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Site contribution
Date: April 2011
Prepared by:
Martin Frey, LL.M.
Baker & McKenzie Zurich
Holbeinstrasse 30
Postfach
8034 Zurich
Phone:   + 41 44 384 14 14
Fax:   +41 44 384 12 84
E-Mail:   martin.frey@bakermckenzie.com
Introduction
Procedural acts are acts carried out in connection with judicial or administrative proceedings either by the parties or their representatives, or by a judicial or governmental authority in the course of, or as a preparatory measure for, the proceedings. Procedural acts include, for instance, service of process, serving court summons to appear as a party or witness, or taking of evidence through e.g. depositions of parties or witnesses or production of documents.
Under Swiss law, various procedural acts are reserved to courts or regulatory or prosecutorial authorities and may not be performed by the parties themselves. For instance, witness or party depositions, or gathering documentary evidence for a court case are as a rule incumbent on a judge, prosecutor or administrative investigator under Swiss legal principles; conversely, e.g. lawyers acting on behalf of the parties are banned from conducting a witness interrogation in the absence of a court or prosecutor or administrative investigator. If a procedural act needs to be carried out in Switzerland in support of judicial proceedings in foreign countries, the foreign country in question must lodge with the competent Swiss authority a request for international mutual legal assistance ("MLA"). In order to avoid bypassing MLA and thus, to prevent foreign authorities or even private individuals (acting for the benefit of such authorities) from performing on Swiss soil procedural acts without Swiss governmental authorization, the Swiss Penal Code ("SPC") provides that whoever, without being authorized, carries out activities on behalf of a foreign state or a foreign party or organization on Swiss territory, where such activities are the responsibility of a public authority or public official and whoever encourages, or aids or abets such activities shall be liable to imprisonment for up to three years or to a monetary penalty or, in serious cases, to imprisonment of not less than one year (Article 271 SPC). This provision applies irrespective of the concerned party's (e.g. the witness's) consent.
Against this background, conflicts with US law may arise when a US court or governmental body orders a Swiss-based party to produce evidence in US proceedings, or where a party to US proceedings attempts to serve on a Swiss-based party a summons to appear or a court complaint, or where lawyers acting on behalf or parties to a US litigation seek to interrogate a witness in Switzerland. These acts often fall under the notion of "prohibited acts for the benefit of a foreign state" under art. 271 SPC, whereas from a US perspective, it is incumbent upon the parties to a civil litigation to serve process, or conduct pre-trial discovery including the production of documents or depositions of witnesses.
Indeed, from a Swiss perspective, a subpoena to produce documentary evidence, or a summons to appear as a witness but also, the interrogation as a witness or the gathering and production of evidence, involve a coercive element: In case of non-compliance with a subpoena, or e.g. refusal to testify despite the absence of a privilege from the duty to testify (such as "Fifth Amendment" style self-incrimination privileges etc.), a court or prosecutor or administrative investigator may impose coercive sanctions (typically fines and in extreme cases even custodial sanctions). Likewise, in the United States, document production orders or summons to testify often involve the possibility for a court to impose coercive sanctions, such as custody for contempt of court, etc. Now, under Swiss law only Swiss authorities may use coercive power on Swiss soil. Thus, where a procedural act involves at least an implicit threat of coercive sanction for non-compliance, it will fall under art. 271 SPC and in principle only Swiss authorities may carry out such acts on Swiss soil under the applicable MLA protocol or, alternatively, the Swiss government needs to grant special permission in order for the act in question to be permissible.
The above having been said, parties to US judicial or administrative proceedings who seek the gathering of evidence, or wish to serve process, or even conduct an internal investigation with subsequent disclosure of its results to a US authority (e.g. the SEC) are strongly encouraged to use the mechanisms to gather evidence etc. provided under the various MLA treaties ("MLAT"s) in place between Switzerland and the US. Where administrative authorities are involved, international administrative assistance might be viable (and is often faster and less bureaucratic than MLA). Go to: Mutual assistance in Switzerland. In the absence of an applicable MLAT or arrangement for administrative assistance, one might consider applying with the Swiss government for permission under art. 271 SPC to carry out the procedural act in Switzerland. Such permission is discretionary and might, or might not, be granted depending on the circumstances, including political considerations.
Conversely, Swiss courts and authorities tolerate service of official documents by foreign diplomatic representations to their own nationals (not Swiss nationals) where no coercive threats (such as fines, etc.) for non-compliance are involved.
