When assessing the risk or chances of civil litigation, two procedural questions do often matter as much as the assessment of the relevant claim itself: What does it cost and who must pay?
Civil litigation costs in Switzerland are a matter of both, uniform federal and varying cantonal law. While the allocation of procedure costs is governed by the Swiss Federal Code of Civil Procedure (CCP), the actual rates are a matter of each of the 26 Swiss cantons' competence.
Who pays?
The civil litigation costs include the court costs (a flat fee for the conciliation proceeding, the costs for the taking of evidence and for translation and a judgement fee) and the party costs (attorney's fees and necessary expenditures) (cf. art. 95 CCP).
As a principle, civil courts in Switzerland require that the plaintiff advances the expected court costs (art. 98 CPC). The courts will declare a statement of claim non-admissible unless such advancement is paid. To raise the "paywall" to civil litigation, a respondent may request that the plaintiff provides security for his prospective party costs if, i.a., the plaintiff is domiciled in a country with which Switzerland does not maintain a treaty on court and party costs (art. 99 CCP).
In its final decision the court will allocate the court costs and the party costs in accordance with the outcome of the case (art. 106 CCP). If the plaintiff is successful, the defendant must pay all of the court costs and compensate the plaintiff for its party costs, and vice versa. It is worthwhile noting, however, that the successful party cannot reclaim his advance payments from the court but must claim such monies from the unsuccessful party. Consequently, the successful party bears the costs and risk of collecting the court costs and compensation for party costs against the unsuccessful party.
It must further be noted that the compensation for the successful party's attorney's fees is allocated by the court based on a schedule of compensation issued by each Swiss canton. The compensation according to these schedules does oftentimes not cover the actual attorney's fees.
In the event of settlement, the parties are free to agree on the allocation of the costs. In a typical settlement, the parties will agree to bear their own attorney's fees and to share the court costs whereby the courts often provide their own incentive for a settlement by lowering the court costs substantially.
What does it cost?
The rates of court costs and compensation for attorney's fees are – as mentioned before - a matter each of Switzerland's 26 cantons' law. The respective schedules follow similar rules of calculation and provide for a so-called basic fee that depends on the amount in dispute. The below tables show such basic fee schedules (valid in February 2018) of the cantons of Zurich and Basel-Stadt as examples:
Example: Court costs (basic fee) in Zurich:
Example: Compensation for attorney's fees (basic fee) Zurich:
Example: Court costs (basic fee) in Basel:
Example: Compensation for attorney's fees (basic fee) Basel:
In most cantonal systems, the basic fee schedule is supplemented by numerous factors that will increase or decrease the final fee. The most common factors are the complexity of the case, the number of written statements and hearings, the application of foreign law or the termination of the proceeding before a final decision is made.
Added on Aug. 8, 2020: On 26 February 2020, the Swiss Federal Council published the report and the draft bill concerning the revision of the CPC. The purpose of the revision is, amongst others, to facilitate access to justice by way of partly shifting the cost burden and risk from the claimant to the state. The draft proposes that the claimant will, in principle, only have to advance half of instead of the full expected court costs when initiating civil proceedings. Also according to the draft, courts must offset the court costs against the advances made by the party liable to pay costs (typically the losing party). In reverse, courts will refund the advances to the successful claimants and must collect the court costs from the losing respondent directly.
The principles and examples set out in this article provide a general overview over the costs and cost allocation in civil litigation in Switzerland. Numerous exceptions (e.g. cost free procedures, legal aid, court's discretion) that are not discussed in this article may apply and considerable research may be required to assess the cost risk in any specific case. At swisslitigators.com (a service by Advokatur GTK GmbH) we help our clients with such assessments.