Admissibility of international forum running

Abstract

The Federal Supreme Court changes its jurisprudence on negative declaratory actions

In a leading decision of March 14, 2018 in proceedings conducted by Homburger, the Federal Supreme Court has changed its prior jurisprudence on the requirements for negative declaratory actions. lt ruled that the intention of a party to secure a venue in Switzerland for an imminent legal dispute in an international context is to be considered as a sufficient interest for a respective declaratory action.

The Federal Supreme Court considers that, in an international context, the actual interest to conduct a lawsuit in a particular state can be significant, already due to the different procedural rights and the different language, length and costs of the proceedings. This justities qualifying the interest of a party to secure a suitable venue in case of an imminent legal dispute as a sufficient interest in a declaratory judgment.

With this judgment, which is carefully motivated and which will be published, it is settled that forum running is legitimate and admissible in the international context. As a welcome result, the judgment eliminates a discrimination of (primarily Swiss) Parties who want to file a claim for negative declaratory judgment in order to secure a venue in Switzerland.

The judgment of the Federal Supreme Court was rendered under the Lugano Convention. The considerations of the Federal Supreme Court should, however, by analogy also apply to other international disputes. International forum running outside the field of application of the Lugano Convention will be practically relevant in particular in case of a potential enforcement of a foreign judgment in the area of the Lugano Convention.

At the moment, it appears open whether the Federal Supreme Court will adhere to its previous jurisprudence, according to which forum running is not admissible, in the domestic context.

Facts

The Swatch Group, which was represented by Homburger in these proceedings, decided to terminate the prior cooperation with wholesalers in the course of a gradual Implementation of a selective distribution system for spare parts. The wholesalers were granted an Interim period until the end of 2015 (with an advance notice of more than a year) prior to termination of supply with spare parts.

In spring 2016, an English wholesaler requested reinstatement of the supply from three companies of the Swatch Group, based on English and European competition law, stating that it would otherwise file a claim in England without further notice. Before the English company had filed its claim for performance, the Swatch Group filed an action with the Commercial Court of the Canton of Berne. lt requested a negative declaratory judgment that it did not have a supply obligation and that it did not owe anything to the English company due to the termination of supply.

The Commercial Court of the Canton of Berne denied an interest of the claimants in a declaratory judgment on the basis of the lex fori. lt held that the interest of a party to secure a venue in Switzerland with a negative declaratory judgment did not constitute a sufficient interest in a declaratory judgment, in accordance with the previous jurisprudence of the Federal Supreme Court. Accordingly, it did not admit the claim by judgment of June 26, 2017.

The Swatch Group filed an appeal against this judgment with the Federal Supreme Court. The Federal Supreme Court approved the appeal by judgment of March 14, 2018 (4A_41712017, scheduled for publication) and affirmed a sufficient legal interest in a negative declaratory judgment. The Federal Supreme Court remanded the matter to the Commercial Court of the Canton of Berne for continuation of the proceedings.

Considerations of the Federal Supreme Court

Since the parties are domiciled in England and in Switzerland, the Lugano Convention was applicable. The Federal Supreme Court adhered to its previous jurisprudence, according to which the Lugano Convention does not regulate the legal interest in a claim. Rather, the legal interest is governed by national law.

The Federal Supreme Court then held that the assessment of the legal interest shall be made on the basis of the lex fori (i.e. Swiss law) and not on the basis of the lex causae (in the present case English law).

Subsequently, the Federal Supreme Court addressed the central question whether an interest in a declaratory judgment is given in case of a negative declaratory action by which an impending action for performance shall be preempted (so-called forum running).

The Federal Supreme Court considered whether provisions of national law (such as the legal interest in a claim) might have to be interpreted restrictively also outside the substantive scope of the Lugano Convention. This in case that the national provisions would otherwise impede the practical effectiveness of the Lugano Convention (so-called effet utile principle). The Federal Supreme Court left this issue open.

Under national Swiss law, the Federal Supreme Court addressed the question whether the interest of a claimant who brings an action for negative declaratory judgment, namely to resolve an existing uncertainty about the legal situation by a court himself, appears worthy of protection. Relinquishing its previous jurisprudence, the Federal Supreme Court affirmed this question. In particular, it took into account that, in the international context, the actual interest to conduct a lawsuit in a particular state and not in another state can be significant, already due to the different procedural rights and the different language, length and costs of the proceedings.

In conclusion, the Federal Supreme Court held that «at least in the international context, the interest of a party to secure, in case of an impending legal dispute, a place of jurisdiction that is suitable to it has to be qualified as a sufficient interest in a declaratory judgment». Accordingly, the legal interest of the claimants for negative declaratory judgement is to be affirmed and does not lapse due to the subsequent filing of an action for performance by the defendant in the proceedings regarding declaratory judgment.

Appraisal and Practical Relevance

With the leading decision of the Federal Supreme Court of March 14, 2018, which will be published in the Federal Supreme Court’s official publication, it is settled that forum running in the international context is legitimate and admissible. The Federal Supreme Court thereby explicitly relinquishes its previous jurisprudence. The decision of the Federal Supreme Court was rendered without an oral deliberation of the judgment and hence unanimously.

As a welcome result, the judgment eliminates a discrimination of (primarily Swiss) parties who want to file a claim for negative declaratory judgment in order to secure a venue in Switzerland. Pursuant to the recent judgment Schlömp of the Court of Justice of the European Union (case C-467116 of December 20, 2017), it is sufficient for doing so to initiate mandatory conciliation proceedings.

The judgment of the Federal Supreme Court was rendered in application of the Lugano Convention. However, the reasons that are given by the Federal Supreme Court for the admissibility of forum running in the euro-international context, also (and a fortiori) speak for its admissibility in the international context outside the scope of application of the Lugano Convention.

At the moment, it appears open whether the Federal Supreme Court will adhere to its previous jurisprudence considering forum running to be inadmissible in the domestic context. The judgment of March 14, 2018, which only addressed the international context, does not allow to establish a clear trend in this respect. The remark that the change of jurisprudence applies «at least [!] in the international context» indicates that at least in certain cases a sufficient legal interest in forum running is also conceivable in the domestic context.

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