributor to take adequate measures (ie, corrective actions) in the course of its business to prevent potential dangers arising from those products.

A corrective action is deemed “adequate” if the disadvantages that arise for the producer or other distributor are not considered completely disproportionate in comparison with the advantages resulting for the affected consumers. Potential measures include the issuing of warnings, a sales stop, the withdrawal from the market or the recall of the product. The law does not provide for any fixed formal requirements. Therefore, any corrective action may be chosen if it ultimately serves to avert the danger emanating from the product. In practice, the competent enforcement bodies regularly require a producer/importer to issue a warning throughout the supply chain as well as towards consumers (provided that the product has already reached the consumer). Depending on the actual safety risk, the enforcement body may also require that the warning be made public – eg, on the producer’s website and/or on the website of the Swiss Federal Consumer Affair Bureau (regarding the role of the Bureau, please refer to 1.1 Product Safety Legal Framework).

Switzerland follows a risk-based approach regarding the obligation to notify the regulatory authorities. Generally, the duty to notify the authorities in respect of a product safety issue is triggered – for consumer products – if a producer or any other person placing a product on the market knows or ought to know that the product in question presents a risk to the safety or health of users or third parties (Article 8, paragraph 5, Swiss Product Safety Act). The respective provision in the Product Safety Act corresponds to the producer’s or other distributor’s obligation to notify the authority according to Article 5, paragraph 3 of the European General Product Safety Directive (2001/95/EC). The notification obligation of the Product Safety Act applies where the specific sectoral law does not provide for any separate notification obligation.

The notification must be made immediately. According to a FAQ-guide published by the State Secretariat for Economic Affairs [SECO], “immediately” means no later than one to two days, depending on the associated safety risk. Swiss legal scholars advocate a longer period of a maximum of ten days pursuant to the EU commission’s Guidelines for the Notification of Dangerous Consumer Products to the Competent Authorities of the Member States by Producers and Distributors in accordance with Article 5(3) of Directive 2001/95/EC.

The Swiss Product Safety Act defines the minimum content of the notification. There are no legal requirements as to the form of the notification. However, some regulatory bodies provide for voluntary notification templates on their websites but emphasise that the completion of the form should not delay the notification.

Generally, whoever fails to timely notify the authorities of a dangerous or potentially dangerous consumer product according to Article 8, paragraph 5 of the Swiss Product Safety Act or whoever violates the duty to collaborate with the enforcement authorities (Article 11, Swiss Product Safety Act) is liable for a fine of up to CHF40,000 (in the case of wilfulness) or CHF20,000 (in the case of negligence). Sectoral law, however, sometimes provides for different criminal liability. In any case, the law sets forth that the person within the producer’s organisation who is responsible for the offence should be punished. The principal is only punished if he or she wilfully or negligently, in breach of a legal obligation, failed to prevent the offence.

There are no publicly available examples of companies being prosecuted or fined for breaching these obligations. However, that does not mean that no such cases exist. Under Swiss criminal prosecution law, the courts may generally only publish a judgment if the publication is in the public’s interest or in the interest of the injured party.

Depending on the respondent of the action (eg, a producer, distributor or retailer), an injured party would likely base its claim for damages on the following grounds.

Against the Producer

The Federal Product Liability Act provides for the non-contractual strict liability (ie, not depending on fault) of a producer for damages if a defective product leads to the death or injury of a person or the damaging or destruction of property. “Producer” means the person who has manufactured the end product, a basic material or a partial product; any person who claims to be the producer by affixing its name, trade mark or other distinctive sign to the product (“quasi-producer”) as well as any person importing the product for distribution purposes to Switzerland. The liability is only triggered if the product is deemed defective – ie, if it does not offer the safety that one may expect considering all circumstances (such as the get-up or overall appearance of the product, the expected use or the time of market placement). The Federal Product Liability Act, however, provides for several defences (please refer to 2.12 Defences to Product Liability Claims for further details).

In addition, the injured party could base a damages claim on contract (if the producer is the seller and the injured party is the buyer) or general tort law. The latter, however, would require proof of fault. Given this obstacle, a claimant would generally invoke the respective torts claim only on a subsidiary basis.

Against the Seller

The Swiss Code of Obligations provides for the strict contractual liability of a seller for the direct damage suffered by a buyer due to a defective object purchased from that seller. “Direct damage” would also include any personal damage or damage to property which was directly caused (ie, without any additional causal link) by the product’s defect. If the seller were also the producer of the defective product, the injured buyer could alternatively base its claim for damages on the Federal Product Liability Act as discussed above.

In Switzerland, the standing to bring claims for product liability is – such as with any other claim – a matter of substantive law – ie, it depends on the legal basis of a claim. A party has standing to sue if it (at least allegedly) has a substantive claim under a certain law or legal relationship.

In the context of product liability, claims are usually based on either the Federal Product Liability Act, a contract or tort law (as discussed in 2.1 Product Liability Causes of Action and Sources of Law).

Under the Federal Product Liability Act, any person injured by a defective product or any person suffering property damage due to a defective product may bring a claim against the responsible producer.

For contractual claims, a party to a contract usually has standing to sue if it suffers damage following a violation of the contract by the other party (in the context of product liability – eg, in case of the delivery of a defective product).

Under general tort law, any person who has suffered damage following a civil wrong committed by another person with whom the injured party is not (necessarily) linked by a legal relationship, such as a contract (eg, as often in product liability cases: the consumer and the producer of a product), has standing to sue.

