Sovereign Immunity in Switzerland: A Practical Guide for Award Creditors and State Counterparties

Prepared by Tahmidur Remura Wahid (TRW) Law Firm — Dhaka • Dubai • London

Switzerland is a premier venue for international arbitration and award enforcement, prized for a sophisticated judiciary, predictable procedure, and a long-standing commitment to the rule of law. That same system, however, rigorously respects sovereign immunity—the body of rules that shields foreign states and their property from the jurisdiction and coercive powers of Swiss courts. For businesses, investors, and even states and state-owned enterprises (SOEs), understanding how Switzerland applies immunity is essential to drafting contracts, selecting a seat, planning enforcement, or resisting overbroad execution.

This guide distils the Swiss approach into actionable steps, separating immunity from jurisdiction (can a court hear the case?) from immunity from execution (can an award or judgment be enforced against assets?). Where helpful, we add practitioner tips based on how Swiss courts analyse “commercial” vs. “sovereign” conduct and what they expect when parties argue waiver, attachment, or interim protective measures.

For broader context on cross-border disputes and enforcement strategy, see International Arbitration and Enforcement of Arbitral Awards. If you need a rapid assessment tied to a live matter, contact us via Contact TRW.

1) What sovereign immunity means in Switzerland

Sovereign immunity protects a foreign state against:

• Jurisdiction: a Swiss court’s power to adjudicate the dispute; and
• Execution: coercive measures against the state’s assets (bank accounts, receivables, real estate, moveables) in Switzerland.

Switzerland applies the restrictive theory, drawing a bright line between:

• Acta jure imperii (sovereign/public acts: legislation, diplomacy, defence, taxation, licensing, monetary policy), which attract immunity; and
• Acta jure gestionis (private/ commercial acts: buying or selling goods, borrowing, investing, operating a refinery, chartering a ship), which do not.

The test is the nature of the act, not its purpose. A state’s “public interest” motive does not convert an otherwise private commercial transaction into an act jure imperii. This nature-of-act analysis underpins both jurisdiction and execution stages but operates with different thresholds (execution immunity is typically harder to overcome).

2) Waiver: consent to jurisdiction vs. consent to enforcement

A foreign state may waive its immunity:

• From jurisdiction: commonly via arbitration clauses or forum-selection clauses in commercial contracts. Agreeing to arbitrate disputes is usually treated as consent to adjudication of those disputes (i.e., a waiver of jurisdictional immunity for that dispute).
• From execution: Swiss courts require a clear and specific waiver. A generic arbitration agreement seldom suffices to waive execution immunity. To reach assets, the creditor must show that (i) the assets are used for commercial purposes, and (ii) there is a sufficient Swiss nexus, unless the state expressly waived execution immunity in detailed terms.

Practical drafting tip: If you expect to enforce in Switzerland, consider a separate, explicit execution-immunity waiver that:

• identifies categories of assets (e.g., bank accounts of an SOE used in the project’s cashflow),
• acknowledges commercial use, and
• contemplates interim measures and security post-award.

For help revising your templates, see International Arbitration.

3) Immunity from jurisdiction: when Swiss courts will hear claims

A plaintiff must show:

1. The claim arises from acta jure gestionis (commercial/private conduct), not sovereign acts;
2. A sufficient connection to Switzerland (e.g., place of performance, payment routing, seat of the relevant relationship, or conduct in Switzerland); and
3. No applicable treaty or doctrine revives immunity for the category at issue (e.g., certain employment or public law contexts may differ).

Arbitration clauses are pivotal. A state that agrees to arbitrate disputes from a commercial contract ordinarily cannot invoke jurisdictional immunity against proceedings concerning the validity of that arbitration agreement or the arbitration itself. That said, Switzerland will not force a non-consenting state into arbitration absent a clear agreement (see §7 below).

4) Immunity from execution: the three Swiss hurdles

Even with jurisdiction (or a favourable award), execution against state property is constrained. Swiss courts usually require three cumulative showings:

1. Commercial activity: The assets targeted (not merely the underlying contract) must serve a commercial function. Purely sovereign assets—diplomatic property, military equipment, central-bank reserves—remain protected.
2. Swiss nexus: There must be a sufficient connection between Switzerland and the transaction giving rise to the claim (or the enforcement process). Mere presence of assets in Switzerland is not enough.
3. No statutory protection: Certain assets are unattachable (e.g., property dedicated to public functions), including by virtue of Swiss debt-collection law.

Operational tip for award creditors. Build an asset-use record: payment instructions in the underlying contract; account statements showing commercial inflows/outflows; invoices to private counterparties; and board minutes/financials evidencing non-sovereign operations. Expect the state to argue sovereign use; you’ll need contemporary documentation to rebut.

For a structured enforcement plan, see Enforcement of Arbitral Awards.

5) Treaties and sources that shape Swiss practice (in short)

Switzerland’s immunity regime flows from customary international law, relevant treaties, and Swiss case law. In the background are the European Convention on State Immunity, the UN Convention on Jurisdictional Immunities of States and Their Property (not yet in force), and a significant body of Federal Supreme Court decisions that articulate the commercial/sovereign divide, execution criteria, and waiver standards. While there is no single Swiss statute codifying all immunity rules, the jurisprudence is steady, nuanced, and pro-rule-of-law.

6) Arbitration and immunity: two common scenarios

A) The state signed the arbitration agreement (or BIT)

• Jurisdictional immunity: generally waived—the state consented to arbitrate.
• Execution immunity: not automatically waived. The creditor still must meet the three-hurdle test for attachment, or rely on an express execution waiver.

