The short answer is that it is dominated by illegitimate patronage and corrupt, in microscopic ways at every turn that, when amalgamated, cause grievous and even outrageous miscarriages of justice. It is to be avoided at all costs.
Never agree to Swiss litigation or arbitration in any contract or other document. Here we will explain to you why not.
The Swiss Civil Code was written as a single document by Swiss jurist Eugen Huber and enacted into law in 1907. At the time it was conceived as a paragon of efficiency and straightforward drafting. Yet the Swiss legal system promptly mangled those goals until we have reached the point, in the third decade of the twenty-first century, in which it routinely issues totally unjust results.
Its two main diseases are firstly to prevent people seeking to repatriate money in Swiss bank accounts from doing so (that is to say, a deeply scarred protectionism in favour of Swiss banks, Switzerland's largest industry). This results in Switzerland being perpetually hauled up before the court of international public opinion as the most corrupt banking centre in Europe.
The second disease is the 99.5 per cent conviction rate in Swiss criminal courts, worse even than Japan or Russia. This is indicative of extraordinary bias in favour of prosecutors, who have far too much power and who often even write the court judgements in the cases they are prosecuting; and a desire - endemic across Swiss society (perhaps because they are too rich for their own good) - for nobody to lose face. Hence prosecutors must always win, to avoid embarrassing them. Injustice results at every touch and turn from this philosophy.
We would now like to provide an illustrative list of some of the very many problems that result from this unholy mix of bias in favour of banks; and an overwhelming desire not to lose face in litigation.
Although Swiss laws are mostly nationally adopted, the court system is based around individual cantons each of which have their own full range of first instance and appellate courts (each canton has a different system) when each canton is very small (there are 28 in a country of a mere seven million people) and there are simply not enough competent lawyers in each canton (some of which are as small as 30,000 people) to populate such a complex and differing array of judicial systems.
Because Switzerland is obsessed with grass roots democracy, the various judges and prosecutors in each canton are often elected by the populace on political party tickets. Prosecutors and Judges are often expressly associated with political party lists. Hence they are politically biased elected officials. Judges and prosecutors ought not to be biased.
It also renders prosecutors and judges easy targets of corruption, because political parties stand behind them and that is why they are in office (they do not hold tenure and their terms are periodically renewable); and political parties need money to operate and in particular to ensure the election / selection and re-election / re-selection of their judicial candidates. Hence politicised members of the judiciary are susceptible to political party payments influencing their decisions.
Because the community of lawyers, prosecutors and judges in each canton is so small, no member of any legal profession wishes to embarrass another member of the same small community. It is the culture of a gentlemen's club (also predominantly male in virtually all cantons).
This makes conflicts of interest problems impossible to solve - someone is always married to, or a family member with, or a social or more intimate friend of, some other member of the legal profession in the same small cantonal environment. The legal communities are too small to resolve conflicts of interest problems by separating lawyers and magistrates sufficiently.
This explains prosecutors' conviction rates in Swiss bench trials (Switzerland does not really have a jury system): the judges do not want to embarrass the prosecutor by suggesting he got it wrong on this occasion. It follows that conviction rates are virtually 100 per cent.
This problem is compounded by the broad and unsupervised powers given to prosecutors as investigating magistrates. They can decide to execute warrants, arrest people pending trial (the detained person need only be under investigation, not actually charged with a crime), undertake any measures of enquiry they see fit, and indict anyone they want, in each case unilaterally and effectively immune from judicial oversight. That is because, to avoid embarrassing the prosecutor, the judges will always conclude that the prosecutor acted lawfully, should the matter come before them.
Indeed things get even worse. The institutional culture of the judiciary being a 'rubber stamp' of the prosecutor's work is so ingrained that trials and other judicial hearings are typically pre-ordained affairs pre-agreed between prosecutors, legal counsel and judges; and prosecutors typically write the judgment the court hands down in a prosecution (vindicating his or her indictment, naturally) before the trial even begins. Hence Swiss trials are a sham.
Indeed this is so much so that courts typically refuse defendants' requests to call witnesses or evidence. Nor do they call the prosecutor's witnesses, whose testimony is taken as read on the papers, it being assumed that the prosecutor in his own investigations has tested the reliability of that testimony himself when in fact he may not have done because he has an institutional incentive to achieve convictions in order to satisfy the voting populace and his political party that he is good at his job.
