Foundations of Business Law

• Independent courts
• Representative parliament
• The military
• Police
• The bureaucratic organisation
• Civil society itself

• If someone has the total power, this person will abuse the power
• Because of that they advocated the separation of power (Gewaltentrennung)

- The judiciary (court system) has to apply the law and make sure that the legislative and the executive of the state act according to the law

- District court, first instance court

• Representative government (Bundeshaus, Kremlin, etc.) =means that the people vote for political decision makers to pass the laws of the country
• Most parliament are bi-cameral – two chambers

- Representatives of State (Bundesräte) usually elected by parliament

- States where security/excecutive is ordered by military and police (Afghanistan, Somalia, etc.)

• Freedom of Speech
• Freedom of Association
• Liberty of Press

• natural law is a general rule, found out by reason, by which a man is forbidden to do that which is destructive of his life
• This theory asserts that there are laws that are immanent in nature
• Everyone recognizes what is just and fair
• People often argue with the natural law against oppressive government
  • Mahatma Gandhi British colonial rulers

Thomas Hobbs:

• a natural law practitioner, he set up 9 laws of nature

• Laws are rules made, whether deliberately or unintentionally, by human beings
• There is no connection between the validity conditions of law and ethics or morality. A law can be immoral and still be valid and enforced

• A natural law jurisprudence would say that this law is legally deficient
• An unjust law is no law in the eyes of a naturalist and so doesn’t need to be obeyed

- Administrative rulings

- precedents which address the legal right of, and restrictions on, working people and their organizations

- mediates aspects of the relationship between trade unions, employers and employees

- someone working and living outside their country of origin-->Cross-borders commuter and business trips are not foreign employee

- if a business trip doesn’t go longer then 8 day in a period of 90 days, no permit is required

- relocation= temporary transfer of employees to another job in same organization (relocation agreement = fixed terms and conditions)

- Agreement on the Free Movement of Persons – in force since 1 June 2002

- Work permits are issued by the respective cantonal office of industry, trade, and labour; application requires the respective form in Germany, French or Italian

- the work permits are only valid in the canton of origin--> New one if someone moves to and another canton

Agreement on the Free Movement of Persons

- For EU/EFTA citizens:

• Free entry
• Residence and work

- For non-EU/EFTA citizens

• Only skilled labour needed by Switzerland is admitted from third states
• A work permits is not gained with an offer of employment – you also have to prove that no Swiss or EU/EFTA citizens could be found to occupy the vacant position
• the number of permits issued is limited

Short-term permit (L-Permit)

·       EU/ EFTA citizens:

• 12 months – limited employment relationship of less than one year
• Job seekers also receive a L permit after 3 months
• The permit may be extended after a maximum of one year without interruption

·       Non-EU/EFTA:

• Permit allows a stay lasting one year
• Extended up to a maximum duration of 24 months

 Initial residence permit (B-Permit)

·       EU/ EFTA:

• Granted to persons with an unlimited employment relationship or lasting at least 12 months
• Will automatically extend up to five years without any formalities
• If the person is unemployed for longer than 12 months the extension is limited to one year

·       Non-EU/ EFTA:

• Residence permit does not exceed one year the first time
• Work permit will only be granted within the limits of the maximum numbers set each year
• Mostly renewed in an annual basis

1.1.3      Permanent residence permit (C-Permit)

·       EU/EFTA:

• Nationals from the 15 EU countries and EFTA obtain this permit, of indefinite length, after a regular and uninterrupted stay of five years in Switzerland.

·       Non-EU/EFTA:

• After 10 years of regular and uninterrupted stay

• Students, retirees and affluent people
• Allowance of the family to accompany: Dependent family members of B-Permit holders (and L-Permit holders in the case of EU/EFTA nationals) are generally granted the same permit for the same duration as the principal permit holder

1.) contract law in the section “individual employment contract” of the Swiss Code of Obligations (CO), art. 319ff.

2.) mandatory labour law, which sets certain minimal standards, e.g. minimal holiday p.a., maximum amount of working time per week, work at night, etc. and can be found in the Swiss Labour Act (LA)

1.) collective labour agreements (treaties) concluded between unions and employers (no law – just rules)

2.) individual employment contract between an employer and an employee

• a company’s internal rules and regulations (being integral part of the individual employment agreement)

• usual residence location’s law is applied
• If the contractual parties do not agree – law of the state of work will be applied
  • If the person works in different state, the law of the domicile location will be applied

- Form of the contract: can be orally, but written is recommended

- Position, area of responsibility

- Salary: how and when payment is to be received, 13th month, amount

- Working hours: overtime comensation with money or free time, max. legal working hours for industrial enterprises 45h/week; all others 50h/week, vacation min. 4 week per year (5 for age of under 20)

- Temination of contract: each party can give notice prior:

• trial period (probation period) 7 calendar days (as of the end of the day)
• first year of service: 1 month (as of the end of a month)
• second up to the ninth year of service: 2 months (as of the end of a month)
• 10 years of service and more: 3 months (as of the end of a month)

 law protects the employee from being dismissed during the duration of military or civilian service, illness, accident or pregnancy