Further, in order to protect commercial secrets, Swiss law prohibits (i) the search for manufacturing or trade secrets in order to make them available to a foreign court or governmental agency, a foreign organization, a private enterprise, or their agents as well as (ii) the mere fact of making manufacturing or trade secrets available to such entities or their agents (Art. 273 SPC). Therefore, anyone submitting documents to an American court or a party involved in judicial proceedings in the U.S. may be liable to prosecution in Switzerland if such documents contain a manufacturing or trade secret. This prohibition may be in conflict (and indeed already often was in conflict in the past) with a party's duty under U.S. procedural law to produce documents in proceedings before a U.S. court. Also, the notion of a Swiss commercial secret ("manufacturing or trade secret") is quite broad: any fact relating to a Swiss-based business or even employee that is (i) commercially significant and (ii) not publicly known outside Switzerland, such as e.g. a contract, its negotiation or breach, or e.g. an employee's salary slips may fall under the notion of Swiss commercial secret. Thus, a great number of documents of interest to a U.S. litigation will often contain Swiss commercial secrets and consequently, art. 273 SPC may result in a pressing problem for whoever is exposed to US litigation and must use in such litigation information of commercial significance relating to Swiss-based business activities.
Note that art. 273 SPC also applies intra-group, i.e. if making available a Swiss commercial secret to, e.g., a foreign parent or affiliate company. Conversely, it does not apply where all Swiss-based owners of the secret in question waive secrecy. Thus, one solution to the problem may consist of seeking waivers from all Swiss-based secret's owners involved. Alternatively, art. 273 SPC does not apply if filing the information in question with a Swiss authority, e.g. in the course of MLA or international administrative assistance proceedings. Finally, as a last resort solution, one would have to redact relevant information before producing the same abroad so as to avoid any identifier of the involved secret's owners who have not waived secrecy. However, do always keep in mind also the possible applicability of art. 271 SPC (outlined earlier), which cannot be avoided through a simple consent or redacting of identifiers.
In addition, other legal provisions need to be observed in case of disclosure of information, such as, in particular, data protection (go to: Data protection) and banking laws.
Applicable Law
Swiss Penal Code articles 271 and 273. Both articles are part of the chapter entitled "Felonies and offenses against Country and National Defense".
Art. 271 SPC, entitled "Prohibited acts for a foreign state", reads as follows:
1. Whoever, without being authorized, performs acts for a foreign state on Swiss territory that are reserved to an authority or an official,
whoever performs such acts for a foreign party or another foreign organization,
whoever aids and abets such acts,
shall be punished with imprisonment for up to three years or a monetary penalty, in serious cases with imprisonment for not less than one year.
2. Whoever abducts somebody to a foreign country using violence, ruse or threat in order to hand him over to a foreign authority, party of other organization, or to endanger his life and limb, shall be punished with imprisonment for not less than one year.
3. Whoever prepares such abduction shall be punished with imprisonment or a monetary penalty.
(paragraph 2 and 3 play an accessory role compared to paragraph 1 and will not be discussed here).
Art. 273 SPC, entitled "Economic intelligence service", reads as follows:
Whoever seeks out a manufacturing or business secret in order to make it accessible to a foreign official agency, a foreign organization, a private enterprise, or their agents,
whoever makes a manufacturing or business secret accessible to a foreign official agency, a foreign organization, a private enterprise, or their agents,
shall be punished with imprisonment for up to three years or a monetary penalty, in serious cases with imprisonment for up to three years or a monetary penalty, in serious cases with imprisonment for not less than one year. Furthermore, the judge may impose a monetary penalty.
Detailed Information
Art. 271 SPC aims at protecting Swiss sovereignty, particularly Switzerland’s right that acts of state be performed on Swiss soil only by Switzerland’s own officials, unless (i) such right is, pursuant to an international convention or treaty, granted to a foreign authority, or (ii) an exception is granted by a competent Swiss authority on a case by case basis.
Whoever, on Swiss territory, and without permission by Swiss authorities, carries out activities for a foreign state that under Swiss legal tradition, are incumbent on courts or governmental authorities is subject to criminal prosecution. This applies also to persons furthering or enabling such acts. Relevant acts are, in particular, those that might have coercive legal consequences for the persons involved or for third parties, such as contempt of court etc. for the failure to testify or produce documents requested under a subpoena etc. Thus, typically, gathering evidence for the benefit of foreign court or prosecutorial or regulatory proceedings will falls under art. 271 because in many cases, such evidence gathering is not really voluntary but rather, covered by at least implicit threats to be disciplined in case of non-compliance with the court order etc. in question. Conversely, where a company for instance, gathers evidence in order to prepare for filing a complaint abroad along with exhibits, this is often not covered by any subpoena-type of coercive threat. Thus, no coercive power of a foreign authority on Swiss soil is involved and consequently, art. 271 SPC will not apply. Also, where failure to produce documents in foreign proceedings do not entail coercive consequences but rather, would lead to just detrimental assessment of evidence by the foreign court or authority or, e.g. a shift of the burden of proof, etc. art. 271 SPC does not kick-in either.
