Spotlight on asset seizure and proof in Switzerland

All the questions

Seizure and evidence

i Securing assets and income

There are three ways to secure assets and income in Switzerland:

  1. criminal freezing orders;42
  2. civil seizure orders;43 and
  3. insolvency freezing orders.44

Article 263 paragraph 1 of the SCPP provides that objects and assets belonging to the accused or to a third party may be frozen if it is expected that these objects or assets:

  1. will serve as evidence;
  2. serve as security for procedural costs, monetary penalties, fines or costs;
  3. must be returned to the injured parties; Where
  4. should be confiscated.

All property likely to be confiscated following a procedure based on article 70 CPS must be seized during the investigation. These assets may be in Switzerland or abroad, in which case they must be seized by letters rogatory. The freezing takes precedence over any other decision obtained from creditors.

Freezing orders also extend to assets that can be seized to secure the state’s replacement claim for proceeds of crime that can no longer be confiscated.45 With respect to these assets, the State has no preferential rights over those of other creditors.

Freezing orders can be issued for the return of assets to their rightful owner, but not to secure a claim for damages from an injured person. Consequently, the injured party may also have to obtain civil freezing orders, namely seizures obtained in the context of debt collection proceedings or the execution of foreign freezing orders.

The accounts subject to a blocking order may be described in a generic form, such as “any account of which the designated persons are holders, beneficial owners, signatories or business contributors, as well as any account likely to have received or made transfers to this account”.

Civil seizure orders are narrower in scope, as they can only affect property held at the time the order is received. The conditions for obtaining these commands are also stricter. The main difficulty for creditors is to identify the assets located in Switzerland, the probability of the existence of Swiss assets having to be brought before the civil court. Pre-app discovery is not available.

The cause of a civil seizure by a creditor46 can be one of the following:

  1. the debtor has no domicile or fixed address anywhere, in Switzerland or abroad;
  2. the debtor has dissipated property and fled the jurisdiction or is preparing to flee in order to frustrate the execution of the outstanding debts;
  3. the debtor is in transit or is a person visiting markets or fairs, provided that the claim concerned is such as to require immediate payment;
  4. the debtor has no domicile in Switzerland and no other grounds for attachment are satisfied, but the claim has a sufficient connection with Switzerland or is based on a written acknowledgment of debt;
  5. the creditor has certificates attesting to previous unsuccessful attempts to enforce the debtor’s outstanding debts; and
  6. the creditor has a final enforcement order under the Swiss Debt Collection and Bankruptcy Act (LSDCA), usually a domestic or foreign judgment or arbitration award.47

The court where the assets are located issues a restraint order ex parte if the creditor demonstrates, by supporting documents, the probability that he has a pecuniary claim; there is cause for an attachment order as set out above; and there are assets at hand belonging to the debtor.48

The likelihood of the existence of the assets to be seized can be demonstrated by direct or circumstantial evidence.

The seizure order describes specific assets and can target assets in several places, including outside the canton of the court.

The debtor can initiate proceedings to oppose the seizure. At the same time, the creditor must validate the seizure by requesting the issuance of a payment order against the debtor, who may oppose it.49 The cancellation of the opposition can take place by the execution of an existing Swiss or foreign judgment or by the introduction of a civil action on the merits in Switzerland or abroad. The final seizure of the seized goods and the distribution to the creditors cannot take place before the end of the procedure for annulment of the opposition to the injunction to pay.

