Originally from Handbook on Third-Party Funding in International Arbitration, Second Edition

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PART I.  THE THIRD-PARTY FUNDING LANDSCAPE

1.  The TPF market in Switzerland

1.1.  Please shortly describe the TPF market in your Jurisdiction.

Switzerland has a well-established history of third-party funding for relatively small court and administrative disputes, which has been provided via legal costs insurance and State-financed legal aid (see Question I.1.6, below).

Third-party funding arrangements for the financing of high-value court litigation or international arbitrations have not been common but have been the subject of increasing attention in recent years. The minimum value in dispute that funders require varies. Some funders may already fund a value in dispute of CHF 250,000, others require at least EUR 7,000,000.

Some questions regarding third-party funding, such as the legality of such arrangements and potential negative impacts on the attorney-client relationship, have been directly addressed and decided by the Swiss Federal Supreme Court. Since 2004, the Court has twice given the green light to the use of third-party funding of litigation in Swiss courts and, indirectly, in arbitration proceedings.   In parallel, awareness of third-party funding has been increasing. It now is regularly considered for international arbitrations but its use in the Swiss domestic market is still relatively small compared to other jurisdictions.

1.2.  Is it dominated by local or international Funders? Which Funders are active? Which cases typically get funded?

The number of finance providers actively marketing litigation funding in Switzerland is still relatively small.

In addition, companies operating elsewhere (primarily Germany, England, and the United States) have been approached and have agreed to finance arbitrations seated in Switzerland.   However, details regarding the extent of this practice are not available and there is no official registry or directory of funders.

As in other jurisdictions, if a commercial litigation funding company determines that a potential or existing claim of sufficient potential value has an acceptable chance of success, the company takes over the costs of pursuing the claim in exchange for a fixed percentage of the recovery (typically in the range of 15-40% or a multiple of the invested amounts and possibly an upside) if the claim is ultimately successful. If the claim is unsuccessful, the litigation funding company pays the resulting costs, such as the court costs as well as the legal fees and costs of the opposing party.