Swiss Supreme Court dismisses another state liability claim after Credit Suisse–UBS merger

In its judgment of October 7 2025 (Decision 2E_5/2024, published on September 2 2026), the Swiss Federal Supreme Court decided in a state liability suit brought by a shareholder against the Swiss Confederation in connection with the March 2023 emergency merger of Credit Suisse Group AG into its major rival UBS Group AG.

The claimant had purchased 13,436 Credit Suisse shares between 2014 and 2022, investing a total of CHF 149,903.30. In his suit, he sought CHF 140,783.30 in damages from the Swiss state in relation to 12,000 Credit Suisse shares.

The judgment followed a May 2025 ruling when the highest Swiss court had to decide a similar case (Decision 2E_1/2024) brought by two Swiss investors against the state for losses incurred as a consequence of the decrease in value of their Credit Suisse shares because of the merger.

At its core, the court in the subsequent case assessed the legality of the exclusion of shareholders’ rights to information and participation ordered by the Federal Council (the Swiss government) based on constitutional emergency powers in order to enable the takeover due to time-sensitive urgency and to safeguard the interests of Switzerland as a whole.

The Supreme Court found that, in this acute crisis, giving greater weight to the interests of the nation as a whole over the shareholders’ rights to participation was neither in breach of fiduciary duty nor arbitrary. There was no evidence to suggest that the suspension of rights was not in the public interest or even unnecessary. Consequently, no material breach of official duty was found that could give rise to state liability and the shareholder’s claim was dismissed.

The background of this case is rooted in the acute financial crisis faced by Credit Suisse in early 2023. As a global systemically important bank, it had been experiencing a long-term erosion of investor confidence due to various scandals (the Mozambique loans affair in 2016, covert surveillance exercises in 2019, the Greensill and Archegos collapses in 2021) and significant financial losses between 2010 and 2022. Between 2010 and 2022, the bank paid out CHF 15 billion by way of fines, settlements, and damages. During the same period, Credit Suisse remunerated its management to the tune of CHF 39.8 billion in variable compensation while incurring losses of CHF 33.7 billion.

From 2012, the bank’s share price continually dropped (from an all-time high of nearly CHF 100 in April 2007). At the end of February 2023, the share price had fallen to just over CHF 3. The situation reached breaking point in March 2023 after the Saudi National Bank, a major shareholder, announced that it would not provide further capital to the bank. As a result, the Credit Suisse share price plummeted a further 30% on March 15 2023. To prevent an uncontrolled failure, the government intervened using its emergency legal powers.

In the early hours of March 16 2023, Credit Suisse was forced to request emergency liquidity assistance from the Swiss National Bank in the amount of CHF 50 billion to remain liquid. Between March 13 and March 16 2023, CHF 30 billion in client funds were withdrawn from the bank.

On the evening of March 16 2023, the Federal Council’s SR 952.3 - Verordnung vom 16. März 2023 über zusätzliche Liquiditätshilfe-Darlehen und die Gewährung von Ausfallgarantien des Bundes für Liquiditätshilfe-Darlehen der Schweizerischen Natio... | Fedlex(the Emergency Ordinance) came into force, introducing the liquidity assistance loan with bankruptcy privilege and the liquidity assistance loan with a default guarantee and bankruptcy privilege.

On March 17 2023, Credit Suisse obtained CHF 20 billion to avert bankruptcy. On March 19 2023, Credit Suisse and UBS concluded a merger agreement pursuant to which Credit Suisse shareholders would obtain one UBS share for 22.48 Credit Suisse shares.

The claimant, a shareholder of Credit Suisse (the Claimant), filed this state liability claim after the merger, alleging that the emergency measures taken by the Federal Council and the resulting merger were unlawful and caused him financial losses.

The Supreme Court dismissed the claim in its entirety, ruling that the Federal Council had not committed a significant breach of official duty and that the emergency measures were within the scope of constitutional authority.

The Claimant had alleged that the Swiss government’s actions constituted a de facto expropriation of his shareholding of 12,000 Credit Suisse shares. The Claimant’s lawsuit was based on four arguments of alleged unlawfulness.

The Claimant argued that the Federal Council should have intervened as early as autumn 2022 when the financial crisis at Credit Suisse became apparent, rather than waiting until the acute crisis arose in March 2023.

The Claimant further contended that the requirements permitting the government to enact emergency legal measures under Article 184, paragraph 3 and Article 185, paragraph 3 of the Swiss Federal Constitution had not been met. Specifically, he argued there was no “sudden and unavoidable danger” in March 2023 that necessitated bypassing the ordinary legislative processes.

The Claimant also challenged the UBS takeover itself, arguing it was not in the public interest and was a disproportionate response to the crisis.

Lastly, the Claimant advanced that the Emergency Ordinance was to be considered unlawful since it curtailed shareholder rights, thereby violating the principle of good faith and the rule prohibiting arbitrariness governing administrative law. Furthermore, he claimed that the lack of compensation for shareholders violated the constitutional right of property (Article 26).

At the outset, the Supreme Court noted that claims against the Swiss state based on the Federal Responsibility Act were governed by the principle of adversariality, which required claimants to prove the matters of fact based on which they derived their entitlement (i.e., no ascertaining of the facts ex officio). On the other hand, the state was subject to strict liability under the relevant legislation, with claimants only needing to prove the illegality of the state’s act, damages suffered, and the causal link between the first and the second.

The Supreme Court also underlined that a state act, including the passing of legislation, could only be deemed to be unlawful where it constituted a severe contravention of official duties. In addition, unlawfulness in the sense of state liability primarily entailed a violation of an absolute right (such as bodily integrity or property). Financial interests were only covered where the transgression of official duties constituted a breach of a norm that specifically targeted the protection of such interests.

