Fifteen Eighty Four

Despite the existence of soft law instruments specifically created for international commercial contracts, most notably the UNIDROIT Principles of International Commercial Contracts 2016, national laws continue to dominate cross-border transactions.

In this regard, international commercial contracts are frequently governed by Swiss law, which is considered to be the most appealing law after English law. In fact, along with English law, Swiss law is, on average, three times more attractive to commercial parties than any other law. Recent statistics released by the International Chamber of Commerce (ICC) confirm this, indicating that Swiss law has consistently been the second or third most popular law chosen to govern the parties’ contracts.

The popularity of Swiss law as the law chosen to govern the parties’ contract is also confirmed by surveys carried out by international commercial actors. Indeed, according to the Queen Mary/White & Case 2010 International Arbitration Survey: Choices in International Arbitration, Swiss law is the third most popular law used by corporations behind English and New York law. In addition, according to a survey carried out of 100 European businesses in 2008, Swiss law was the second most preferred choice of governing law in cross-border transactions.

So why is Swiss law so popular?

Many reasons are cited for the popularity of Swiss law as the law governing the parties’ contract.

First, Swiss law allows room for party autonomy and contains very few mandatory provisions. It is not subject to EU law or complicated rules on general terms and conditions, such as those found in Germany. Swiss law upholds the principle of pacta sunt servanda yet commercial actors can still rely on the values of fairness and justice epitomized, for example, by the good faith principle found in Article 2(1) of the Swiss Civil Code. In this way, international commercial actors are protected against sharp dealing.

Second, Swiss law is said to be ‘neutral’. Indeed, it does not favour any particular party in commercial dealings.

Third, the Swiss Code of Obligations (the main source of Swiss contract law) borrows concepts from the French and German legal systems making it particularly well suited to cross-cultural relationships. In this vein, parties from Civil law jurisdictions may prefer Swiss law, due to its commonalities with the laws of several Civil law jurisdictions, rather than other popular laws of Common law jurisdictions, such as English and US law.

Fourth, the Swiss Code of Obligations and the Swiss Civil Code (the main sources of Swiss contract law) are both concise and easily accessible, being available online not only in the official languages of German, French and Italian but also in English. The case law of the Swiss Federal Supreme Court is also steady and predictable and is easily accessible online. For example, all decisions of the Federal Supreme Court rendered since 1 January 2000 can be found on the website of this court.

Finally, this popularity may be explained by the fact that Switzerland is also a popular seat of arbitrations and that certain parties choose the substantive law of the jurisdiction of the chosen seat of the arbitration to govern their contract.

The ICC Statistics indicate that there are a significant number of non-Swiss parties who will be involved in arbitration proceedings where their contract is subject to Swiss law. Furthermore, English is typically selected as the language of the arbitration proceedings.

Given the popularity of Swiss law as a law governing the parties’ contract, in particular, in proceedings in English involving non-Swiss parties, the idea behind this book on international commercial contracts under Swiss law is to make Swiss contract law more accessible to English-speaking commercial actors and practitioners who are not familiar with Swiss contract law by presenting the general principles of Swiss contract law as well as the key specific contracts under Swiss law which one finds in international commerce.