New SFT precedent concerning the interpretation of court settlements by the execution judge
On 28 November 2017, the Swiss Federal Tribunal (SFT) uploaded to its website a new precedent, dated 23 October 2017 (case reference: 5A_533/2017; the “SFT Proceedings“), in which it examined the question to what extend an execution judge in Switzerland is authorized to interpret a court settlement pursuant to which a party has to make a payment (a “Court Payment Settlement“).
The parties in the SFT Proceedings had entered into a Court Payment Settlement in prior court proceedings before a Swiss court (the “Settlement Proceedings“). In this Court Payment Settlement, the parties had, among other things, agreed that the defendant’s acknowledged debt in the amount of roughly CHF 77’000.00 shall only be due and payable once the fate of the defendant’s asserted right or rather claim of set-off in an amount exceeding the mentioned debt has been definitely determined in certain other already pending court proceedings opposing these parties (the “Set-Off Proceedings“), either on the basis of a definitive and enforceable judgment or on the basis of a settlement agreement concluded between the parties.
The relevant paragraph of the parties’ Court Payment Settlement, recorded by a Swiss court in the Settlement Proceedings, reads as follows:
„[Les] Parties stipulent expressément que la dette de B.________ SA, de CHF 77’221.45 (…) avec intérêts à 0,38% l’an dès le 9 juillet 2011, ne sera exigible qu’une fois le sort de la créance compensante de B.________ SA contre A.________ SAS, objet de la procédure pendante devant la Cour civile du Tribunal cantonal vaudois sous référence C G12.017824/SNR/coj, [est] définitivement connu, que ce soit par le biais d’un jugement définitif et exécutoire ou d’une convention entre les parties.“
In the present context, it is to be pointed out that the defendant’s above-mentioned asserted claim of sett-off, disputed between the parties in the Set-Off Proceedings, was based on three different causes of action, i.e., a violation of the Swiss Federal Act on Unfair Competition (the “Swiss UCA“), the violation of a contract between the parties, and, finally, an alleged liability based on trust.
Now, heavily simplifying the relevant dispute for the purposes of this post, what happened following the conclusion of the above-mentioned court settlement is that the Swiss court in the Set-Off Proceedings, in essence, only examined the merits of the defendant’s alleged cause of action based on the Swiss UCA, but refused to examine the other two asserted causes of action, for want of the fulfillment of certain procedural preconditions in relation to these causes of action. In other words, the Swiss court in the Set-Off Proceedings examined and then rejected the defendant’s alleged claim of set-off based on a violation of the Swiss UCA, but refused to hear the defendant’s case based on the other two asserted causes of action, i.e., liability based on a contract and/or on trust.
Despite the above-mentioned circumstance that the court in the Set-Off Proceedings had not dealt with the merits of two of the above-mentioned alternative causes of action of the defendant’s asserted claim of set-off, the opposing party took the view that its claim of roughly CHF 77’000.00 recorded in the above-mentioned Court Payment Settlement had become due and payable, and it initiated debt collection proceedings against the defendant in Switzerland.
In the mentioned debt collection proceedings under Swiss law, the claimant / creditor of the claim of roughly CHF 77’000.00 argued, in essence, that the parties’ true intention when entering into the relevant court settlement was that the maturity of his claim was exclusively subject to the outcome of the Set-Off Proceedings, not of any further court proceedings between the parties. In other words, he argued, in essence, that it was irrelevant in relation to the maturity of his claim of roughly CHF 77’000.00 that the judge in the Set-Off Proceedings had not examined all three alternative causes of action and had not denied the alleged set-off claim on the basis of such a comprehensive examination of the merits of the alleged set-off claim.
Conversely, the defendant at issue argued, in essence, that the parties had agreed in the Court Payment Settlement that the maturity of the acknowledged debt of roughly CHF 77’000.00 was subject to a definitive disposition of the defendant’s claim of set-off, and that such definitive assessment and judgment on this claim had not been made yet, because the court in the Set-Off Proceedings had refused to hear the defendant’s case in relation to two alternative causes of action.
Now, in the SFT Proceedings, the SFT basically examined the question whether or not a Swiss execution judge shall interpret a Court Payment Settlement, which shall have the function of an executory title, in such a way that, particularly, he or she shall try to establish the parties’ true intention when entering into such settlement.
After a detailed examination of its prior relevant jurisprudence, and clarifying its previous case law, the SFT, in essence, concluded that a Swiss execution judge shall not make such an interpretation of a Court Payment Settlement.
The relevant core statement in this new SFT precedent is recorded at consideration 4.4.4 of 5A_533/2017 and reads as follows (emphasis added):
„Dès lors, de même qu’il ne peut pas interpréter une décision judiciaire comme s’il était saisi d’une demande fondée sur l’art. 334 CPC […], le juge de la mainlevée ne peut pas non plus interpréter, au sens de l’art. 18 al. 1 CO, une transaction judiciaire. Par ailleurs, comme en présence d’un jugement, pour constituer un titre de mainlevée définitive, la transaction judiciaire doit clairement obliger définitivement le débiteur au paiement d’une somme d’argent déterminée. Le juge de la mainlevée doit seulement décider si cette obligation en ressort. Cette solution correspond au demeurant à la jurisprudence fédérale en matière d’exécution forcée d’une obligation autre qu’en argent […].“
In light of this new SFT precedent, it is crucial that any Court Payment Settlement that shall be enforced in the sense of an executory title in Swiss debt collection proceedings is drafted very carefully, so that it derives from this settlement, without any ambiguity, which amount of money is owed by whom (“la transaction judiciaire doit clairement obliger définitivement le débiteur au paiement d’une somme d’argent déterminée“).
This new precedent raises the interesting question whether a Court Payment Settlement must be unconditional, in the sense that the payment obligation recorded in the court settlement must be definitively due and payable and cannot be subject to a condition(s). This question is raised by the circumstance that in the new precedent at issue, the SFT states that the court settlement must definitely (“définitivement“) obligate the debtor to make a certain payment (at consideration 4.4.4).
For the purposes of this post, i.e., without a more detailed examination of this issue, I do not think that the SFT intended to make such qualification. In other words, I do not think that the SFT intended to determine that a payment obligation recorded in a court settlement may never be subjected to a condition(s).
That said, what is clear is that if such payment obligation shall be subject to a condition(s), it is crucial that such condition(s) is worded in such a manner that (i) the content of the condition(s) is unambiguously clear, and (ii) that the occurrence of the condition(s) can clearly be proved by the creditor on the basis of documents (“durch Urkunden liquide beweisen“)
PHH, Zurich, Switzerland, first published on LinkedIn on 28 November 2017 (www.haberbeck.ch)
The information contained in this post is for general informational purposes only and is not intended to constitute legal advice. Readers of this post should not take any actions or decisions without seeking specific legal advice.