Dispute Resolution Methods

• The section aims to provide a basic grasp of dispute resolution through courts and alternative methods, and to outline main elements for selecting a specific dispute resolution method.
• It also aims to describe Swiss court system and arbitration basics in Switzerland, and explain international private law principles, applying them to simple scenarios.

Introduction and Terminology

• Legal disputes occur when individuals disagree on factual or legal interpretations. The section focuses on private law disputes and resolution methods.
• Procedural law enforces legal rights, dealing with steps for civil law enforcement and party positions, but it does not answer specific legal questions.
• Dispute resolution methods divide into judicial processes, using state judges or courts, and extrajudicial processes, known as Alternative Dispute Resolution (ADR).
• Litigation is the most common judicial process.
• Alternative Dispute Resolution (ADR) includes arbitration, negotiation, and mediation.
• Arbitration is adjudicative, and a third party determines the outcome, while negotiation and mediation are consensual, and parties try to agree.

Litigation

• Litigation is initiated when a party files a lawsuit against another, with formal proceedings governed by legislated procedural rules.
• Outcomes in litigation are decided by an neutral judge or court based on substantive questions and applicable law, with court verdicts legally binding but appealable.
• Litigation is typically adversarial, involving opposing parties seeking favorable outcomes, which can be costly and time-intensive.
• Questions of fact (evidence) often are more important than legal interpretations during trials.
• Considerations before litigation: risks, enforceability of judicial decisions, costs, party willingness and patience, settlement possibilities, commercial interests, and evidence sufficiency.
• ADR suitability should be considered before starting litigation.

Alternative Dispute Resolution (ADR)

• Alternative Dispute Resolution (ADR) encompasses techniques to resolve disputes outside formal litigation, dating back to the early 1970s in the USA.
• ADR gained acceptance due to the influence of Asian methods like mediation, and its rise is attributed to increasing court caseloads, lower costs, confidentiality, and greater control over the decision-makers.
• ADR depends on parties agreeing to use ADR processes, typically involving a neutral facilitator or decision-maker, but outcomes from ADR aren't legally binding.
• Online Dispute Resolution (ODR) is another form of ADR.

Arbitration

• Arbitration is a formal ADR method where an arbitrator decides the outcome, known as an arbitration award, after parties present their cases.
• Arbitral proceeding participation is typically voluntary and often managed by private organizations that provide arbitrators and rules.
• Commercial matters can be arbitrated, often through an arbitration clause in contracts, or via an individual arbitration agreement made after a dispute arises.
• Agreement to arbitrate usually means parties waive litigation rights and are bound by the arbitrator's decision, though nonbinding arbitration is possible.
• Legal remedies against arbitral awards are limited.

Entities for Arbitration

• The International Chamber of Commerce (ICC) is an arbitral institution that provides rules and organization for ADR proceedings.
• The Swiss Arbitration Association (ASA) has over 1,000 members and offers services for arbitration and mediation support.
• The Arbitration Centre of the World Intellectual Property Organization (WIPO) handles domain name and intellectual property disputes.
• The Court of Arbitration for Sport (CAS) in Lausanne resolves sports-related disputes globally.

Negotiation

• Negotiation is the simplest form of ADR where parties settle disputes informally, with or without legal representatives.
• Attorneys often advise clients to negotiate settlements before trials, and parties can negotiate settlements during or after judiciary trials.
• Attorneys act as advocates to represent their clients' interests.

Mediation

• Mediation involves a neutral third party (mediator) who aids dispute resolution by working with both sides.
• The mediator emphasizes points of agreement to help parties evaluate options, and although they may propose solutions, they do not make the final decision.
• Mediation is used in family, commercial, and organizational contexts.
• A key advantage is that mediation is less adversarial than litigation because the parties are usually trying to prove each other wrong in front of a judge.
• Mediators take an active role to bring parties to a mutually satisfactory resolution, which makes them preferred for disputes with ongoing long-term relationships.
• Institutions offering arbitration may also provide mediation services, e.g., WIPO or ICC.