Which of these legal bases is the most favourable for an injured party to bring claims related to a product depends largely on the underlying facts of the case. Whenever there is a contractual relationship, an injured party will most probably bring claims under that contract given that, under Swiss law, there is a presumption of fault – ie, the burden of proof is on the breaching party causing damage, and in sales contracts there is even a strict liability without requirement of fault for direct damage. If there is no such contract – which is usually the case between an injured party and a producer – the injured party would generally try to sue a producer primarily under the Federal Product Liability Act because of its strict liability, whereas under tort law the producer can only be held liable in case of fault.

The applicable time limit depends on the legal basis that the respective claim is based on.

For claims based on the Federal Product Liability Act the statute of limitations is three years, starting from the date on which the injured person has become or should have become aware of the damage, the defect of the product and is able to identify the producer (Article 9 of the Federal Product Liability Act).

For claims based on contract law (in the context of product liability most likely a sales contract), the statute of limitations is two years, starting from the day the defective product was delivered (Article 210, Swiss Code of Obligations).

For claims based on tort law, the Swiss Code of Obligations provides for two different statutes of limitations, a relative and an absolute one (Article 60, Swiss Code of Obligations). The relative limitation period is three years, starting from the date on which the injured person has become aware of the damage and the person liable for it. The absolute limitation period is ten years for damaged goods and 20 years for personal injuries, starting from the date on which the damaging event occurred or ended. This absolute limitation period runs regardless of whether the injured person has any knowledge of the damage and even if the damage has not yet occurred. This longer limitation period under tort law with regard to personal damage has the effect that a producer may be held liable by an injured party under tort law, even if the limitation period for claims under the Federal Product Liability Act has already lapsed.

The Swiss Civil Procedure Code defines the locally competent court for a dispute in domestic matters, whereas the Swiss Federal Act on Private International Law or the Lugano Convention (applicable in civil and commercial matters involving parties from EU or European Free Trade Association (EFTA) states) deals with the question of territorial jurisdiction of a Swiss court in international, cross-border disputes.

Rules regarding the place of jurisdiction are quite comparable both in domestic and in international cases. As a general rule, proceedings can be initiated in the competent court at the domicile or seat of the respondent (eg, at the seat of the liable producer). Depending on the area of private law concerned, a claimant may also initiate proceedings at another forum – eg, in product liability cases, a consumer would be entitled to bring a claim at its own domicile.

With regard to subject-matter jurisdiction, it can be said that generally speaking, all cantonal courts in Switzerland have jurisdiction in all areas of the law and apply both cantonal and federal law. There are no specific/specialised courts for product liability claims, which can therefore be brought before any locally competent court.

However, the Swiss Civil Procedure Code grants the cantons the option to establish specialised commercial courts, in which the panel of judges is mixed – ie, composed of regular judges and experts (so-called expert judges) in the economic sector relevant for the case. Four cantons – Zurich, Bern, Aargau and St. Gallen – have established such a court, which is part of the cantonal supreme court and serves as a court of first instance for commercial matters. Such a commercial court has subject-matter jurisdiction if:

  • a claim concerns the commercial activity of at least one of the parties to the dispute;
  • the decision could be appealed to the Swiss Federal Supreme Court (which requires an amount in dispute of at least CHF30,000); and
  • the parties to the dispute are registered in the Swiss commercial register or a similar foreign registry.

Where only the defendant is registered in the commercial register, a claimant can choose to initiate proceedings either before the commercial court or the locally competent ordinary court. If a producer has its registered seat in a canton with a commercial court, an injured party can thus choose to bring its product liability claim either before the commercial court or the ordinary court.

If a claiming party has the possibility to choose where to bring its claims, it again depends on the underlying facts and on the party’s perspective which court is the most favourable. Commercial courts have the advantage that experts from the relevant sectors are part of the judges’ panel, whereas judges of ordinary courts generally do not have expert knowledge in the specific product sector, but their decisions might be more consumer-friendly. Another difference to take into consideration is that there is only one legal remedy against decisions rendered by a commercial court, whereas decisions of the ordinary courts can be appealed against twice (see 2.11 Appeal Mechanisms for Product Liability Claims).

Swiss procedural law provides for mandatory reconciliation proceedings. Before initiating the main proceedings, the claimant must submit a reconciliation request to the Conciliation Authority (so called “justice of peace”), following which the Authority will schedule a conciliation hearing. If no agreement can be reached, the Conciliation Authority will issue an authorisation to proceed (ie, to file a claim before court), which is valid for three months. If a claim is filed before a court without a valid authorisation to proceed, the court will not decide on the merits but dismiss the case for procedural reasons.

Despite the mandatory nature of the reconciliation proceeding, the Civil Procedure Code provides for a few exceptions which might be of relevance in product liability cases. A claimant may unilaterally waive conciliation if the respondent’s registered domicile is outside of Switzerland. The parties may mutually agree to waive reconciliation if the amount in dispute is at least CHF100,000. In addition, and irrespective of the amount in dispute, the parties may agree to replace the reconciliation procedure with mediation pursuant to Article 213 of the Swiss Civil Procedure Code.

In addition, and as set out in 2.4 Jurisdictional Requirements for Product Liability Claims), certain cantons have established commercial courts. If a producer has its registered seat in one of these cantons, an injured party may choose to bring its product liability claim either before the commercial court or the ordinary court, as long as the criteria as set out in 2.4 Jurisdictional Requirements for Product Liability Claims are met. If a claimant decides to bring a claim before a commercial court, no reconciliation proceedings take place and the claim must be filed directly with the commercial court.