Another central theme in the Supreme Court’s decision is the high level of deference granted to decisions by the Federal Council in matters of national economic stability and emergency law. The Supreme Court noted that when the Federal Council exercises discretion in political and highly sensitive economic matters, the judiciary applies a “high level of restraint”. It would only intervene if the government’s actions were arbitrary or constituted a significant breach of official duty. Importantly, “expediency” or “wisdom” of the Federal Council’s political activities were not subject to judicial review.

The Supreme Court found no evidence that the Federal Council had a legal duty to act specifically for the benefit of shareholders as early as 2022. Such a duty would have been necessary for a finding of liability by omission. Rather, the Supreme Court noted that public records showed that the Federal Council had been actively evaluating various crisis scenarios and conducting cost-benefit analyses as early as October 2022 with a view to how best to manage the situation at Credit Suisse. Because the Federal Council had been engaged in a continuous process of assessment, there was no “omission” of duty.

The Supreme Court upheld the use of emergency law by the Swiss government in the case at hand, clarifying several key points.

To trigger Article 185, paragraph 3 of the Swiss Constitution, there had to be a threat to fundamental state interests or public order that could not be averted by ordinary means. The potential for a ‘grounding’ of the Swiss economy and a global financial crisis, which in the view of the Swiss government were live and realistic threats at the time, met this threshold.

The court clarified that for emergency law to be applicable, it was not required that the insolvency danger be unpredictable. Unforeseeability was merely one factor to be considered in the overall balancing of interests.

Lastly, the massive scale of the potential damage – estimated at 150% of the GDP (approximately CHF 1.156 trillion) – provided a legitimate basis for the Federal Council to conclude that an immediate, non-ordinary intervention was required.

In view of these national and international interests, the invocation of constitutional powers by the Federal Council did not constitute a breach of official duties.

Regarding the argument on the takeover by UBS, the Supreme Court ruled that the Federal Council had acted within its discretion to prioritise the public interest (economic stability) over the interests of individual shareholders.

When assessing the measure adopted under emergency law, the Supreme Court did not substitute its own discretion for that of the Federal Council. The appropriateness of the measure taken was beyond the scope of review by the Supreme Court. In view of the political implications involved in the choice of measure, the Federal Council enjoys considerable discretion. The Supreme Court therefore exercises great restraint when assessing the facts of the case, weighing up the public interests at stake and considering proportionality, and intervenes practically only on the ground of arbitrariness. The mere fact that another solution might also have been conceivable does not fulfil this criterion.

The Supreme Court found no evidence of arbitrariness in choosing the UBS merger as the most viable solution to prevent a systemic collapse. A milder measure was not available in the opinion of the Federal Council and despite the valid concerns of the Claimant that the merger created a very large bank with its own risks, concerns alone could not invalidate the government’s decision.

The Supreme Court also addressed the controversial Article 10a of the Emergency Ordinance, which permitted the exclusion of certain shareholder rights during the merger.

The Supreme Court found that excluding such non-monetary shareholder rights was not arbitrary or a violation of good faith. Such a measure was necessary to ensure the speed and certainty required by the crisis. In a key finding, the court noted that the Federal Council was, in principle, authorised to override statutory law by invoking constitutional emergency powers. Adherence to the information and consultation rights of the shareholders would have thwarted a timely takeover of Credit Suisse over a weekend. The fact that the Federal Council gave greater weight to the interests of Switzerland as a whole in this acute crisis than to the interests of the shareholders could not constitute a material breach of official duties.

In concluding, the Supreme Court noted that the Emergency Ordinance did not curtail a shareholder’s right to request a judicial review where it found that its shareholder rights had not been adequately protected.

The Supreme Court emphasised that the guarantee of property (Article 26, Swiss Constitution) only protected specific legal rights to property but did not serve as a guarantee of the overall value of a person’s wealth or the market value of their shares during a crisis. The court specifically noted that it had not been the Federal Council that defined the purchase price or the exchange ratio in the Emergency Ordinance. Rather, UBS had determined the price and Credit Suisse had agreed to it. The Federal Council, on the other hand, set the amount of the (publicly funded) government guarantees.

The Supreme Court concluded that the Claimant had failed to demonstrate any significant breach of duty by the Federal Council. The claim was dismissed as unfounded. The Claimant was ordered to pay the court costs of CHF 5,000.

The judgment fits in neatly with a US ruling of July 16 2026 by the US Court of Appeals (Second Circuit) where bondholders had sued Switzerland seeking roughly $370 million. The claimants had challenged the emergency write-down of $17.3 billion in Additional Tier 1 (AT1) bonds during the 2023 collapse of Credit Suisse. The Court of Appeals ruled in favour of Switzerland, finding the commercial activity exception did not apply, and dismissed the case for lack of jurisdiction.

It should be noted that despite these decisions in favour of the government, there are other pending lawsuits before courts dealing with the fallout from Credit Suisse’s collapse and merger. In particular, two cases are to be mentioned, and the Supreme Court’s decision does not prejudge either of them.

Firstly, a case is pending before the Zurich Commercial Court against UBS, based on Article 105 of the Federal Merger Act. The amount in dispute is CHF 50 billion and centres on whether the price paid by UBS for the Credit Suisse shares in 2023 was reasonable (or far too low, as the plaintiffs claim).

Secondly, in the so-called AT1 proceedings, about 3,000 bondholders of AT1 bonds filed claims at the Federal Administrative Court arguing that the write-down order by the Swiss Financial Markets Supervisory Authority was disproportionate and arbitrary as the contractual viability event had not been triggered. The first-instance court upheld this view in a pilot case. The decision in the pilot case was brought before the Supreme Court, where the matter is pending.