The right of in-house counsel to refuse cooperation in civil proceedings (In-House Counsel Privilege)

1. The new provision - Article 167a E-CPC

The right of in-house counsel to refuse cooperation will be statutorily regulated in a new section entitled "Right of refusal with regard to the activities of the in-house legal service" in article 167a E-CPC. The new article reads as follows:

" 1. A party may refuse to cooperate and to produce documents in connection with the activities of its in-house legal service if:

a. it is registered as a legal entity in the Swiss Commercial Register or in an equivalent foreign register;

b. the legal service is headed by a person with a cantonal license to practice law or who meets the professional requirements for practicing as an attorney in his or her country of origin; and

c. the activity in question would be deemed as part of an attorney's professional activities.

2. A third party may refuse to cooperate and to produce documents in connection with its activities in an in-house legal service under the conditions set out in paragraph

3. The parties and the third parties may file an objection against decisions to refuse cooperation in accordance with paragraphs 1 and 2.

4. The costs of disputes concerning the right of refusal under paragraphs 1 and 2 shall be borne by the party or third person who invokes it."

Änderung der Zivilprozessordnung (admin.ch)

2. Why is the new regulation needed?

In principle, parties and third parties in civil proceedings are obliged to cooperate in the taking of evidence. As a party or witness, they must testify truthfully and produce documents. Attorneys who are authorized to represent clients professionally are exempted from this obligation to cooperate. In addition, documents forming correspondence between a party or a third party and a lawyer who is entitled to act as a professional representative do not have to be produced.

In contrast to regulations in other jurisdictions, in-house counsels in Switzerland do not have any rights to refuse cooperation currently. This can lead to procedural disadvantages for Swiss companies, particularly in foreign court proceedings. Because there is no right in Switzerland for employees of in-house legal services to refuse to testify or to produce evidence, Swiss companies can, for example, be obliged to produce correspondence and documents from their in-house legal department in legal proceedings in the USA, whereas this is not the case for their US counterparties.

The new regulation should help to strengthen the legal position of companies and offer them improved legal protection in legal disputes.

3. What are the organizational requirements for asserting the right to refuse cooperation?

To be able to exercise the right to refuse cooperation, the following requirements must be met:

a. the company must be registered in the commercial register in Switzerland or in an equivalent foreign register;

b. the company's in-house legal service must be headed by a person with a cantonal license to practice law or who meets the professional requirements for practicing as an attorney in his or her country of origin.

The legal text does not provide a definition of "in-house legal service". In particular, it is unclear whether the legal service must be a separate organizational unit within the company or not. The use of the term "legal service" indicates such a requirement. It is also questionable whether compliance departments qualify as in-house legal service of a company if they do not report to the head of the legal service. According to the view represented here, this should be the case if the person heading the compliance department has a cantonal license to practice law or meets the professional requirements for practicing as an attorney in his or her country of origin.

The requirement that the legal service is headed by a person who has the specific qualifications of an attorney is intended to guarantee and ensure a certain professional quality of the legal service, according to the dispatch on the amendment of the CPC.

4. Scope and limits of the right to refuse cooperation

The right to refuse cooperation applies exclusively to the activities of the company's internal legal service and only to activities that would be considered profession-specific for an attorney.

As with regard to the attorney-client correspondence, the right to refuse cooperation also extends to documents from the exchange with the company's in-house legal service. It does not matter whether the documents are within the control of the company's in-house legal service or not. According to the view represented here, this should also include communication with the legal service of a group company.

The law does not define the activities that are profession-specific for an attorney. According to the dispatch on the amendment of the CPC, the requirement of an attorney's professional activity is based on the common requirement of the protection of professional secrecy for attorneys. This means, for example, that private, political, or social activities of attorneys, as well as predominantly commercial activities, do not fall under the profession-specific activity unless they are directly related to the attorney's work.

Representation or assistance in civil proceedings and legal advice regarding civil proceedings undoubtedly count as profession-specific or typical lawyer activities. It is not clear whether, for example, conducting negotiations in connection with legal transactions or conducting internal investigations are also included.

It should also be noted that the right to refuse cooperation only applies to civil proceedings, but not to criminal and administrative (criminal) proceedings.

If you have any questions about the changes to the CPC or require assistance, please do not hesitate to contact our specialists in Geneva, Lugano or Zurich. We will be happy to assist you.