There are no specific rules under Swiss product liability law or Swiss procedural law, obliging a producer or other distributor to preserve any evidence in product liability cases.

There are, as in many other jurisdictions, general evidentiary risks in not preserving evidence. In a product liability case, the claimant is generally required to prove that the defendant’s product is defective, and that the product defect is the cause of his or her injury or damage to property. Under Swiss product liability law, the defendant (producer or other distributor) has several defences (please refer to 2.12 Defences to Product Liability Claims for further discussion of these). In this light, a producer or other distributor is well advised to preserve documentation (eg, random samples, technical documentation, consumer feedback, etc) and product samples for every batch so that such evidence can be readily produced if necessary. Furthermore, under some sectoral laws, producers may be required to preserve the conformity declaration or technical documentation. 

There are no specific rules on the taking of evidence in product liability cases, and the Swiss Civil Procedure Code does not provide for any pre-trial or discovery mechanisms.

Pursuant to the general rules on the taking of evidence in civil procedure, each party must indicate the evidence it wants to rely on in its briefs. To the extent that such evidence is already in its possession, the party must file the evidence together with its briefs. For product liability cases, this holds, in particular, true for:

  • product samples;
  • documentary evidence (such as technical documentation, risk assessment, customer feedback, etc);
  • expert opinions; and
  • digital or other data.

To the extent that it is the responsibility of the court to order the taking of evidence, parties must submit respective requests together with precise descriptions of the evidence. This holds, in particular, true for:

  • opinions to be submitted by a court-appointed expert (indication of the questions to be presented);
  • inspections to be executed by the court (indication of the subject); and
  • witness testimony (indication of the witnesses) – under Swiss law, witnesses will be examined by the court and there are no cross-examinations.

If a party wants to rely on evidence in the possession of the opposing party or a third party (eg, a defective product, purchase receipt, medical reports), it has to precisely identify the evidence and request that the court order that the evidence be provided.

If a potential claimant (ie, an injured person) has reason to believe that evidence is at risk, it may request the preventive taking of evidence by the court. This request can be filed at any time during the proceedings and even prior to the commencement of the proceedings.

The preventive taking of evidence is considered an interim measure. The request is usually granted if:

  • a specific law or provision allows the preventive taking of evidence;
  • the evidence is at risk (which is the case if the evidence may cease to exist or may alter before the ordinary evidentiary proceedings); or
  • there is another interest worthy of protection.

In any case, the requesting party has to credibly demonstrate (but not prove) the grounds on which it bases its request. In case of imminent harm, the request can be granted ex parte.

The court may seek an opinion from one or more experts at the request of a party or ex officio. However, the court will do so only if it considers an expert opinion necessary to prove relevant facts that are disputed by the parties. If such an opinion is sought, it is the court that appoints as well as instructs the experts and submits the relevant questions to them. Prior to this, the parties are given the opportunity to submit additional questions or to have the questions modified. The court can order that the experts submit their opinion in writing or present it orally. It may also summon the experts to the hearing to present and explain their written opinion. In that case, the parties will be given the opportunity to ask for explanations or to put additional questions to the expert. However, cross-examination of the expert is not permitted.

Furthermore, the court may put questions to a witness with expert knowledge in order to assess the merits of the case. The expert witness must have special expertise in the subject so that the court can examine the expert witness not only with regard to the merits, but also on its assessment thereof. However, an expert witness cannot replace an expert opinion. In contrast to an expert, the expert witness is not subject to an appointment procedure. Finally, an expert witness is liable to prosecution only for giving false testimony and not for giving a false expert opinion.

Parties are free to individually commission an expert opinion and to submit it in the proceedings. As opposed to an expert opinion that was produced by a court-appointed expert, the party expert opinion is not considered to be evidence but will only qualify as a party allegation.

As a general rule under Swiss civil law, it is incumbent upon the party who wants to rely on a certain fact to establish and prove this fact. For product liability cases this means that it is generally the injured person who bears the burden of proof for all facts underlying its claim.

This holds true for all claims (and the respective requirements) based on tort law and on the Federal Product Liability Act. For claims based on a contract there is one deviation from this rule: the burden of proof for fault is reversed. This means that if all other requirements are met, it is assumed that the defendant was at fault and it will be upon the defendant (ie, the producer) to prove that this was not the case. From a procedural perspective, it may thus be favourable for an injured person to bring a claim based on contract rather than based on tort law. For claims based on a sales contract, provided that a direct nexus between the damage and the defect of the product can be established, fault is not a requirement at all. The same holds true for claims based on the Federal Product Liability Act.

The Federal Product Liability Act provides, however, for several exceptions to this strict liability (see 2.1 Product Liability Causes of Action and Sources of Law). In accordance with the general rule as set out above, it is the producer who bears the burden of proof for any fact it wants to rely on in order to exonerate itself from liability.

As to the relevant standard of proof: the general threshold is full proof, meaning that the court has to be convinced beyond any reasonable doubt. Where this is not possible (eg, because the defective product has been destroyed or disposed of or the amount of damage suffered cannot reasonably be quantified) the courts may apply a less strict standard.

There are no specific or specialised courts for product liability cases in Switzerland. Therefore, such cases generally must be brought before ordinary courts (ie, the competent local court) or – in certain cantons and if the statutory prerequisites are fulfilled (see 2.4 Jurisdictional Requirements for Product Liability Claims) – before the competent commercial court.