The net result is that Swiss criminal trials tend to involve defendants just giving pre-prepared statements to the court apologising for their crimes, because there is no proper opportunity for the defendants in Swiss trials to test the prosecutor's evidence or to call one's own evidence. In such an environment the only rational litigation strategy is to beg forgiveness and to hope for a light sentence.
There are also severe problems with due process, a concept Swiss justice barely recognises. It is common for non-judicial authorities to issue ex parte decisions having legal effect, e.g. public debt collection offices issuing decisions freezing or confiscating assets, with nobody telling the alleged debtor; or arrest or search warrants being issued without the prior imprimatur of a court. These sorts of decision may not be served upon a person to whom they are addressed even at the time of their execution; nor may any of the supporting documents that led to the extra-judicial ex parte order be similarly so served. Instead the victim of such an order has to go hunting around themselves to try to find the papers that justified the hostile government action against them - all the time with an often short (10 days including weekends and holidays including Christmas Day is typical) and non-notified period of time running against them to mount a receivable court challenge to what has happened. Moreover after the ex parte order has been made, no provision is made for an automatic inter parties hearing. So, for example, in the Swiss equivalent of an English Mareva injunction (an ex parte bank account freezing order ostensibly to prevent dissipation of assets) the bank is informed but the account holder is not. The account holder is left wondering what has happened when his debit card no longer works; and by the time he or she figures it out the ten day period for challenging it may have elapsed. Even if a court challenge is filed on time, an inter partes court hearing may be ultimately scheduled months into the future, leaving the assets frozen for an indefinite period potentially causing an account holder massive losses. Nor does a prosecutor or applicant for an ex parte order need to observe the principle of uberrima fides (utmost good faith), revealing to the court in an ex parte application known facts that go against his claim. Indeed grounds for ex parte orders are often made up; the judiciary does not intervene to avoid loss of face. (As one Swiss lawyer put it to this author, 'each hand washes the other'.)
The banking litigation system is also overtly xenophobic, in the sense that the legal test to freeze non-residents' Swiss accounts is substantially laxer than that for a freezing order to be issued against a resident's bank account.
The xenophobia in the Swiss legal system also extends to discrimination against foreign lawyers, who are resented and afforded fewer legal rights than domestic lawyers. This discrimination even extends to lawyers from one canton receiving less preferential treatment from the authorities of the canton next door.
Because the international arbitration community in Switzerland is even smaller (really just a few dozen practitioners), all the faults that infect Swiss litigation infect Swiss arbitration even more acutely, in which international rules and standards are manipulated to meet Swiss norms of ex parte and pre-fabricated decisions.
Swiss justice is arguably one of the worst in Europe and that is for three reasons. Firstly court administration is too decentralised for such a small country. Law cannot be practised in tiny village-like communities in an explicitly political environment in which lawyers, judges and prosecutors all stand on overtly political tickets. Switzerland's legal system is more complex than that of the United States; and in a country a tiny fraction of the size. Secondly Swiss justice is overtly discriminatory (over 80 per cent of Swiss prison inmates are foreigners), and there is no authority working to prevent this. Thirdly the legal rules, conceived as flexible, provide far too much discretion in the hands of prosecutors and other public officials who are not judges. And the judges play second fiddle to them, due to deference and face-saving incentives in small hierarchical communities typical of the village mentality. Switzerland is not the only European country with these problems; but it is one of the most acutely infected.
Hidden within the reasoning contained in this article are some serious questions about whether other European states ought to denounce the Lugano Convention, the principal purpose of which is to render Swiss court judgements enforceable in other European countries; the New York Convention of 1958 (which provides for the same for Swiss arbitration awards); and/or ought to cease judicial cooperation with Switzerland in respect of Swiss criminal investigations. Given that Switzerland does not extradite its own citizens even for the most serious crimes, other European states may consider it appropriate to denounce their extradition conventions with Switzerland as well. Those conventions are all one-way.
A country as small as Switzerland needs a national legal system with far less discretion in the hands of the village prosecutor or debt collection official (for Switzerland is mostly a collection of villages). Until she enacts these radical reforms, we can have no confidence in the Swiss system of justice.