It is irrelevant for an act to fall under art. 271 SPC whether foreign authorities or officials overtly perform official acts on behalf of a foreign state on Swiss territory or whether the person (who can be an individual or a company) carrying out the act for a foreign state, acts in secret. It is important that the acts are acts of state in nature, that they are performed for the benefit of a foreign state and that their performance is reserved to a Swiss authority or a Swiss official under the principles outlined earlier.
If someone (i) participates in an inspection or investigation of a company's files in Switzerland undertaken by representatives of a foreign authority, (ii) collects information from third parties in Switzerland, or (iii) gathers information and sends it to a non-Swiss company in order to be forwarded to a foreign authority, Art. 271 SPC may be violated. Permission by the deponent or by any third parties affected will not relieve the deposing party from its obligations under Art. 271 SPC. Also, it is disputed amongst legal scholars whether a company may simply investigate for, and gather, for the benefit of a foreign state evidence within its own ambit of control (as opposed to e.g. collection documents from third parties) without violating art. 271 SPC. While a number of authors advocates permissibility of such intra-company evidence gathering for the benefit of foreign authorities, it must be noted that no court ruling has ever brought clear guidance in this regard. Quite to the contrary, it can be inferred from certain decisions from the Swiss Federal Government and the Swiss and the Swiss Justice Department that also intra-company investigations or evidence gathering may fall under art. 271 SPC if production has been ordered by a foreign court or authority. Indeed, the main rationale behind art. 271 SPC in the present context is avoiding the exercise of coercive power by foreign authorities on Swiss soil. Thus, the determining criterion is likely the answer to the question what sanction applied abroad for failure to comply with the production order, summons to appear, etc. To be on the safe side, it is not recommended to rely on the distinction between intra-company gathering of evidence on the one hand from third party evidence collection on the other.
The illegal conduct must be carried out within the jurisdiction of a Swiss authority. The offender has to act at least in part on Swiss territory. The power of Swiss authorities or officials to take evidence is limited by the boundaries of Switzerland. For this reason, a well-known practice with the goal of evading the scope of Art. 271 SPC has developed: The parties voluntarily arrange that the interrogation of witnesses/informants or inspection of documents takes place outside Switzerland. There is not case law under art. 271 SPC on such cases. In particular, the question of whether preparation for such acts would be found to have occurred in part on Swiss territory has not been examined. However, a substantial risk exists that the inspection of documents that would ordinarily not be taken abroad like e.g. physical documents other than those an employee would ordinarily take with him on a business trip would be sufficient under Swiss criminal law to deem the full process of the taking of evidence as an act on Swiss territory. Moreover, it is conceivable that the laws of other countries where these acts are carried out may be violated.
Any person can be an offender, i.e., the offence set forth in Art. 271 SPC may be committed by a Swiss or a foreign national, an individual or an official.
The primary addressee of an act falling under Art. 271 SPC is, however, a foreign state acting through its authorities or officials. The relevant acts will often be performed in support of foreign civil, criminal or fiscal proceedings, i.e. in order to benefit proceedings in a foreign state. The acts must be performed for the benefit of a foreign state in order to fall under Art. 271 SPC. This means that the conduct must be "in the interest" of a foreign state: it does not even need to ultimately be of practical use to the foreign state; rather, it suffices for the conduct in question to be intended to benefit the foreign state. Further, other than foreign states, foreign political parties and other foreign organizations are beneficiaries falling within the ambit of art. 271. A foreign organization is defined as a group of persons who jointly pursue a common political purpose, even if their association is very loose and the organization has neither articles of association nor corporate bodies. However, Art. 271 SPC will in principle only apply where such organization is governmental in nature. For instance, arbitral tribunals are deemed private even where the arbitrators are appointed by a state tribunal. Therefore, depositions of witnesses and other acts aimed at obtaining evidence, as well as notifications served on behalf of a foreign arbitral tribunal, in principle, do not fall within the ambit of Art. 271 SPC. Such acts, however, may be punishable under Art. 271 SPC if the arbitral tribunal has been established with the sole purpose of bypassing MLA. In cases of doubt whether or not the arbitral tribunal requesting assistance for service of documents or a deposition is an instrumentality of the foreign state in question, these acts should be performed outside Switzerland only; alternatively, the Federal Department of Justice and Police should be consulted on the possibility of initiating MLA proceedings. Also, appeal or enforcement proceedings before governmental courts after proper arbitration proceedings are acts of state by nature and require MLA or a Swiss governmental permission where measures are envisaged in Switzerland. Also, inspectors from foreign health authorities who visit Swiss production sites in the course of an admission procedure fall under the scope of Art. 271 SPC; therefore, in the absence of relevant treaty arrangements, an authorization from the competent Federal Department of Economic Affairs should be obtained before an inspection on Swiss territory takes place.