Pillar 1: State pension; Old- age and Survivors Insurance AHV/ Invalidity Insurance IV; securs minimum standard of living, deducted from salary ( 50% born by employee, 50% by employer)

Pillar 2: Occupational pension; Occupational Benefit Plan concerning old-age, survivors and invalidity BVG; maintenance of current living standard, mandatory above a certain salary level and deductions are made from salary (50% through employer)

Pillar 3: Individual Pension, BVG, Voluntary individual contributions

• 3a: Tied pension provision (fiscally priviledged)
• 3b: flexible pension provision

• Residents in Switzerland are subject to federal income and wealth taxes.
  • net wealth
  • progressive rates

• Non-residents may be subject to Swiss taxes on various kinds of Swiss source income: interest or dividends paid by a Swiss entity, income from real property or from business activities in Switzerland, directors' fees, or compensation for an activity performed in, and paid by a Swiss employer.

- situations where person does not agree with the factual or legal interpretation of situation by another person

1. Judicial processes: state judge or court is means of conflict resolution > Litigation

2.Extrajudicial processes: Alternative Dispute Resolution (ADR), Arbitration, negotiation, mediation

Litigation: initiated when party files suit against the other

Some disputes will not reach agreement through collaboration and need power of state:

• Outcomes are decided by impartial judge or court and verdict is legally binding
• Both parties have right to appeal judgement to higher court

Procedural rules: rules of evidence and the procedure are established by legislature

--> in a trial questions of evidence are more important than legal considerations

• What is risk involved? Is it worth going through lengthy procedure?
• Will judicial decision be enforceable? (in bankruptcy, you still don’t get paid after)
• Are proceedings affordable?
• Is party willing and patient enough to follow a court case through judicial system?
• Is there a way to settle without court? Is litigation serving commercial interest?
• Is there sufficient evidence to prove relevant facts?
• Would ADR be an option?

ADR: (not legally binding)

- Method of resolving disputes outside of judicial process (litigation, court) through the presence of a facilitator or decision maker (neutral, unbiased) --> cheaper and less time-consuming than litigation

e.g.: mini trial: the third party gives advisory opinion on how court could decide

e.g.: Online Dispute Resolution ODR: using internet forums to resolve dispute

formal method of ADR (e.g. Swiss Arbitration Association)

Arbitrator: thrid party of a panel of neutral persons

• Arbitrator imposes decisions on parties (arbitration awards) after hearing both sides;
• Occurs when contractual parties agree on solving dispute with arbitration clause > clause provides resolving of dispute with arbitration and not with court (usually legally binding)

non binding arbitration: parties can go forward with a lawsuit if no agreement with arbitrators decision

simplest form of ADR

• Parties attempt to settle a dispute informally, with or without attorneys
• Attorneys advise clients to try to settle before proceeding to trial
• Negotiations are allowed before, during and even after a trial

• Neutral third party acts as mediator and works with both sides to facilitate resolution
• Talks with parties separately and emphasizes points of agreement to help evaluate
• Mediator may propose solution but doesn’t make decisions resolving the matter

• Preferred form for business partners, employers vs. employees, parties in long-term relationships

- Jurisdiction: which court has authority to hear a case

• domestic disputes: place of jurisdiction is domicile of defendant
• contractual relationships: choice of jurisdiction clause

- Applicable law:

• international context: international private law sets rules for place of jurisdiction and applicable law
•  no international context: Swiss law applies

• Lower courts: first trial
• Appellate courts: (courts of appeal) cantons highest court, does not conduct new trials where evidence is submitted and witnesses examined
• Big cantons have special courts (commercial or labour)

1. First trial in lower court

2. Party not agreeing with lower court’s ruling files appeal

3. appellate court reviews records and challenges lower courts findings

• Federal Supreme Court is the highest judicial authority

• Federal Criminal Court, Federal Administrative Court, Federal Patent Court are below

- court fees: depend on cantonal fee and amount in dispute--> imposed on losing party and if no winner: relation percentage of amount in dispute

- attorney fees: hourly rate depending on cantonal fee schedules and amount in dipsute

Contingency fee agreement: Attorney only gets paid if he wins the case ( not allowed in CH)

1. Court must decide first whether it has jurisdiction and if it’s the appropriate venue

(forum shopping= hunting for an advantageous place of jurisdiction)

2. Characterization of cause of action in to legal categories

3.Each legal category has one or more choice of law rules to determine which competing law is applied to each issue. Questions on applicable law:

• Court will apply law of the forum to all procedural matters
• Evaluates factors that connect legal issues to laws of potentially relevant states and applies substantive laws with greatest connection

4. When applicable law is decided, law must be proved before forum court and applied to reach a judgement

5. Successful party must enforce judgment involving the task of securing cross-border recognition of judgme

CPIL: applies when a legal dispute has a foreign element and then determines place of jurisdiction and applicable law (Assessment)

- Sole partnership, General Partnership, Corporations, Limited Liability Company

• Number of owners
• Minimum capital
• Entry in Commercial Register
• Liability
• Management (of business according to the law)
• Corporate Bodies (if any)
• Sharing of profits and losses
• Taxation

- anyone doing  business without creating a separate business organization has a sole proprietorship

- Sole proprietors with annual revenues > 100’000 CHF need to be in commercial register