Depending on the value in dispute, the proceeding is held in a simplified proceeding (for claims below CHF30,000) or in an ordinary proceeding (for claims above CHF30,000 or claims without monetary value).

In Switzerland, cases are decided by judges and the exact composition of a bench depends on local, cantonal law. In simplified proceedings, the court is however often composed of a single judge (Einzelrichter), whereas there are usually three or more judges (Kollegialgericht) on the panel in ordinary proceedings.

There is usually no minimum threshold with regard to the damages that can be claimed. If claims are brought under the Swiss Product Liability Act, however, the claimant must bear a deductible of CHF900 in case of a claimed damage to property.

With regard to the damages that can be awarded to a claimant, there is no maximum in absolute numbers. However, a claimant can only be compensated for the damages it actually suffered. In other words, Swiss courts do not award so-called punitive damages that exceed the amount of the actual loss. Swiss law does not allow a damaged party to take monetary advantage (enrichment) from the event of damage. Accordingly, the claimant must prove each individual damaged position (exact amount) and the causal link between the damaging event (in product liability cases: the defective product) and the respective position.

There are no specific rules governing the appeal mechanisms in product liability cases. The general procedural rules provide essentially for two appeal opportunities which are relevant for product liability cases: a first one to the high court of the respective canton and a second one to the Swiss Federal Supreme Court.

Appeal to the High Court of the Respective Canton

Final and interim decisions and decisions on interim measures of a court of first instance can be appealed if the amount in dispute is at least CHF10,000. The time limit for the filing of an appeal is 30 days in the case of an ordinary proceeding and 10 days in that of a summary proceeding. The appellant may submit that the first-instance court has (i) applied the law incorrectly, and/or (ii) established the facts incorrectly. The conduct of the proceeding is, to a large extent, at the discretion of the appeal instance – ie, the court of second instance will decide whether to conduct a second round of written submissions or to hold an oral hearing. The appeal instance may conclude the proceedings by either confirming the challenged decision, by rendering a new decision or by remitting the case to the court of first instance.

Appeal to the Swiss Federal Supreme Court

The decision of the court of second instance may be appealed to the Swiss Federal Supreme Court if the amount in dispute is at least CHF30,000 or if a question of fundamental interest is to be decided. The time limit for filing the appeal is 30 days. The appellant may essentially claim that the previous instance has (i) violated federal law; and/or (ii) established the facts manifestly wrongly or in violation of the federal law, provided that such deficiency was relevant for the outcome of the case. The procedure will be conducted in writing and will usually be limited to two written submissions. Like the previous instance, the Swiss Federal Supreme Court may confirm the challenged decision, render a new decision or remit the case to the previous instance.

Exception: Decisions of the Commercial Courts

There is only one legal remedy against a decision rendered by a commercial court, which is the appeal to the Swiss Federal Supreme Court. The procedure will be the same as described above.

The Federal Product Liability Act provides for the strict liability of a producer. The producer is, however, not liable under the Federal Product Liability Act if it can prove that:

  • it has not placed the product on the market;
  • there was no defect when the product was put into circulation;
  • it did not manufacture the product for sale, or any other form of distribution with an economic purpose, or manufacture or distribute the product in the course of its professional activity;
  • the defect is due to the fact that the product complies with binding regulations issued by public authorities; or
  • the defect could not have been detected according to the state of the art in science and technology at the time the product was put into circulation.

Furthermore, the producer of a raw material or part product is not liable under the Act, if it can prove that the product defect is due to the construction of the product or the instructions of the producer of the end product.

A producer’s failure to meet the regulatory requirements is considered a disappointment of the product user’s justified safety expectations and can be decisive for the determination of the defectiveness of the product. Swiss courts, however, have repeatedly found that adherence to regulatory requirements is the minimum standard only when determining the justified safety expectations. The producer must assess in each individual case, whether its product meets the user’s safety expectations and may not rely on adherence to regulatory requirements or the conformity assessments of regulatory bodies.

In Switzerland, the claiming party has to pay an advance on the court costs to initiate court proceedings. The payment of the advance is a procedural requirement for the action, meaning that if no payment is made, the case will be declared inadmissible. This has been quite a threshold for claiming parties in general and in particular in product liability cases involving consumers, given that the amounts to be advanced are calculated based on the amount in dispute and are generally relatively high.

However, the claiming party may get reimbursement of the advance, if it wins the case as, in Switzerland, the "loser pays" principle applies. Accordingly, the costs follow the event which means that the losing party must bear the court costs and, on top of that, must compensate the successful party for its legal costs. Court costs are determined and allocated by the court ex officio; while party costs are awarded upon request.

Currently, the court does not directly reimburse an advance payment of court costs made by a successful party, but only grants this party a compensation claim against the unsuccessful party, so that the successful party bears the risk that the costs cannot be collected.

The compensation for legal costs is determined in accordance with a tariff which is primarily based on the amount in dispute. The tariffs vary between cantons, but in the majority of cases, the compensation granted does not cover the real legal costs incurred by a party; depending on the amount at stake, the amount payable as compensation for legal fees can be higher or lower than the actual costs incurred.

If no party succeeds entirely, the costs are allocated in accordance with the outcome of the case and unnecessary costs are charged to the party that caused them, independently of whether it was the losing party.