If a bankrupt company is involved in a fraudulent scheme, either as a victim or as a tool of the perpetrator, the bankruptcy judgment, respectively the judgment recognizing a foreign insolvency judgment, triggers the opening of bankruptcy. Upon receipt of the judgment, the local bankruptcy office must immediately take all necessary measures to enforce it, such as freezing bank accounts. These commands are issued ex officio and sent to major Swiss banks. Only the debtor’s accounts can be frozen in the context of insolvency proceedings. The assets and claims of the bankruptcy estate are listed in the inventory of the estate. If the Swiss bankruptcy liquidator does not intend to assert certain claims of the bankruptcy estate, the creditors may request the assignment of the right to assert these claims on behalf of the bankruptcy estate to their own costs and risks against the right to be paid in priority on the proceeds of collection.50 Compared to insolvent foreign companies, Swiss preferred creditors have a priority claim on the distribution of Swiss assets, before the balance can be repatriated to the main estate of the foreign bankruptcy.51

ii Obtaining evidence

The main obstacles to obtaining evidence in Switzerland are bank secrecy,52 trade and business secrets and data protection. However, these pitfalls can be overcome, especially in criminal and insolvency proceedings, where bank secrecy cannot be invoked against state authorities. Recent Swiss case law on mutual assistance in civil matters also shows a trend in favor of the lifting of banking, commercial and business secrets in favor of establishing the truth in a foreign civil lawsuit.

It is important to note that Switzerland has a blocking law, contained in article 271 CPS, which punishes with a penalty of up to three years of imprisonment unauthorized activities carried out on Swiss territory for the account of a foreign authority. Collecting evidence in support of a foreign proceeding is considered a violation of Article 271 CPS.

There are several alternative ways to obtain evidence in Switzerland: by criminal denunciation53 and seek54 ordinances, by the conservatory civil instruction55 and civil production orders, and by information disclosure orders by bankruptcy authorities.56 In addition to the parties’ right to request additional evidence (see above), parties to criminal proceedings have the right to inspect the file,57 which includes the right to receive a copy and use it in other proceedings of any kind, both in Switzerland and abroad. In principle, according to Swiss law, the parties have no obligation to keep an investigation secret. Thus, they can access and use all the evidence in the file, in particular the result of the disclosure orders issued by the prosecutor. Article 108, paragraphs 1 and 3, of the CPPP provides, however, that restrictions may apply temporarily when there is a well-founded suspicion that a party is abusing his rights or when this is necessary for the safety of persons or to safeguard public or private interests in preserving confidentiality.58

The type of documents that can be obtained include bank statements, KYC documents, visit reports, and compliance reports.

Subject to exceptions arising from the constitutional right to remain silent and not to incriminate oneself,59 the holder of documents, information and other elements is obliged to hand them over to the public prosecutor.60

Since Switzerland is a civil law country, it is difficult to obtain evidence before the trial. In this particular context, Article 158 CPSC provides for the possibility of obtaining evidence located in Switzerland at any time if the applicant demonstrates that it is probable that the evidence is threatened or that he has a legitimate interest in obtaining the evidence. requested. The Swiss Federal Court has ruled that a legitimate interest is sufficiently demonstrated if the plaintiff wants to assess the chances of success of a planned legal action.61 Preventive obtaining of evidence is even granted if a trial takes place outside Switzerland. The procedure takes place inter partes. In principle, gag orders are not available. This national tool is an interesting alternative to the request for international legal assistance (see below). It can be quicker, and the civil plaintiff’s rights are broader than under an MLA request. However, the grounds for refusing to take evidence are much more limited in the context of the execution of a request for mutual legal assistance than in an independent request for the taking of evidence for preventive purposes.

A civil plaintiff can also obtain evidence after a civil action has been brought. Production orders issued by the civil judge are, however, very limited as the plaintiff must target specific documents or evidence (see above). As the plaintiff must quantify his damage by detailed claims for reparation and allege all the facts necessary to prove the damage immediately in his first conclusions,62 requesting the production of evidence in a civil trial is an ineffective strategy in fraud-related cases.

In bankruptcy proceedings, the debtor is obliged, under pain of penal sanctions, to disclose all his assets to the bankruptcy office and to be at the disposal of the office.63 The debtor must open the premises and closets at the request of a bankruptcy officer. If necessary, the official may call upon the assistance of the police.64 Third parties who have custody of property belonging to the debtor or against which the debtor has claims have the same duty of disclosure and delivery as the debtor.65 Creditors and other interested parties have the right to inspect the bankruptcy file66 and use the evidence it contains.67

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