Freezing orders of Swiss assets: an effective way for the Italian creditor to secure the debt recovery

Swiss law offers foreign creditors (in particular Italian creditors) the possibility of obtaining the freezing order of assets located in Switzerland belonging to a debtor under relatively flexible conditions, provided, however, that the creditor has the benefit of an enforceable decision issued by a judicial authority.

Relatively unrestricted conditions

An Italian creditor who requests the freezing order of assets located in Switzerland belonging to its debtor on the basis of an Italian court decision will have to make the following elements plausible (i.e., a reduced degree of proof):

• The existence of a claim against the debtor.
• The existence of assets located in Switzerland belonging to the debtor. The freezing order may cover all kinds of assets (salary, real estate, claims - in particular in connection with bank accounts), the creditor having to provide a detailed description of said assets and their location.
• Its claim against the debtor is not secured by a pledge.
• The creditor benefits from a definitive court decision against the debtor, mainly enforceable decisions rendered after an adversarial trial and issued in a State party to the Lugano Convention ("CLug"), of which Italy is part. This will be the case of the Italian judgment ("sentenza") and, under certain conditions, of the injunction ("decreto ingiuntivo").

The creditor must state the amount of its claim in Swiss francs, the conversion rate being the one in force on the day of the filing of the application for freezing order.

The possibility of simultaneously requesting the freezing order and the recognition of the foreign decision rendered against the creditor

Freezing orders in Switzerland based on an Italian foreign decision require the prior recognition of this decision by the Swiss judge. In this respect, the creditor can request, directly in its application for a freezing order, the prior recognition of the foreign decision (exequatur) on which he bases its claims against the debtor, which saves considerable time.

The creditor will have to produce a certificate of enforceability of the Italian judgment in accordance with art. 54 CLug.

A fast, efficient, and inexpensive execution

If the judge finds that the conditions are met, he/she simultaneously issues an exequatur decision (recognition of the enforceability of the foreign decision) and orders the freezing of the debtor's assets located in Switzerland. Freezing orders are issued immediately, i.e., usually on the day of filing of the application.

The freezing order is issued in a non-adversarial manner, i.e., without hearing the debtor. The debtor will be heard only if it files an opposition to the freezing order, or if it appeals from the recognition of the foreign decision on which the freezing order is based. The rules of the summary proceedings apply: they provide for short deadlines and evidence generally limited to titles.

The judge subsequently notifies the freezing order to the relevant debt collection office, i.e., the office of the place where the assets of the debtors are located, for execution. In this respect, the court instructs the debt collection office to execute the freezing order and to inform the debtor and any possible third party affected by it (for example a bank). The debtor and/or the third party can no longer freely dispose of the frozen assets. A freezing order record ("procès-verbal", "verbale", "Urkunde") is drawn up at the bottom of the order. It states which assets are frozen and provides an estimate of their value (art. 276 al. 1 Debt Enforcement and Bankruptcy Act, "DEBA"). The record is immediately notified to the parties (art. 276 al. 2 DEBA).

In this context, the court fees are relatively low, the rates varying from one canton to another. In Geneva, the court fees range from CHF 100 to CHF 2,000, depending on the amount of the claim subject to the freezing order.

A "facilitated" validation of the freezing order in Switzerland

As the freezing order is a provisional measure, it must necessarily be validated by a subsequent action.

The validation must take place within ten days following the notification to the creditor of the freezing order record issued by the debt collection office.

It occurs at the place of jurisdiction of the freezing order (art. 52 DEBA), i.e., at the place where the debtor's Swiss assets are situated.

The validation can take place in various ways. Swiss law notably permits validation by simply initiating a regular enforcement proceeding with the Swiss debt collection authorities, who will then notify a summons to pay on the debtor. The fees for the debt collection request usually amount to CHF 67.

Limited grounds for opposition by the debtor

At the stage of the freezing order, the debtor of a debt established in an enforceable decision will hardly be able to oppose to freezing of assets, except in special cases, for example if it proves to have settled its debt in the meantime.

The debtor's defense will also be limited at the subsequent stage of validation of the freezing order. Indeed, even if the debtor has the possibility to raise an opposition to the execution proceedings initiated against it, the creditor will be able to obtain the final lift of said opposition easily, by simply producing the enforceable Italian decision.

The freezing order will remain in force notwithstanding the debtor's opposition, so that the creditor's rights remain protected during the entire process.

Once the debtor's possible objections have been set aside, the proceedings will continue by way of seizure, which will finally lead to the realization of the debtor's assets. The creditor will be repaid after the realization.

However...

• Swiss judicial and execution authorities are not authorized to notify judgments or debt collection documents abroad. Thus, decisions and documents relating to the freezing order of a debtor's assets in Switzerland will have to be notified through diplomatic channels on the grounds of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, which may be time consuming.
• Despite its limited means of defense, the debtor may still try to oppose to the freezing order and its subsequent validation by dilatory means, for instance by appealing decisions taken in this context, which may generate costs for the creditor (in particular lawyers' fees) and extend the duration of the proceedings.
• The creditor must make it sufficiently plausible that there are assets located in Switzerland belonging to the debtor and explain where these are situated. Providing general information (for example the mere mention of various banks) is not sufficient in this context and "fishing expeditions" are not admissible.
• In the specific case of the freezing of assets on a bank account, the bank (third party) has no obligation to inform the creditor of the amount available in said bank account. Usually, the creditor only learns about this information later, when the debt collection office draws up the seizure report. If it turns out that there are no/few assets on the account, the procedure will lose its utility. This is a risk that the creditor must take into consideration in this context.

An effective measure to consider

In conclusion, due to its flexible conditions and its fast implementation, the freezing order of assets located in Switzerland is an effective measure that deserves particular attention from Italian creditors who have an enforceable decision from the Italian courts against their debtor, especially because many Italian nationals hold assets in Switzerland (chalet, bank accounts, etc.). Of course, the freezing order procedure and its subsequent validation entail several risks, which the creditor must carefully analyze when developing its strategy.

‍

Our teams will be pleased to advise you on this matter.