Art. 273 SPC declares a criminal offense any seeking out of a manufacturing or trade secret (collectively a "Swiss commercial secret") in order to make it available to a foreign authority, a foreign organization or a foreign private business enterprise or their agents. In addition, it is a criminal offence under art. 273 SPC to simply make available, i.e. divulge, to such foreign entity a Swiss commercial secret. The notion of "Swiss commercial secret" is construed broadly so as to cover all and any significant Swiss business activities falling under an interest not to be revealed to foreign public officials or foreign private organizations. A Swiss commercial secret (other than manufacturing secret) is defined as any fact of economic nature that (i) is not generally known outside Switzerland, (ii) is intended to be kept confidential, (iii) is covered by a legitimate interest in being kept secret and (iv) is closely connected to the Swiss economy. As a matter of practice, all and any commercially relevant facts relating to a Swiss based business are deemed a "Swiss commercial secret" under art. 273 SPC; examples involve e.g. commercial contracts, their violation or negotiation, or even salary slips of Swiss-based employees.
In theory, art. 273 SPC protects Swiss territorial sovereignty and independence as well as the Swiss national economy. However, these public interests are only protected to the extent the secret's owner maintains his or her interest in keeping the information secret. Only Swiss-based owners of secret information are relevant under art. 273 SPC, including Swiss branches of foreign enterprises. In other words, art. 273 SPC does no longer apply where all Swiss-based owners of the protected information waive secrecy, as will be elaborated upon below:
As stated above, Art. 273 SPC will not apply where all Swiss-based owners of the protected information waive secrecy. As a matter of practice, the hurdle for those willing to disclose abroad Swiss commercial secrets is proving that all third party Swiss-based secret's owners, e.g. other parties to a contract, have waived secrecy too. According to Swiss legal doctrine, such consent may be implicit. Thus, it may for instance result from a contract that all parties thereto must have reasonably anticipated and agreed disclosure of same in a particular country to a particular public, etc. Where such interpretation is reasonably warranted, no explicit third party waiver will be necessary although, naturally, caution must be applied in inferring implicit secrecy waivers from contract language. Conversely, a consent will not be sufficient to permit disclosure if given under pressure exerted e.g. by foreign authorities. In other words, a secrecy waiver under art. 273 SPC must be truly voluntary.
In cases where Switzerland's overall national interest is at stake, secrecy cannot be validly waived by individual secret's owners. Such secrets of "national importance" (such as information relating to measures in case of war, or secrets relating not only to commercial transaction but also, to military plans or political arrangements etc.) may not be disclosed at all.
It is prohibited to seek out a manufacturing or trade secret in order to make it available to a foreign official agency, a foreign organization, a private enterprise, or their agents. If the recipient of the secret information is a private individual (who is not acting as agent on behalf of one of the beneficiaries listed above), Art. 273 SPC will not apply. Successful completion of a search for manufacturing or trade secrets is not important for the application of Art. 273 SPC. Therefore, even if the spy uses inappropriate methods to seek out a secret, he or she will be liable to prosecution under Art. 273 SPC only provided that the other conditions for the application of this provision are met. Conversely, art. 273 APC applies also intra-group. On the other hand, many commercial contracts concluded in multi-enterprise contexts make no reasonable sense without involving a variety of foreign entities so that in such case a reasonable contract interpretation might result in an implicit secrecy waiver to the extent necessary to ensure proper contract implementation. Where Switzerland grants MLA or administrative assistance to a foreign country based on an international treaty or Swiss domestic law, disclosure of information falling within the scope of Art. 273 will be lawful because in such case, the information in question will be handed over to a Swiss and not foreign authority.
Both the prohibition of acts for a foreign state and that of commercial espionage for the benefit of certain foreign beneficiaries are so-called "political offenses" falling within the subject-matter jurisdiction of the Swiss Federal Prosecution Service (as opposed to cantonal prosecutors). Further, permission to prosecute from the Swiss Federal Government (the "Federal Council") or as the case may be, a competent federal governmental department in politically less important cases, is required. The Federal Council, or, in cases where this competence has been delegated to a federal department, the department, will analyze whether it is politically appropriate to prosecute the offense (application of the so-called "principle of opportunity"). The decision whether or not to prosecute is discretionary and, as a rule, will be delegated to the Federal Department of Justice and Police.
