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On 16 March 2020, the Swiss Federal Council declared an “extraordinary situation” under the Federal Law of Epidemics. This is the most severe status contemplated under the law and equates to a state of emergency. It allows the Federal Government to order all necessary measures for parts of or the entire country, including the right to overrule measures that were ordered by cantons and to deviate from all existing Federal laws.

Measures Ordered by the Swiss Government

The Federal Council ordered further measures to prevent the spread of COVID-19 in Switzerland, to protect the Swiss population and to safeguard the capacity of the Swiss healthcare system. The amended ordinance on measures to combat COVID-19 became effective on March 17, 2020 (at 00.00). It includes the following measures:

Restrictions on border traffic from risk countries

The Federal Council declared Italy, Germany, France and Austria as risk countries. Consequently, the Federal Council has decided to introduce checks at the borders with Germany, Austria and France as of 17 March 2020 (00:00), and imposed entry bans, albeit with exceptions. Entry into Switzerland from Austria, France, Germany and Italy is now only possible for Swiss citizens, persons holding a residence permit for Switzerland, and persons who have to enter Switzerland for work-related reasons (so called cross-borders commuters). Transit and goods traffic will continue to be allowed as well. Finally, people with emergency situations will also be able to enter Switzerland. These border restrictions aim to protect the Swiss population and maintain capacities in the Swiss healthcare service. As a result, small border crossings around the country will be closed and cross-border traffic channeled through larger crossings. The Federal Customs Administration will publish a list of all open crossings.

Measures vis-à-vis the population, organizations and institutions

Until 19 April 2020, classroom teaching is banned at schools, universities and other training and education institutions. The cantons are required to ensure that childcare is provided for children who cannot be looked after privately. The cantons must prevent that people at high risk, e.g. the grandparents, take care of the children. Child day-care facilities may only be closed if other suitable arrangements exist.

As of 17 March 2020 (00:00), all public and private events are prohibited. The majority of establishments open to the public will be closed. This applies to all shops, markets, restaurants, bars and entertainment and leisure facilities, such as museums, libraries, cinemas, concert halls, sports centers, swimming pools or ski areas. Hairdressers and cosmetic studios are also closed by the new measures as the recommended distance between individuals cannot be maintained. The competent cantonal authorities may carry out unannounced inspections at any time of the establishments and on-site and are responsible for compliance with these rules in their territories.

Food stores, takeaway businesses, company canteens, home delivery services and pharmacies will remain open, as will petrol stations, railway stations, banks, post offices, hotels, public administration offices and social institutions. Hospitals, clinics and medical practices will remain open, but must forego non-urgent medical procedures and treatments.

Companies inviting for a General Meeting may, irrespective of the expected number of participants and without observing the invitation deadline, order that the shareholders can only exercise their rights a) in writing or in electronic form or b) by proxy designated by the company.

People at high risk should work from home. If remote work is not possible, they are to be placed on leave by their employers but continue to receive their salary. The employees must inform their employer if they belong to the high-risk group. The employer may request a doctor’s certificate regarding the employee’s high-risk status.

The cantons may issue additional measures or guidelines in areas not regulated by the Federal Council. The current measures of each canton can be found at https://www.ch.ch/de/coronavirus/#informationen-und-kontakte-in-den-kantonen.

Support by the army

In order to support the civil authorities, up to 8000 military personnel may be deployed for health, logistics and security services until the end of June 2020. The army will support the healthcare system by providing medical services. Military personnel can, if necessary, take on logistical tasks such as transport services and assist in the construction of improvised infrastructures. It can relieve pressure on the cantonal police services, for example by providing additional support regarding embassy protection, or by assisting the Border Guard at border crossings and at airports.

Effects on Contracts

Whether COVID-19 and its effects qualify as Force Majeure cannot be assessed as a general matter. Rather it, depends on the specific contract. If the contract includes a Force Majeure or similar clause, the clause needs to be interpreted. If it was construed broadly, this situation may constitute a Force Majeure event and the consequences foreseen in the clause apply.

If the contract does not include a specific clause but is governed by Swiss law, one needs to assess its content and formulation to determine whether COVID-19 may be a case in which a debtor for instance in a delivery contract is excused from performance of its duties. Under Swiss law, this could be the case due to a subsequent impossibility or a delay that is not the fault of the debtor. In both cases, the debtor has the burden of providing evidence that they are not at fault for the impossibility or the delay. The answer to whether COVID-19 can excuse a debtor will depend on factors such as whether the contract foresees a specific delivery date, whether the subsequent events were foreseeable at the time the contract is concluded, whether the impossibility of performing the task is lasting for an unforeseeable time, and whether the cause lies in governmental measures, etc.