The Swiss Civil Procedure Code is currently undergoing a revision which is expected to affect the costs in civil proceedings. In particular, the draft proposal proposes to cut the advance payments in half (as a general rule but with certain exceptions) – which will lower the threshold to initiate proceedings. Furthermore, the proposal provides that the successful party will be directly reimbursed by the court for the advance it paid and will no longer have to reach out to the losing party to be reimbursed. Whether the draft proposal will be accepted still remains open.

Third Party Funding

Third party funding is permitted and exists, although it is not very common in Switzerland. In principle, there are no restrictions to it, as long as the funded party is still in control of the claim. If the funded party is represented by legal counsel, it is important to avoid any set-up that might impair the counsel’s ability to act independently and to pursue only its client’s interests. Otherwise such a set-up might interfere with the counsel’s obligations pursuant to the rules of professional conduct.

Contingency Fee Agreements

“No win, no fee” and contingency fee agreements are not permitted under Swiss law since they are considered to stand in contradiction to the counsel’s obligations to act independently. According to the Swiss Federal Supreme Court, the attorney’s rules of professional conduct require a base salary, which does not only cover the attorney’s costs but must also guarantee a certain profit. Only if this precondition is met, may the parties agree on an additional success fee element in the sense of a top-up fee.

Legal Aid

Legal aid is available (mostly) for private individuals under the preconditions that (i) the requesting party does not have the funds to finance the proceedings itself, and that (ii) the case is not devoid of any chance of success. The request must be placed with the same court that is also deciding on the merits. The court will decide on the request in a formal, preliminary proceeding, during which the requesting party must fully disclose its financials and state its position on the merits. If legal aid is granted, the applicant is relieved from the obligation to pay any court costs (including any advance on costs) and the state will cover any reasonable lawyer’s fees. Legal aid does, however, not relieve the applicant from the obligation to pay party compensation to the opposing party in the case of defeat.

Legal Protection Insurance

Since the threshold for receiving legal aid is high and the costs for initiating proceedings are considerable, legal protection insurance is becoming more and more common amongst consumers. Even standard insurance packages include a legal protection policy. Since the conditions of such policies vary significantly and most insurance policies tend to avoid litigation and to settle potential disputes, it is, however, difficult to quantify the impact of legal protection insurance on product liability claims.

There are no real collective redress procedures in Switzerland. However, it is possible to jointly bring several claims (eg, by a number of claimants filing their claims together when there are similar facts and legal grounds) in one proceeding or by way of an assignment of the individual claims to a claimant party. Since this is usually cumbersome, it is however rarely done.

In 2018, the Federal Council published a proposal for certain amendments to the Swiss Civil Procedure Code which provided for collective redress mechanisms. However, the proposed amendments were recently dropped by the Federal Council in the ongoing legislative revision of the Swiss Civil Procedure Code. The amendments regarding the collective redress mechanisms were split off and will be dealt with in a separate revision project.

There are not many published decisions concerning product liability in Switzerland because most cases are settled. The following cases are noteworthy. 

In its decision of 5 January 2015 (4A_365/2014; 4A_371/2014), the Federal Supreme court held that in the case of prescription drugs, the justified safety expectations of the product need to be assessed with regard to the safety expectations of the patient, but also with regard to the knowledge of the prescribing physician. In the specific case (it concerned the contraceptive pill “Yasmin”), it was deemed sufficient that the warning of a possible increased risk of a thromboembolic event compared to contraceptive pills of previous generation was only included in the expert information, but not in the patient information.

In its decision of 9 September 2013 (2C_13/2013), the Federal Supreme Court held that the malfunction of a product is considered a product defect if the product’s value is specifically based on its serviceability (ie, a fire extinguisher)

On 18 March 2011 (137 III 226), the Federal Supreme Court decided that a producer was not liable for any defects that were not detectable at the time of the market placement according to the then current state of science and technology (so called development risks).

In its decision of 19 June 2010 (4A_255/2010), the Federal Supreme Court had to rule on a product liability claim relating to a defect window. The court held that the producer was not liable because the window was manipulated after it had been placed on the market, which was beyond the reasonable expectation of the producer.

On 4 October 2010, the Federal Supreme Court found that the compensation of an injured party is to be reduced if that party has failed to carefully study the product manual before using the product (4A_319/2010).

As of 1 January 2020, the statute of limitations for claims based on tort law has been revised, and extended time limits have been implemented (see 2.3 Time Limits for Product Liability Claims). The relative time limit has been extended to three years and the absolute time limit to 20. The extension was the consequence of a decision of the ECHR rendered in an asbestos-related case. In 2014, the ECHR considered that the former time limit of ten years violated the right of access to court in cases where the time limit lapsed before the injured party could possibly have been diagnosed with the disease.

Another trend that has had an impact on product liability cases and that has definitely arrived in Switzerland is sustainability. An initiative launched by Swiss citizens in 2016 with the aim of amending the Swiss Federal Constitution – the so-called Responsible Business Initiative – wants multinationals to respect human rights and the environment in their activities abroad. Under the Responsible Business Initiative, companies would be legally obliged to incorporate respect for human rights and the environment in all their business activities. This would also include responsibility for the manufacture and sale of products abroad. If the initiative is accepted by the Swiss parliament and passes the popular vote, the new provisions could provide a means for damages claims based on non-compliance with environmental laws against a Swiss parent company.

There are several areas of focus concerning future policy development in respect of product liability or product safety. Some of these areas have already been mentioned in this chapter – eg, recently enacted revisions of limitation periods or the Responsible Business Initiative (as discussed in 3.1 Trends in Product Liability and Product Safety Policy). In addition, the following developments are noteworthy.