B) The state did not sign the arbitration agreement

• A claimant may attempt non-signatory theories (alter ego, group of companies, implied consent). Swiss courts will test consent strictly when a state is involved. Without clear consent, forcing a state into arbitration is unlikely.
• Where a state objects at a preliminary stage (e.g., appointment of an arbitrator), Swiss courts may treat sovereign immunity as a threshold issue (see next section).

7) A recent inflection point: immunity at the arbitrator-appointment stage

In a 2025 decision, the Swiss Federal Supreme Court clarified that a foreign state can invoke sovereign immunity to resist a request that Swiss courts appoint an arbitrator on the state’s behalf in an ad hoc arbitration seated outside Switzerland, where the state never consented to arbitrate. The takeaway is simple but powerful: no express consent, no compulsion—even at a step as preliminary as arbitrator appointment. Two practical consequences follow:

• Consent is king. If a state didn’t sign the arbitration agreement (or a valid extension theory doesn’t apply), Swiss courts will not manufacture consent via appointment mechanisms—particularly where the seat is not Swiss.
• Front-load consent evidence. Claimants should bring clear consent (signed clause, authoritative correspondence, treaty basis) to any Swiss court application touching arbitrator appointment or tribunal constitution.

This reinforces a core Swiss theme: arbitration remains consensual, and sovereigns are not dragged into it without unmistakable agreement.

8) Building an enforcement-ready record (for claimants)

1. Seat selection with the end in mind. If you anticipate Swiss enforcement, a Swiss seat may streamline ancillary court support (interim measures, evidentiary assistance, set-aside parameters), though a Swiss seat is not required for enforcement in Switzerland. The decisive factor remains assets and their use.
2. Execution waiver drafting. Include a separate, tailored waiver that references commercial assets and accepts interim and final execution in Switzerland. Avoid boilerplate.
3. Asset intelligence. Map banking within Switzerland (and correspondent banks), receivables from private counterparties, and securities held through Swiss intermediaries. Tie them to commercial flows.
4. Nexus proof. Show Swiss performance elements, payment routings, or other Switzerland-centred links. Don’t rely solely on the fact the award debtor banks in Zurich.
5. Interim measures planning. Consider freezing/attachment post-recognition where appropriate. Draft submissions to establish commercial use of each targeted account or receivable.
6. Public-policy risks. Keep relief enforceable in Switzerland (e.g., interest structures, currency issues, injunctive contours). Draft awards you can collect, not just celebrate.

For a tailored enforcement playbook, see Enforcement of Arbitral Awards.

9) Common defences states raise (and how Swiss courts view them)

• Sovereign use of assets: Expect the state to brand accounts as “budgetary” or “diplomatic.” The creditor must prove commercial use of the specific asset. Mixed-use accounts can be contentious; detailed banking evidence helps.
• Insufficient Swiss nexus: If the only Swiss link is asset location, creditors should be ready to show transactional connection—performance, payment flows, or contract administration with Swiss components.
• No consent to arbitration: Where consent is contested, Swiss courts tend to resolve immunity first at the threshold (especially outside a Swiss seat), not after the proceeding has gained momentum.
• Public policy: Raised sparingly in enforcement proceedings. Swiss courts apply a narrow conception, focusing on due process and fundamental principles; mere legal error by a tribunal rarely suffices.

10) For states and SOEs: reducing execution risk without chilling commerce

• Corporate hygiene: Keep sovereign and commercial accounts and functions segregated. Use separate entities and banking arrangements for revenue-generating operations.
• Clarity in contracts: Where arbitration is acceptable, define seat, law, language, and express limits (or conditions) on execution against assets. Avoid accidental execution waivers.
• Evidence of sovereign dedication: For assets you wish to protect, maintain contemporaneous records showing public purpose (budget line items, official decrees, diplomatic uses).
• Early objection roadmap: When facing unwanted arbitrations, object early and assert immunity at the appointment or recognition stages; delay can be construed as acquiescence on some procedural points.

11) Ten quick answers (General Counsel cheat-sheet)

1. Does an arbitration clause waive execution immunity in Switzerland? Generally no; you need either a clear execution waiver or to meet the three-hurdle execution test.
2. Can I attach a state’s account just because it’s in Zurich? No. You must also show commercial use and a Swiss nexus to the underlying claim.
3. Do central-bank reserves enjoy immunity? In practice, yes—they are quintessentially sovereign.
4. If the state didn’t sign the arbitration clause, can Swiss courts appoint an arbitrator anyway? Unlikely—absent clear consent, immunity bars appointment (especially for non-Swiss seats).
5. Is a Swiss seat required to enforce in Switzerland? No. But it may streamline some court support.
6. Are SOEs always protected? No. If they engage in commercial activities, they are treated accordingly.
7. Can I rely on mixed-use accounts? It’s risky. Prove the portion and purpose tied to commercial flows.
8. Do BITs help at execution stage? BITs help prove consent/jurisdiction and can influence public-policy analysis, but execution still turns on asset use and Swiss nexus.
9. Will Swiss courts second-guess the tribunal’s merits? Rarely. Enforcement review is limited; due-process and basic legality dominate.
10. What wins close cases? Evidence of asset use, clean waiver drafting, and a credible Swiss link to the dispute.

12) How TRW can help

Whether you are an award creditor charting a collection path or a state/SOE seeking to manage execution risk, we match strategy to Swiss doctrine and your asset map:

• Seat and clause design aligned to enforcement corridors.
• Consent and waiver audits for existing contracts and treaties.
• Asset intelligence and Swiss nexus building.
• Targeted applications for interim relief and recognition.
• Defence roadmaps for states/SOEs preserving immunity while maintaining commercial agility.

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Tahmidur Remura Wahid (TRW) Law Firm — International Arbitration & Enforcement
Dhaka • Dubai • London

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