Swiss Law and Swiss Arbitration Seoul, 18 September 2018 Tino - PowerPoint PPT Presentation

Establishment of a Swiss Presence, Application of Swiss Law and Swiss Arbitration Seoul, 18 September 2018 Tino Gaberthüel and Harold Frey

Why Switzerland?  Political and economic stability  Excellent infrastructure  Efficient and reliable banking and payment system  Reliable legal framework (e.g. IP protection)  Globalised economy (KOF Index of Globalisation #5)  Worldwide lowest level of corruption (Corruption Perception Index #5) 2

Why Switzerland? Education Education Technology Technology Innovation Innovation QS Top University 2019 Ranking: Swiss Federal Institute of Technology (ETHZ) Rank 7 École Polytechnique Federale (EPFL) Rank 22 Source: IMD World Competitiveness Center 2017 3

Why Switzerland?  Global champions and cutting-edge start-ups (incl. IT, life science, pharma, biotech/medtech, fintech and blockchain) located in Switzerland 4

Switzerland and the world  Close and stable ties to Europe (and the rest of the world)  30 free trade agreements with 40 partners (incl. Republic of Korea)  108 double taxation treaties (incl. Republic of Korea)  Major foreign companies with European HQs or key operations in Switzerland 5

Foreign Direct Investment (FDI)  Generally no approval or screening of foreign investments (unlike e.g. CIFIUS)  Few exceptions of sector-specific regulations Real estate  Restricted acquisition of residential real estate Banking  License restrictions and notification duties Radio Communication  License restrictions Radio and TV Broadcasting Aviation  License and ownership restrictions Nuclear power  License restrictions 6

Foreign Direct Investment (FDI) FDI Redomiciliation Green Field M&A Acquisition Joint Venture 7

Green Field Investment Registered entities (as of 1.1.2018) 10% 35% 25% 30% Total (1.1.2018): 626'364 Corporation (AG) LLC (GmbH) Sole proprietorship Other legal forms (limited partnership, foundation, association, etc.) Source: FOSC, 2018 Source: startups.ch, 2017 8

Establishment of a Corporation or LLC  Minimum capital: CHF 100,000 (corporation), CHF 20,000 (LLC)  Few corporate documents required  No personal attendance required for set-up  At least one local director or authorized signatory  Legal existence upon registration in commercial register  Quick and easy process (approx. 1-2 weeks)  Sophisticated and reliable third-party services providers 9

Corporation vs. LLC LLC (GmbH) Corporation (AG) + Limited liability + Limited liability + More tailor-made governance (veto and + Conditional and authorized capital consent rights) + Shareholders not publicly known + Additional obligations of shareholders + Fit for capital markets (non-compete, ancillary duties, transfer + Widely used, well established case law restrictions, exclusion)  Shareholders publicly known − More rigid corporate governance  No conditional or authorized capital  Unfit for capital markets  Less case law Preferred corporate form, required form for Start-ups, JVs, US subsidiaries ("tick the box") stock exchange listing 10

Swiss Law as an attractive choice of law  No binding precedent rule ( stare decisis ) Neutral Statute- Case  Guiding principle: Party autonomy based law  Large pool of experienced practitioners  Easily accessible legal authority and statutes Civil  Based on globally accepted and familiar principles Law See Annex 1 for additional information 11

Swiss Law as an attractive choice of law  A preferred choice in international business  A neutral blend of legal cultures and traditions  A legal system based on familiar principles 12

Switzerland is a preferred seat of arbitration  Internationally recognized center for arbitration  Attractive locations and facilities for hearings  Many international and dispute resolution organizations 13

Switzerland is a preferred seat of arbitration  Business-friendly environment and legal system  Limited possibilities for appeal and easy enforcement of awards  Neutral and politically stable country in the heart of Europe  Well-established infrastructure and easily accessible locations  Large pool of experienced practitioners See Annex 2 for additional information 14

Switzerland' s attractiveness lies not only in its chocolate… 15

… but also in its reliability as a business hub and arbitration location  In the heart of Europe, but still independent and pragmatic  Well established legal framework  Efficient and reliable courts, accessible and hands-on regulators  Practically no restrictions for FDI  Quick and easy set-up of a legal presence  Attractive tax system 16