As in many other countries, Switzerland is closely observing the increasing use of Artificial Intelligence (AI) and the challenges arising therefrom. Within this context, the Swiss Federal Council commissioned a cross-departmental working group under the leadership of the Federal Department of Economics, Education and Research (WBF) to examine the challenges of artificial intelligence and the need for action on the part of the federal government. With regard to product liability, the WBF report concluded that the current Swiss liability legislation has a very general character and can thus also be applied to new technologies. In this light, the Federal Council does currently not see any need for new regulations on AI. However, the WBF report does not exclude that specific liability provisions (in the form of a strict liability for the producer) could be enacted in the future.

In addition, some amendments on product safety relevant legislation have just been enacted or will soon come into force:

On 1 January 2020, an amendment to the Swiss Energy Efficiency Ordinance (EnEV) came into force, since then it has been mandatory to declare the energy consumption and other characteristics of various domestic appliances on the energy label. On 22 April 2020, the Federal Council decided on additional amendments to the EnEV to further align the Swiss regulations with the stricter energy efficiency regulations of the EU for mass-produced installations, vehicles and devices. These recent amendments to the EnEV will gradually enter into force, beginning 15 May 2020.

Furthermore, a revision of the Ordinance on the return, taking back and disposal of electrical devices (VREG) is pending. The VREG pursues the same objective as EU Directive 2012/19/EU of the European Parliament and of the Council of 4 July 2012 on Waste of Electrical and Electronic Equipment. Under the revised VREG, producers and importers of electrical devices will be required to pay a compulsory disposal fee for units placed on the Swiss market. So far, this fee has been paid on a voluntary basis only. The disposal fee will be used to finance the return and recycling of discarded devices. The obligation to pay the fee also applies to commercial direct imports and commercial internet purchases abroad. However, the obligation does not apply if private individuals import electronic equipment for their own consumption.

Finally, Switzerland has harmonised its medical devices legislation with the European Medical Device Directive (MDR) by respectively amending the Swiss Therapeutic Products (Act) and the Swiss Human Research Act (HRA). The amendments were enacted by the Swiss Parliament on 22 March 2019 and should have come into force on 26 May 2020 along with the implementing ordinances. Due to the COVID-19 pandemic, the EU deferred the full implementation of the MDR by one year. Switzerland has followed suit and will also defer the entry into force until 26 May 2021.

During the Covid-19 pandemic, the Swiss Federal Council enacted a great number of emergency regulations, which also affected product safety legislation and its enforcement. For example, it decreed a standstill of pending deadlines in civil and administrative proceedings (that also applied to proceedings before regulatory bodies or in product liability proceedings before civil courts) and it imposed restrictions on the supply of certain fever-reducing drugs to the public.

Furthermore, the Federal Council decreed that certain sanitiser products may be placed on the market under a derogation from the statutory requirements if they meet a defined formula. It also ruled that foodstuffs producers would not need to amend the labelling of their products if they have to replace ingredients due to delivery shortages, but only if the product was marked with a red sticker and aa URL directing the consumer to where the correct labelling could be consulted. However, this specific instance of non-compliance would only be tolerated if it would not endanger the health of the consumer (eg, not in the case of allergens). Also, the Swiss Federal Council exempted important medical goods from custom duties. In the areas mentioned above (drugs, medical devices and foodstuffs), regulators have treated the files of applicants with priority.

Due to Covid-19, Swiss suppliers have reorganised their production to meet the increased demand of the Swiss public for personal protective equipment (eg, masks), foodstuffs, drugs and medical devices. For example, producers of skin care products have started supplying sanitisers and a producer of coffee machines has started producing respirators.

Walder Wyss Ltd

Seefeldstrasse 123
8034 Zurich
Switzerland

+41 58 658 55 36

+41 58 658 59 59

christine.leuch@walderwyss.com www.walderwyss.com/en
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Walder Wyss Ltd is a Swiss commercial law firm with offices in Zurich, Geneva, Basel, Berne, Lausanne and Lugano. Its 230 legal experts specialise in corporate and commercial law, banking and finance, intellectual property and competition law, industrial know-how, public and administrative law, dispute resolution and tax law. The firm's clients include national and international companies, publicly held corporations and family businesses as well as public law institutions and private clients. With regard to product regulatory and product liability matters, its experts advise and represent clients in administrative, civil and criminal proceedings, contract negotiations and regulatory compliance at all its locations.

The Contested Primacy of the Swiss Product Safety Act Over the Swiss Freedom of Information Act

In the enforcement of product safety legislation, producers trust that the competent regulatory body treats provided information as confidential – unless a disclosure is required to ensure the safety of the public (eg, in the form of a public warning). For many producers, the authorities’ obligation to secrecy is an unconditional prerequisite for their willingness to collaborate with the authorities. On 7 April 2020, however, Switzerland’s highest court, the Swiss Federal Supreme Court, came to a decision that might negatively influence such willingness to cooperate with the authorities.

The Swiss Freedom of Information Act (FoIA)

Since 2006, every person in Switzerland has had a statutory right to access official documents under the Federal Act on Freedom of Information in the Administration (FoIA). The FoIA aims to promote the transparency of the mission, the organisation and the activities of the Swiss administration. To this end, it contributes to public information by ensuring access to official documents. The FoIA also applies to administrative bodies that are competent to enforce Swiss product safety legislation.

