The Swiss Federal Supreme Court held in 2004 that litigation funding by third-party funders is permissible in Switzerland provided that the funder acts independently of the client’s lawyer (BGE 131 I 223). The court stated that it could even be advantageous for a claimant to have his or her claim assessed by an independent expert who intends to cover the financial risk of the envisaged litigation process and who is thus complementing the claimant’s lawyer’s view (BGE 131 I 223 c. 4.6.3).

In 2014, the court expressly confirmed its earlier decision and emphasised that, meanwhile, litigation funding has become common practice in Switzerland. The court further concluded that it is part of the lawyer’s professional duty as provided for in the Federal Act on the Freedom of Movement for Lawyers ( BGFA ) to inform claimants about a potential litigation funding option as the circumstances require (Federal Supreme Court decision 2C_814/2014 c. 4.3.1).

Thus today, litigation funding is an accepted practice in Switzerland and has been judicially endorsed repeatedly by the Federal Supreme Court in recent years. In light of its rather comprehensive and detailed legal analysis, the court established a quite favourable and predictable environment for third-party litigation funding in Switzerland.

Nevertheless, the Swiss third-party litigation funding market is still relatively small. The reasons for this might be the rather late establishment of litigation funders in Switzerland compared with other jurisdictions, and the fact that class actions and other mechanisms of collective redress do not yet form part of Switzerland’s civil procedural law practice. However, with the envisaged revision of the Swiss Civil Procedure Code ( CPC ), third-party funding in Switzerland will be further promoted, since the Final Draft of the revised CPC requires the Swiss Federal Council to provide the public with adequate information regarding third-party litigation funding to facilitate access to justice.

You can keep on top of all the developments in Switzerland by downloading the updated Switzerland chapter, authored by Marcel Wegmuller, Isabelle Berger and Franziska Studer of Nivalion AG here.