Accordingly, suppliers needs to keep in mind that in a future litigation or arbitration they will have the burden of proving that they were unable to deliver without fault, and they should collect respective evidence. Also for other contract parties, it will be important to collect evidence for the developing factual and legal situation. Furthermore, commercial buyers need to keep in mind that Swiss law assumes that they are waiving performance and will claim compensation if the supplier does not deliver in a timely manner. If a buyer insists on performance at a later point in time, they need to inform the seller immediately after the scheduled delivery date. A supplier, on the other hand, should inform the counterparty immediately whether they may be able to perform later, be it fully or partially.

Effects on Litigation and Debt Enforcement Proceedings

The current measures have, in principle, no effect on the expiration of statutory and judicial deadlines. Unless otherwise ordered by the Federal Council, deadlines are not postponed in civil, criminal and federal administrative proceedings. Deadlines set by the court may be extended by the judge upon request. The Federal Council would have to order a general postponement based on emergency law, which would be possible in light of the current “extraordinary situation”.

For debt enforcement proceedings, the possibility of a legal standstill in the event of epidemics is explicitly provided for in the law. This legal standstill must be declared by the Federal Council or by the cantonal governments with the consent of the Federal Council. So far, no such orders have been issued.

Due to the current situation, certain courts are currently only conducting hearings in urgent cases (e.g., the courts of the canton of Zurich) or excluding audience from attending hearings (e.g., the criminal court of Basel-City).

 

Author

Prof. Dr. Joachim Frick, LL.M./J.S.D., returned to Baker McKenzie Zurich in 1997 after practicing with Baker McKenzie in Taipei and Chicago. He became a partner in 2001. His main areas of practice are dispute resolution, corporate law and insurance. Prof. Frick represents clients as a party counsel in litigation and arbitration proceedings with special emphasis on corporate, insurance, aviation and M&A disputes. He heads the insurance practice of the Zurich office and co-heads the European Financial Services & Insurance Group as a steering committee member. He advises Swiss and international insurance and reinsurance clients in litigious and non-litigious insurance matters and was named one of the leading insurance lawyers in Switzerland by Who is Who' Legal and the IBA's Who is Who of Business Lawyers. Joachim Frick is a professor of law at Zurich University (Titularprofessor) and regularly teaches and publishes in the areas of private international law, arbitration and insurance. He is a member and regular speaker in various professional organizations concerning arbitration and insurance laws. He is a graduate of Zurich University (Dr. iur. 1992) and Yale Law School (LL.M. 1996, J.S.D. 2000).

Author

Nadine Bosshard is an associate in the Firm’s Intellectual Property and Technology Practice Group in Zurich. Nadine holds a Master degree in Law and Economics as well as International Management. She gained practical experience in both the legal and business field in Switzerland, Germany, Belgium and Japan before she joined the Firm in 2019.

Author

Johanna Moesch is an associate in the Firm’s Intellectual Property Practice Group in Zurich. Prior to joining Baker McKenzie as an associate, she worked as an associate and senior associate in a major Zurich law firm and prior thereto as a law clerk in a Swiss district court. She was also a teaching and research assistant at the University of Basel. Johanna obtained a LL.M. degree from the Tsinghua University (Beijing).

Author

Corinne Nacht is an associate in Baker McKenzie's Litigation & Dispute Resolution and Investigations & Compliance practice groups in Zurich. She graduated from the University of St. Gallen (HSG) in 2015. Subsequently, Corinne worked as a trainee lawyer for Baker McKenzie Zurich and for a smaller law firm in the Canton of Thurgau. She was admitted to the bar and rejoined the Firm in 2019.

Author

Gabrielle Tschopp is an Associate in Baker McKenzie’s Litigation & Dispute Resolution and Investigations & Compliance practice groups in Zurich. Gabrielle obtained degrees from the University of St. Gallen (M.A. in Law and B.A. in International Affairs). Prior to joining the Firm, she worked as a legal trainee in a corporate law firm in Zurich and in Chinese and Swiss corporate law firms in China. She also worked as a law clerk at the District Court of Affoltern and as a trainee in a Big Four. Gabrielle was admitted to the bar in 2019.