The claim for access generally applies to any recorded information retained by the authority and issued by the same or shared with the same and which concerns the execution of its public function. Therefore, anyone (including the media or competitors) could request an enforcement authority to grant them access to information shared by a producer (or other person having placed the product on the market), were it not for the following reservation in the FoIA: Article 4 of the FoIA explicitly states that special confidentiality rules contained in other Federal Acts take precedence over a person’s right to access, where those rules declare certain information secret or where they declare the access to certain information to be subject to requirements derogating from those set out in the FoIA.

The FoIA further contains exceptions where the right to public access shall be limited, deferred or refused if the access to the official document, inter alia, is likely to reveal professional, business or manufacturing secrets or if it is likely to prejudice the privacy of a third party, unless exceptionally outweighed by public interest (cf. Article 7 of the FoIA). However, whereas the confidential information is entirely exempted from the scope of the FoIA in the case of Article 4 of the FoIA, the FoIA remains applicable in the case of an exception under Article 7.

BFU v K-Tipp

Based on the right to access under the FoIA, a journalist of one of Switzerland’s main consumer guide magazines (K-Tipp) requested access to the final report of a spot-check on the safety regulation compliance of nine baby changing tables that was carried out by the Swiss Council for Accident Prevention (BFU) in 2015. The spot-check revealed that two tables showed serious safety deficiencies and required a warning to the public, six tables were deficient but did not require a public warning and only one table was fully compliant. The BFU granted the journalist access to the report but blackened the information concerning the tables that had not required a public warning and concerning the fully compliant table. In reaction, the journalist filed a request for a mediation proceeding before the Federal Data and Information Commissioner in accordance with the procedural rules of the FoIA. As the mediation failed, the Commissioner provided the BFU with the (non-binding) recommendation that full access should be granted under the FoIA.

The BFU, however, decided not to follow the Commissioner’s recommendation and adhered to the limitation of the disclosure. It based its decision on the following grounds: According to the Federal Product Safety Act (PSA), the BFU (or any other enforcement authority) is obliged to actively warn the public of dangerous products if the person placing them on the market does not take effective measures itself or does not do so in time. It is further obliged to make the information on the hazardousness of the product and on the measures taken publicly available (Article 10 paragraph 4 of the PSA). To the extent the public is not in danger, however, the BFU (or any other enforcement authority) remains under a statutory obligation to secrecy (Article 12 of the PSA). The BFU took the view that the statutory obligations under the PSA constituted special confidentiality rules that would be reserved from the FoIA in the sense of Article 4 of the FoIA and would thus take precedence over the journalist’s right to access under the FoIA.

Swiss Federal Administrative Court decision

The journalist appealed the decision to the Swiss Federal Administrative Court. The journalist argued that the BFU’s obligation to warn the public was considered an active duty to inform, whereas her right to access under the FoIA would go beyond such active information obligation. In this regard, the BFU’s statutory obligation to secrecy would merely record the general principle of an authority’s official secrecy obligation that the legislator of the FoIA wanted to replace with the principle for transparency. The BFU rebutted that the PSA (which came into force after the FoIA) constituted a complete, subject-specific overall system of regulations regarding information, publicity and confidentiality. Thus, the FoIA would not be applicable to information concerning the enforcement of the PSA based on Article 4 of the FoIA. Otherwise, private persons could use the information resulting from the controlling activities of the enforcement authorities without being bound by the principles of administrative law (eg, the principles of legality, proportionality, equality of rights or the ban of arbitrariness). In addition, the BFU put forward that a broader right to access would ultimately be detrimental to the producers’ readiness to collaborate with the regulator.

In its decision of 2 May 2019 (A-5623/2017), the Swiss Federal Administrative Court, upheld the decision of the BFU. It considered that by the enactment of an enforcement authority’s statutory obligation to warn the public of dangerous products under Article 10, paragraph 4 of the PSA, the Swiss legislature had already balanced the public’s information interest against a producer’s interest in the secrecy of the information. This balancing of interests would apply to the authority’s obligation to secrecy under Article 12 of the PSA in a complementary manner (meaning that the obligation to secrecy applies to the extent the information is not considered relevant for the safety of the product, which would justify a public warning in the sense of Article 10, paragraph 4 of the PSA).

If the journalist’s right to access had been granted, it could have had the same effect as if the BFU had warned the public according to Article 10, paragraph 4 of the PSA. Thereby, the court was mindful of the possibility that a journalist could – after being granted access – publish the data on the product which could in turn encourage consumers not to buy the product or to raise warranty claims, even though the regulator had decided against a public warning. This way, the authority’s statutory obligation to inform, which is bound by certain conditions (specifically a certain risk factor), would virtually lose its purpose as its conditions would be circumvented. In this light, the Court concluded, the ratio legis would speak for the primacy of the PSA over the FoIA.

Decision of the Swiss Federal Supreme Court and its consequences

The journalist appealed against the Federal Administrative Court’s decision before the Swiss Federal Supreme Court. On 7 April 2020, the Supreme Court approved the appeal on the following grounds (1C_299/2019): On the basis of the legislative materials of the PSA, the Supreme Court held that the special confidentiality duty in Article 12 of the PSA concerned manufacturing and business secrets only.

As regards general security issues, however, the Supreme Court held that third parties should be able to obtain the relevant information from the authority. According to the Supreme Court, the confidentiality duty in the PSA aimed at protecting the intellectual property of a producer so that competitors could not obtain confidential manufacturing or business information (eg, construction plans) by a request for information under the FoIA. However, the legislative materials would not indicate that the statutory confidentiality duty was intended to protect more extensive information than business or trade secrets.