Under both criminal offences in question, the maximum penalty is imprisonment up to 3 years or a fine up to CHF 1,08 M. In so-called "serious cases", imprisonment will last no less than 1 year.
Frequently Asked Questions
  • May I take depositions in Switzerland if the person involved agrees to it?
    No, you need to ask the Swiss Federal Government for authorization. The competent authority within the government for granting such authorization is the Swiss Federal Government as a whole or, if the case is deemed of lesser political significance, the federal department in whose ambit the subject matter falls. In most cases involving depositions, the competent department will be the Federal Department of Justice and Police. Note that where MLA is easily possible, particularly where the deposition would be governed an MLAT, permissions to proceed under art. 271 SPC are denied as a rule; on the other hand, permissions are discretionary and case sensitive so that consulting legal counsel might be advisable before deciding on how to deal with the situation. Alternatively, placing the interview or deposition outside Swiss soil might be a viable option.
  • I would like to depose a Swiss citizen in Switzerland. How should I proceed in order not to commit any offense under Swiss law?
    If you need to depose a person in Switzerland, you must formally apply for such deposition by way of a request for Judicial Assistance in Civil Matters under the applicable Convention of The Hague of March 18, 1970. Both Switzerland and the United States are parties to this Convention. It may be noteworthy that Switzerland, as opposed to other civil law countries like Germany for example, is also prepared under certain circumstances to grant judicial assistance under this Convention for pre-trial discovery proceedings (see the reservation made by Switzerland to the Convention). (Please see also Mutual legal assistance)
  • I would like to depose a Swiss citizen in the United States. If the person agrees to it, may I invite him or her to the United States and depose him or her there?
    It is possible to invite the witness for the deposition to be taken in the United States. If someone voluntarily makes a deposition in a foreign country, Art. 271 SPC will not apply and will, therefore, not cause problems in Switzerland. However, Swiss citizens are often not willing to appear in the U.S. for this purpose, irrespective of cost and time. Furthermore, the fact that the information is disclosed outside of Switzerland will not prevent the application of Art. 273 SPC on commercial espionage, i.e., the person giving testimony and those conducting the deposition may be found guilty of having made available a Swiss trade or manufacturing secret to foreign authorities.
  • I am a United States citizen. Am I also protected against commercial espionage performed in Switzerland?
    Art. 273 SPC protects individuals as well as legal entities regardless of their nationality.
  • Is the exchange of information between parent companies and their affiliates illegal under Art. 273 SPC?
    The reciprocal exchange of confidential information within a group of companies is, as a rule, necessary and permitted but still, art. 273 SPC applies also intra-group and must be taken into account. Thus, the Swiss affiliate involved remains responsible for obtaining the consent of all Swiss-based parties to whom the secrets relate. Moreover, the forwarding of information to group companies in foreign countries may infringe Swiss data protection law). In addition, the exchange of information is prohibited if confidential facts concerning third parties (who did not waive secrecy) or confidential information of (Swiss) national importance is at stake. For example, the electronic processing of client data of a Swiss affiliate by ist parent company domiciled outside of Switzerland is only permitted if the contractual partners of the Swiss affiliate have given their consent to the processing of their data abroad.
  • I am compelled by a foreign court to provide information that might infringe the manufacturing or trade secrets of a Swiss company. The foreign authorities threaten to impose high fines in case of my refusal. May I give them the requested information?
    Under certain circumstances a person providing information to a foreign court in violation of Art. 273 SPC may try to rely on "self-defense" under Art. 17 SPC if the disclosure is aimed at safeguarding legitimate interests. However, this defense is only very reluctantly applied, since it would permit foreign authorities to obtain all the documents they want simply by exerting enough pressure on the person who is requested to provide them. If confronted with such a request accompanied by threats in case of refusal to disclose the information, you should try and seek the consent of the parties involved. If this is not possible or if Swiss national interests are at stake, which would make it impossible to waive the obligation of confidentiality simply by obtaining the consent of the parties involved, you should suggest a request for international MLA or contact the Federal Department of Justice and Police. Also, MLA might be necessary in any event due to the applicability of art. 271 SPC where production of the information in question would require evidence gathering on Swiss soil.
    Useful Links
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  • Swiss Federal Office of Justice
    Information on international mutual legal assistance in civil and criminal matters.