Debt collection request remains visible even after unsuccessful legal proceedings

To recapitulate

In Switzerland, anyone may initiate debt enforcement proceedings against anyone. Proof of a claim is not required, which is why individuals or companies are repeatedly facing debt collection proceedings for disputed or even non-existent claims. Such acts of chicanery can have an extremely negative impact on the (alleged) debtor, as they are recorded in the extract from the debt enforcement register which can also be viewed by third parties. For example, they can become a severe detriment to a person who is looking for a rental apartment, or to a company at a public tender.

Since January 1, 2019, the law grants the (alleged) debtor the right to have individual debt enforcement proceedings excluded from the right of inspection by third parties, provided that the debtor has filed an objection to the respective debt collection request and submits the necessary motion no less than three months after service of the payment order. If the creditor then fails to demonstrate within 20 days that he has timely initiated a proceeding to remove the objection, the debt collection request will no longer be visible to third parties and it no longer appears on the extract from the debt enforcement register. However, if the creditor subsequently submits an application for the objection to be set aside in a summary proceeding, the respective debt collection request becomes visible again for third parties.

Information about a debt collection request is further denied to third parties if the debt collection is considered to be null and void because it was cancelled based on an appeal or a court decision, if the debtor prevails with an action for recovery, or if the creditor has withdrawn the debt collection request. If none of these special circumstances apply, the right of third parties to inspect the documents expires five years after conclusion of the proceedings.

A refusal to consider the application for the objection to be set aside on its merits does not result in a refusal of the right of inspection

In the present case, the creditor applied for the objection to be set aside in summary proceedings. However, the competent court did not respond to the request. The debtor argued that the court’s decision to refuse to consider the request justified a refusal of third parties’ right of inspection based on Art. 8 para. 3 lit. d of the Swiss Debt Enforcement and Bankruptcy Act and, therefore, the debt collection request should no longer be disclosed to a third party.

In its first decision 5A_319/2020 of May 7, 2020 on Art. 8 para. 3 lit. d of the Swiss Debt Enforcement and Bankruptcy Act, the Federal Supreme Court stated that the debt enforcement office may only decide whether or not a procedure to eliminate the objection to the payment order was actually initiated, but not whether such procedure was initiated rightfully or wrongly or what the presumed outcome would be.

In the current decision, the Federal Supreme Court was dealing with the different doctrines on non-disclosure of a debt collection request under Art. 8 para. 3 lit. d of the Swiss Debt Enforcement and Bankruptcy Act and, after an interpretation of the respective language, came to the conclusion that the initiation of proceedings to eliminate the objection under Art. 79-84 of the Swiss Debt Enforcement and Bankruptcy Act (which includes a legal opening procedure) is sufficient for the debt collection request to remain disclosed to third parties. It is not necessary for the creditor to prevail in the respective proceedings. The materials relating to the legislative process, in particular the votes of members of the parliament, also support this interpretation. The purpose of an extract from the debt enforcement register is to ensure that justified debt collection requests are visible to third parties. The application for the objection to be set aside is an indication that debt collection is justified, for the following reasons: While the creditor can initiate debt collection proceedings with little effort and at low cost, the effort and costs involved in proceedings for setting aside the objection are significantly higher. As a rule, a creditor will only assume those if he considers his claim to be justified.

Accordingly, the Federal Court dismissed the debtor’s complaint.

Conclusion

With this decision, the Federal Supreme Court clarified the question whether an unsuccessful proceeding for setting aside the objection also justifies the non-disclosure of debt collection to third parties based on Art. 8 para. 3 lit. d of the Swiss Debt Enforcement and Bankruptcy Act. The Federal Supreme Court denies this. Even after an unsuccessful application for the objection to be set aside, the debt enforcement request would still be disclosed to third parties.

If the (alleged) debtor nevertheless wishes to prevent disclosure of the debt collection to third parties, he can and must take action himself and bring an action against the (alleged) creditor for cancellation of the debt collection request or demonstration of non-existence of the claim.