Furthermore, the Supreme Court found that the duty to actively inform the public in case of a dangerous consumer product (Article 10, paragraph 4 of the PSA) in combination with the right to access under the FoIA would ensure a reasonable graduation of information: If a product would be considered dangerous for the safety and health of the public, the authorities would be obliged to actively warn the public in case the person having placed the product on the market would not take adequate measures. If a product caused less serious complaints, there would be no duty to actively inform the public under the PSA. However, this would not preclude there being a claim under the FoIA to obtain access to such information.

In contrast to the BFU and the Swiss Federal Administrative Court, the Supreme Court found that the publication of such documentation would not have the same impact as a public warning as it would attract less publicity. The duty to actively warn the public under Article 10, paragraph 4 of the PSA would therefore not lose its meaning if the FoIA took precedence over the statutory duty to secrecy under Article 12 of the PSA. In consideration of the foregoing, the Supreme Court decided that such statutory duty to secrecy would not take precedence over the FoIA in the sense of Article 4 of the FoIA. The FoIA would thus remain fully applicable. As a consequence, the Supreme Court ordered the lower instance to assess the journalist’s request in light of the FoIA, whereby it would have to assess whether any exception to the right to access under Article 7 of the FoIA would apply (eg, the protection of business or trade secrets).

The Swiss Supreme Court’s decision is the subject of considerable controversy in the Swiss product safety community. In line with the Supreme Court, advocates of the principle of transparency opine that reservations from the FoIA should be assumed as restrictively as possible. They put forward that affected producers could still prevent the disclosure by invoking an exception under Article 7 of the FoIA (such as the existence of business or trade secrets or the primacy of privacy rights). This argument, however, gives little thought to the protective purpose of the PSA and to the producer’s role in achieving that purpose.

If the obligation to secrecy in the PSA does not take precedence over a private person’s right to access under the FoIA, the affected economic operator (eg, producers) could no longer rely on the regulator’s absolute confidentiality with regard to all provided information (provided no public warning is required due to the hazardousness of the affected product). It is true that under the FoIA, the authority would still carry out a balancing of interests. The economic operator could thus still try to prevent the disclosure (or at least to limit the disclosure) by invoking an exception from the FoIA (eg, because business or trade secrets are at stake). However, this resort bears substantial risks for the economic operator and might come with significant costs.

First of all, the affected economic operator would have to prove that the relevant information falls under an exception in Article 7 of the FoIA. This would be particularly challenging with regard to information that lacks clear confidential character, such as risk assessments or sales numbers. Further, under the FoIA, the enforcement authority is obliged to consult the affected economic operator and seek its opinion on the disclosure if it considers granting the request. The economic operator, however, is granted a non-extendable deadline of only ten days to bring forward arguments against the disclosure. This deadline is very short if one bears in mind that (i) the economic operator might be a third party (ie, not the producer itself) that wants or is contractually obliged to align its response with the producer, and (ii) the affected economic operator itself might not have expert knowledge of FoIA procedural rules and might need to find and mandate an attorney. If the economic operator fails to meet the deadline, the enforcement authority would still balance the parties’ interests, but the economic operator would lose the opportunity to participate in the FoIA proceeding. If the producer brings its arguments in time and the enforcement authority nonetheless intends to grant disclosure, the economic operator could ask for a mediation proceeding. If the mediation fails, however, and the enforcement authority decides to grant disclosure, the producer would need to appeal that decision over several instances.   

In light of the above, it is unfortunately likely that economic operators (in particular producers) will take a more cautious approach in sharing information with the authorities. They might take the view that the commercial risks emanating from the disclosure of such information in an FoIA proceeding (ie, the uncontrollable spread of the disclosed information in media and the potential damage to reputation and turnover) outweigh the legal risks of violating their duty for collaboration with the enforcement authority. Thus, in light of the Federal Supreme Court’s recent decision, it must be feared that the overall compliance of economic operators (in particular, producers) will suffer, and that this again will lead to poorer protection of the Swiss public against dangerous consumer products.

Walder Wyss Ltd

Seefeldstrasse 123
8034 Zurich
Switzerland

+41 58 658 55 36

+41 58 658 59 59

christine.leuch@walderwyss.com www.walderwyss.com/en
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Law and Practice

Authors



Walder Wyss Ltd is a Swiss commercial law firm with offices in Zurich, Geneva, Basel, Berne, Lausanne and Lugano. Its 230 legal experts specialise in corporate and commercial law, banking and finance, intellectual property and competition law, industrial know-how, public and administrative law, dispute resolution and tax law. The firm's clients include national and international companies, publicly held corporations and family businesses as well as public law institutions and private clients. With regard to product regulatory and product liability matters, its experts advise and represent clients in administrative, civil and criminal proceedings, contract negotiations and regulatory compliance at all its locations.

Trends and Development

Author



Walder Wyss Ltd is a Swiss commercial law firm with offices in Zurich, Geneva, Basel, Berne, Lausanne and Lugano. Its 230 legal experts specialise in corporate and commercial law, banking and finance, intellectual property and competition law, industrial know-how, public and administrative law, dispute resolution and tax law. The firm's clients include national and international companies, publicly held corporations and family businesses as well as public law institutions and private clients. With regard to product regulatory and product liability matters, its experts advise and represent clients in administrative, civil and criminal proceedings, contract negotiations and regulatory compliance at all its locations.

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