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33 Switzerland

Jürg Frick

From: Set-Off Law and Practice: An International Handbook (3rd Edition)

Edited By: William Johnston, Thomas Werlen, Frederick Link

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 25 July 2024

Banks and cross-border issues — Money and the conflict of laws — Insolvency set-off

This chapter provides an overview of the law of set-off in Switzerland. Under Swiss law, set-off functions as a mechanism of substantive law that extinguishes two obligations to the extent of the smaller obligation. The basic legal framework for set-off is a unilateral act pursuant to Article 120 et seq of the Swiss Code of Obligations of 1911, as amended (CO). The chapter first considers the CO requirements for set-off between solvent parties as well as its mechanism and effects before discussing the legal framework applicable to set-off against insolvent parties. In particular, it examines the implications for mutuality of the distinction under Swedish law between the assets and liabilities of the estate and of the receivership. It also outlines the restrictions on set-off in the event of insolvency before concluding with an analysis of set-off issues in the cross-border context arising from conflict of laws, international jurisdiction, and insolvency proceedings.

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