Contact Tino Gaberthüel Partner Tel: +41 58 450 81 80 tino.gaberthuel@lenzstaehelin.com Lenz & Staehelin Brandschenkestrasse 24, 8027 Zurich, Switzerland Harold Frey Partner Tel: +41 58 450 80 60 harold.frey@lenzstaehelin.com Lenz & Staehelin Brandschenkestrasse 24, 8027 Zurich, Switzerland 17

Annex 1: Application of Substantive Swiss Law Overview  Civil law:  As South Korea, Switzerland has a civil law system. Its contract law is mainly based on the tradition of Roman law – similar to German law, but in several aspects less complicated.  Neutral:  It is widely conceived as a “neutral” legal system.  Statute-based:  It is a statute-based system, i.e . the main sources of law are codified in federal statutes, most notably the Civil Code and the Code of Obligations.  Case law:  The (statutory) law is interpreted by the Swiss Federal Supreme Court and by cantonal courts. 18

Annex 1: Application of Substantive Swiss Law 1. No binding precedent rule  Under Swiss law, there is no principle equivalent to the doctrine of binding precedent ( stare decisis )  Case law is nonetheless considered an important source of law in Switzerland whenever a given issue of law is not covered by statutory law provisions  Furthermore, precedents provide guidance as to the correct interpretation of the law  Principles regarding the interpretation and construction of Swiss law apply also to international arbitration proceedings which are governed by (substantive) Swiss law 19

Annex 1: Application of Substantive Swiss Law 2. Guiding principle: Party autonomy  Swiss law affords the parties far-reaching autonomy in the drafting of contracts  Deviations from non-mandatory rules are possible and common, e.g .:  Concerning the parties’ respective rights and obligations;  Regarding breach of contract/liability: As under Korean law, derogations from the statutory regime such as limiting liability for simple negligence are possible;  Regarding cancellation rights and contract termination: Tailor made termination regimes are permissible  Only few exceptions, for example certain grounds for setting aside of damages caps and mandatory termination right in agency contracts  (As under Korean law, contractual limitations and exclusions of liability are invalid/unenforceable in case of intentional or grossly negligent conduct) 20

Annex 1: Application of Substantive Swiss Law 2. Guiding principle: Party autonomy  For a contract to be valid, Swiss law requires only agreement on certain key points (so-called essentialia negotii )  A lack of consensus on non-essential points does not render the contract invalid, but requires interpretation and amendment 21

Annex 1: Application of Substantive Swiss Law 3. Large pool of experienced practitioners  As a neutral and liberal law frequently selected by parties, Swiss law has the advantage that many practitioners are well-qualified to handle arbitration cases governed by Swiss law  This provides the parties with a broad pool of international practitioners when selecting counsel and appointing arbitrators  Swiss law provides for no restrictions to foreign counsel and practitioners to assist or represent parties in international arbitration in Switzerland 22

Annex 1: Application of Substantive Swiss Law 4. Easily accessible legal authority and statutes  The relevant Swiss codes are available online, many of them in an official English translation (https://www.admin.ch/gov/en/start/federal-law/classified- compilation.html)  The decisions of the Swiss Federal Supreme Court are available online (www.bger.ch), with many decisions of importance for international arbitration having been translated into English by commentators  Doctrine and legal textbooks, several of them available in English, play an important role and are easily accessible 23

Annex 1: Application of Substantive Swiss Law Annex 1: Application of Substantive Swiss Law 5. Based on globally accepted and familiar principles 5. Based on globally accepted and familiar principles  As Korean civil law, Swiss law follows the basic principles of the Roman-Civil-Law- Tradition  Accordingly, widely accepted and familiar principles are applicable to all agreements governed by Swiss law, such as  The principle of good faith ( bona fide ) ,  Pacta sunt servanda, and  Party autonomy  Swiss law is based on easily accessible principles, allowing for smooth cooperation across legal cultures and language barriers 24