Litigation in Switzerland

• Jurisdiction determines which court is competent for a case, usually the defendant's domicile for domestic disputes, unless agreed otherwise contractually through a jurisdiction clause.
• Swiss law applies in cases without international context, whereas international private law clarifies jurisdiction and applicable law in international cases.
• Parties can choose the applicable law, like a contractual choice of law clause.
• The Swiss legal system has separate procedures for civil, criminal, and administrative law, and applies to both domestic and international disputes.
• Cantonal court systems include lower and appellate courts, where appellate courts review records and findings, not new evidence.
• Larger cantons have special commercial or labor courts.
• Substantive law is mainly covered by federal law, whereas procedural codes were harmonized into federal codes.

Overview of the Swiss Legal System

• Federal courts are the highest authority in Switzerland.
• The Federal Supreme Court rules as the final instance on decisions from cantonal courts, the Federal Criminal Court, the Federal Administrative Court, and the Federal Patent Court.

Costs of Litigation

• Litigation costs include court fees and attorney fees, with Switzerland having relatively modest court fees based on cantonal fee schedules and the amount in question.
• Court fees are imposed on the losing party or allocated proportionally.
• Attorneys charge hourly rates, which vary, and services related to court proceedings follow cantonal attorney fee schedules.

Attorney fees and Expenses

• Attorney fees consider the amount in the dispute, case difficulties, and the work involved, while expenses like travel are reimbursed separately.
• Litigation costs split as court fees and parties' expenses—mainly attorney fees.
• The losing party typically covers these costs.
• Contingency fee agreements are not allowed in Switzerland, where attorneys cannot charge a percentage of winnings.

Arbitration in Switzerland

• Arbitration is available through multiple institutions in Switzerland and abroad. Federal civil procedure law has covered international and domestic arbitration since January 1, 2011.
• International arbitration adheres to Chapter 12 of the Federal Act on Private International Law (CPIL), providing flexible rules.
• Domestic arbitration is regulated by Part 3 of the Federal Civil Procedure Code, with more guidance and protection for weaker parties like employees.

International Disputes

• Legal disputes may require understanding private international law, or conflict of laws, which sets procedural rules and principles to determine the place of jurisdiction and applicable law.
• The rules apply when a legal dispute has a "foreign" element, such as contracts agreed by parties in different countries.
• Conflict of laws arises when the legal dispute's outcome depends on which law applies.
• Private international law is feature of national law which varies from country to country.

International Conflict Case Stages

• The court must first decide if it has jurisdiction and is the appropriate venue, considering "forum shopping”.
• Characterization of the cause of action into legal categories, with procedural and substantive law distinction.
• Each legal category has choice of law rules to determine which competing laws apply, dividing into applying the law of the forum to procedural matters, and evaluating connections to apply substantive laws with the greatest connection.
• Then you must show the applicable law to the court.
• Successful parties must enforce the judgment by securing cross-border recognition.

Jurisdiction and Substantive Law

• Answers on Swiss court jurisdiction and applicable substantive laws in international disputes are in the Federal Code on Private International Law (CPIL).
• International treaties take precedence.
• The Lugano Convention (LugC) contains conflicting rules.
• CPIL has two rules for international disputes: a foreign element exists in contract law if at least one party is domiciled abroad.
• CPIL also implies there is foreign element if legal status change (e.g., marriage) occurs abroad.

Assessments of International Disputes

• Place of jurisdiction and applicable law must be assessed in legal disputes that are international.
• CPIL rules cover: domicile for legal capacity of natural persons, place of marriage, intellectual property, and consumer contracts.
• The Hague Conference on Private International Law oversees conventions to develop a uniform system, and the Vienna Convention on Contracts for the International Sale of Goods (CISG) has been ratified by many nations.