Litigation Readiness for Swiss Boards

By the time a Swiss board sees a statement of claim, most of the decisions that will determine the course of the matter have already been taken — often by people who did not know they were taking litigation decisions. An internal email, a form of minute-taking, a document retention policy applied automatically, an early exchange with a counterparty conducted at the operational level: each of these may be the single most important factor in the ultimate outcome, and each is typically set before anyone is thinking about litigation at all. This article describes what readiness looks like — the record-keeping, document policies, investigation posture, communications discipline, and board-level decision architecture that improve a company’s position when a dispute arrives.

1. The readiness horizon

There is usually a window — weeks or months, sometimes years — between the events that give rise to a dispute and the dispute’s formal crystallisation. During that window, the operational facts are being generated, documented, and sometimes disposed of; the internal narrative is being formed; positional commitments are being made in correspondence. The quality of the board’s posture during this window is typically decisive of the outcome in ways the board will not be able to repair once proceedings begin.

The signals that a dispute is on the horizon are rarely ambiguous in retrospect. A regulator makes informal enquiry. A counterparty’s tone changes. An internal whistleblower’s concern is escalated. A financial or operational anomaly attracts attention. A transaction does not close as expected. An executive departs with acrimony. When any of these signals surfaces, the readiness posture should shift: the board should be informed, counsel consulted, document handling reviewed, and internal communication discipline tightened. The failure mode is to treat the signal as an operational problem until it is too late to treat it as anything else.

Under Art. 717 OR, the director’s duty of diligence attaches not only to moments of formal decision but to the discipline with which foreseeable risks are monitored and managed. A board that fails to notice or fails to act on the signals in the readiness horizon is not protected by the fact that formal proceedings had not yet begun.

2. Documents and records

Swiss proceedings do not involve common-law-style pre-trial discovery: documents held by one party are not, as a general rule, accessible to the other before trial except under limited provisional-measures regimes. The practical consequence is that the documents a party itself generates and retains are typically the most important evidentiary resource available — both for the party that made them and, if disclosed or seized in regulatory or criminal proceedings, for the adversary.

Board minutes. The minutes are the primary contemporaneous record of the board’s decision-making and — in any subsequent liability or corporate-law dispute — the primary documentary evidence. Minutes should reflect the deliberation that actually took place: the material alternatives considered, the key factors weighed, the expressed concerns, and the reasoning for the chosen course. Sanitised minutes that record only the resolution are a liability, not a protection. Dissent should be recorded expressly; silence is ordinarily taken as concurrence.

Internal memoranda and email. Email hygiene at the executive level is a governance question. The operational reality is that any email created during the readiness horizon may become an exhibit. The discipline is not avoidance — operational communication is legitimate and necessary — but register: factual accuracy, absence of speculation about liability, avoidance of rhetorical excess. Where an assessment requires the legal evaluation of facts, that assessment belongs in correspondence with counsel, not in internal email.

Retention. Swiss commercial law (Art. 958f OR) requires retention of commercial books and supporting documents for ten years; sector regulation imposes additional, sometimes longer, retention periods. A company’s retention policy should be legally grounded, written, applied consistently, and subject to a clear suspension rule: from the moment litigation is reasonably anticipated, routine destruction of relevant documents must cease. The destruction of documents in circumstances where litigation was reasonably foreseeable can itself be a procedural and — in extreme cases — criminal problem.

Privilege. Swiss attorney professional secrecy (Art. 13 BGFA / Art. 321 StGB) and the corresponding right to refuse evidence (Art. 166 ZPO / Art. 171 StPO) protect communications with external attorneys admitted to a Swiss bar (or, by treaty, a recognised foreign equivalent) acting within their professional mandate. The protection is distinct from common-law “privilege”: it is the attorney’s confidentiality duty, not a unitary client right, and documents in the client’s possession that reflect attorney advice are largely unprotected outside the attorney’s hands. The position of in-house counsel changed materially with the 2025 ZPO revision: Art. 167a ZPO (in force 1 January 2025) grants a limited refusal-to-cooperate right for in-house legal departments in civil proceedings, where the company is a registered legal entity, the legal department is led by a person with a cantonal Anwaltspatent (or equivalent foreign qualification), and the activity at issue would be profession-specific if performed by an attorney. The position in criminal proceedings remains tighter — in-house counsel do not benefit from equivalent protection vis-à-vis Swiss prosecutors. The practical implication for readiness is that sensitive legal assessments should, where possible, be obtained from external counsel and the resulting advice treated with appropriate confidentiality discipline — not circulated more widely than necessary, not mixed into operational email threads, not summarised casually in minutes.

3. Internal investigations

Internal investigations arise at the intersection of regulatory pressure, reputational management, and the board’s oversight duty. Done well, they give the board the factual basis to respond; inform negotiations with regulators and counterparties; and discharge the board’s Art. 717 OR obligation to understand what has happened inside the company. Done poorly, they create discoverable records that damage the company’s position more than the underlying conduct did.

When to commission. The clearest triggers are credible allegations of misconduct at the executive level, a formal regulatory or criminal inquiry, a material whistleblower complaint, and circumstances where the board must form a view on facts that are, by their nature, internal to the company. Less clear but often decisive is the situation in which external counsel, reviewing the facts, advises that the board cannot responsibly make decisions without investigation. The judgment is contextual; the discipline is to take the decision at the board level and to record it.

Who conducts it. For any investigation with potential liability exposure, the conductor should be external counsel, independent of the executives potentially under review. An investigation led by the general counsel’s office risks conflicts when the general counsel is, or reports to, someone whose conduct is at issue. Where the matter is sensitive, the external firm conducting the investigation should not be the firm that has served as the company’s corporate counsel on the underlying transactions; the questions of competence and independence cut in different directions.

