The critical importance of properly determining the subject matter in Swiss banking litigations

Recently, the Commercial Court of the Canton of Zurich (Zurich Commercial Court) published a new judgment dated 13 June 2019 (case reference: HG160177-O), which is a good example of how important it is in banking litigations before Swiss courts to properly determine the subject matter (Streitgegenstand, in German), in other words, to correctly determine and formulate in a civil action what the claimant is asking for.

In the relevant dispute, the claimant asserted, among other things, that certain payments from his account, which were initiated in the banking system by his relationship manager, were not authorised by him and were therefore unjustified (see consideration 3.2, at page 9). In relation to such payments, the claimant sued the bank for damages, the amount of damages corresponding to the (allegedly) unauthorized account debits in question (see consideration 3.4, at page 13). In other words, he filed an action for damages against the bank, which was also clearly shown by the circumstance that the claimant asked for interest on damages in his action, not for default interest (Id.).

While asking for damages in a situation as the one described above may be correct in other legal orders, this is not so under Swiss law as it is construed by the Swiss courts, namely the Swiss Federal Tribunal (SFT). Pursuant to different SFT precedents, and simplifying the relevant legal reasoning for the purposes of this contribution, payment to an unauthorised third party does not release the bank from its obligation to perform vis-à-vis its client (Id.). In the event of a payment to an unauthorised third party, the bank is, therefore, not entitled to debit the customer’s account. Hence, a customer demanding the adjustment of the account balance (i.e., demanding that the original account balance prior to the unauthorized payment is restored) shall bring an action for performance of the contract and not an action for damages (Id.).

In its judgment HG160177-O dated 13 June 2019 the Zurich Commercial Court retained that the relevant civil action is, among other reasons, to be rejected because the claimant has sued the bank for the wrong object: He should not have sued the bank for damages, but for performance, i.e., for reinstating the original account balance prior to the unauthorized debits (see consideration 3.4, at pages 13-14).

Given that the claimant was requesting the payment of a sum of money, without specifying in his requests for relief (Rechtsbegehren, in German) whether damages or performance is sought, the Zurich Commercial Court raised the question whether the claimant’s action could be somehow redefined as a claim for performance (see consideration 4.1, at page 14). From the point of view of claimants’ representatives, it is worrying that the Zurich Commercial Court answered this question in the negative in its judgment at issue (Id.).

As mentioned at the beginning of this contribution, the new Zurich Commercial Court judgment briefly discussed herein is a good example of how important it is in banking litigations before Swiss courts to properly determine the subject matter (Streitgegenstand, in German), in other words, to correctly determine and formulate in a civil action what the claimant is asking for.

Philipp H. Haberbeck, Zurich, 3 January 2020 (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. Any mandate is subject to the full execution of an engagement letter.

Rechtsgebiete: Bank- und Finanzmarktrecht