Leading Case Of The Swiss Federal Supreme Court On The Statute Of Limitation Applicable To Claims For Restitution Of Retrocessions

Author:Mr Peter Hsu and Rashid Bahar
Profession:Bar & Karrer
 
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In its decision of 16 June 2017 the Swiss Federal Supreme Court held that the obligation to account for and pass on retrocessions to the client under the law on mandates (article 400 (1) CO) is subject to a ten year statute of limitation starting to run as of the receipt of the retrocessions by the agent (decision of the Swiss Federal Supreme Court 4A_508/2016). Until this decision, the matter was a subject of controversy among Swiss scholars, who debated both the duration of the statute of limitation (five or ten years) and the point in time as of when the statute of limitation starts to run (as of the receipt of the retrocessions or as of the termination of the mandate agreement).

Case Facts

In 1994 and 1995, the claimant, a transport association, mandated the defendant, an insurance brokerage firm, to develop and structure an insurance concept for its members. The insurance brokerage firm concluded contracts with several insurance companies on behalf of the transport association. In 2005, the transport association discovered that the insurance brokerage firm had received a percentage amount of the insurance premiums as retrocessions from the insurance companies. The transport association immediately terminated the contract with the insurance brokerage firm.

In 2007, the transport association filed a suit with the Court of First Instance of the Canton of Geneva to claim, among other items, the restitution of the retrocessions. The Geneva court held that a ten year statute of limitation should apply to such claims, starting to run as of the date of termination of the mandate agreement. The Court of Appeals of the Canton of Geneva confirmed the decision of the lower court in 2016. The insurance broker then appealed to the Swiss Federal Supreme Court.

On appeal from the insurance brokerage firm, the Swiss Federal Supreme Court had to decide on (a) the applicable statute of limitation period for the obligation to account for and pass on retrocessions and (b) the point in time as of when the statute of limitation starts to run.

Clarification on the Statute of Limitation

Controversy on Applicable Time Period and Starting Point in the Past

Since the leading case on retrocessions FSC 132 III 460 et seq. of the Swiss Federal Supreme Court in 2006, Swiss scholars have debated the relevant time period and starting point of the statute of limitation for the obligation to account for and pass on retrocessions under article 400 (1) of the Swiss Code of...

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