Scope. A defined scope document — signed off by the board or the relevant committee — is the procedural spine of the investigation. It specifies what is being investigated, by reference to what allegations or facts; what evidentiary methodologies will be used; what the output will be; and who will receive it. Scope expansion in the course of an investigation is not unusual but should return to the commissioning body for authorisation.

Privilege and output. The privileged character of investigation work product depends on its structure: advice prepared by external counsel for the board is treated differently from raw factual chronologies circulated widely within the company. Written final reports, however carefully drafted, become vulnerable to production in regulatory, civil, or criminal proceedings. A board considering the format of the output should do so with that reality in mind: the choice between a written report and an oral briefing, between a single document and a layered set, between full circulation and need-to-know distribution, has procedural consequences. These choices should be made deliberately, with external counsel’s advice, at the outset of the investigation.

4. Communications posture

Communication during the readiness horizon operates on three surfaces — internal, external, and public — each with its own discipline.

Internal. Operational communication must continue, but the register shifts. The discipline is factual neutrality: what happened, what is being done, what remains to be decided. Speculation about culpability, legal characterisation, and litigation strategy belongs to correspondence with counsel, not to operational channels. An internal email that reads plausibly as an exhibit is one the author should not be sending.

External — to the counterparty. Pre-litigation correspondence with a prospective adversary is strategic and durable. In most civil matters not falling under commercial-court jurisdiction, the Swiss Code of Civil Procedure (Art. 197 ff. ZPO) requires a mandatory conciliation procedure (Schlichtungsverfahren) before a claim proceeds to the court; commercial-court matters and other categories enumerated in Art. 198 ZPO are exempt. Exchanges in anticipation of or during the procedure often shape the negotiating landscape. The discipline is to conduct serious exchanges through counsel, to maintain positional consistency, and to avoid inadvertent admissions or concessions that will outlast the moment. The operational team’s instinct — to defuse, to explain, to reach accommodation — is sometimes the right instinct and sometimes a trap; its deployment should be a considered decision, not a default.

External — to regulators. Where a regulator is involved, every communication is a filing. The regulator’s perception of the company’s cooperation, candour, and seriousness is shaped by an aggregate of formal and informal exchanges, not by any single one. A company’s regulatory posture should be consistent across the surfaces — the board’s public statements, counsel’s filings, executives' interviews, internal documents that may ultimately be produced — and the pressure point is most often in getting that consistency right under time pressure.

Public. Media communication during a developing dispute is almost always a question of restraint. Statements to the press become exhibits; “no comment” has a texture; corrections are available but costly. The board should agree, in advance of any material communication going out, what the company’s external narrative is, who is authorised to articulate it, and what triggers a shift. Managing the public register without counsel’s involvement is, in most material matters, unwise.

5. The board’s decision architecture

At the centre of litigation readiness is the board’s capacity to take the strategic decisions — to engage, to settle, to wait, to litigate, to disclose — that will determine the matter’s course. Four structural points deserve attention.

Early board engagement. The board should be informed of material disputes as they develop, not when they crystallise. A board that learns of a dispute only when a claim is filed is a board that has not been doing its job; the readiness horizon has passed without its participation. The reporting rhythm and triggers for escalation to the board — typically through the audit committee or a dispute-specific subset — should be set in advance, not improvised.

Decision quality. The decisions taken during a dispute — on strategy, on settlement, on disclosure — are governed by the same procedural discipline that governs every board decision: adequate information, genuine deliberation, honest consideration of alternatives, contemporaneous recording. The Swiss business-judgment standard that protects reasoned decisions from substantive second-guessing operates here as elsewhere; it protects the board that treats dispute decisions with the rigour of other major decisions, and it withdraws from the board that does not.

Independent oversight. For disputes of material scale or reputational consequence, the board should consider retaining counsel independent of the team executing the matter. The argument for doing so is set out in Independent Oversight in Board-Level Disputes. In a litigation-readiness context, independent oversight is most useful before major strategic inflections — the decision to file or to respond, the decision to settle or to continue, the decision to make public statements — rather than as a continuing engagement.

Whose interest. Settlement decisions are a particular test of the duty of loyalty. The interest of the company in resolving a dispute will sometimes diverge from the interest of individual executives, of controlling shareholders, of minority shareholders, or of future management. The board’s duty under Art. 717 OR runs to the company; the settlement that best serves one constituency may not be the settlement that best serves the company. The board should articulate, in deliberation and in the record, whose interest is being served by the chosen course and why.

6. A practical checklist

The agenda that follows from the sections above does not reduce to a checklist, but a short one may nevertheless be useful to the board returning to this question under pressure.

Is the board informed of material disputes early, through an agreed reporting rhythm?
Are the minutes of recent meetings reflective of the deliberation that took place?
Is the document retention policy written, applied, and subject to a suspension rule?
Is sensitive legal assessment obtained from external counsel and handled with appropriate privilege discipline?
Have the triggers for an internal investigation been thought through, and is there a framework for commissioning one if needed?
Is the company’s internal communication discipline adequate to the stakes — factual, restrained, counsel-mediated where appropriate?
Is there a clear decision architecture for external communication during a developing dispute?
For material matters, has the board considered whether independent strategic oversight is warranted?
Are settlement decisions framed and recorded as the company’s decisions, serving the company’s interest?

None of these questions has a single right answer. Each deserves a board’s considered, documented attention at intervals — not under the pressure of the dispute itself, but before.