Judgment of the Federal Supreme Court of 27 January 2025
Case Reference : ATF 151 III 35 (4A_189/2024)

Facts

On February 6, 2014, A. (the “Patient”) was examined by Professor C. (the “Doctor”) due to pain in her hand. The Doctor was covered by liability insurance with Insurance Company B. (the “Insurance Company”). On February 26, 2014, following the diagnosis, the Doctor performed surgery on the Patient’s hand.

The Patient left the clinic on February 28, 2014. The discharge report noted that the post-operative period “was marked by extremely severe pain on the first day”. Further examinations, expert reports and surgical interventions followed over the subsequent years.

By a request dated April 27, 2023, the Patient filed a claim to the Commercial Court of the Canton of Berne, for careless medical treatment by the Doctor. Said claim was directed against the Doctor’s Insurance Company, on the basis of art. 60 para. 1bis of the SICA. Substantively, the Patient sought an order requiring the Insurance Company to pay CHF 35,000 as compensation for non-material damage resulting from the surgery performed on February 26, 2014, together with interest at 5% from that date. The claim was filed as a partial action, with a reservation of future damages.[1]

By a decision dated March 6, 2024, the Commercial Court denied the claim, considering that the Insurance Company had no passive legitimation. The Patient challenged this ruling before the Federal Supreme Court.

Issue

In the case at hand, the liability contract between the Doctor and the Insurance Company had been concluded before art. 60 para. 1bis SICA, the provision granting an injured third party a direct right of action against the insurer, had entered into force.

According to art. 103a SICA, only two categories of provisions of the SICA apply to contracts concluded before its June 19, 2020 amendment:

1. Formal provisions;
2. The right of termination of the contract under 35a and 35b SICA.

The central question before the Federal Supreme Court was whether this transitional provision allowed art. 60 para. 1bis SICA to apply to such pre-existing contracts.

Decision

The Federal Supreme Court began by reviewing the divergent doctrinal positions on this matter.

According to one part of the doctrine, art. 103a SICA only refers to “contracts”[2] and thus exclusively to the contractual relationship between the policyholder and the insurer. Since, the direct right of action under art. 60 para. 1bis SICA is statutory rather than contractual, it should fall outside the scope of art. 103a SICA and therefore apply even to contracts concluded before its entry into force.

Another doctrinal view considers that art. 103a SICA explicitly declares only the formal requirements and the right of termination under articles 35a and 35b to be applicable, implying a contrario that all other provisions of the revised SICA (including art. 60 para. 1bis SICA) should not be considered applicable to contracts concluded before their entry into force.

To resolve this doctrinal conflict, the Federal Supreme Court interpreted art. 103a SICA using its 4 methods of interpretation:

1. Literal interpretation, based on the wording of the provision and its direct meaning;
2. Systematic interpretation, considering the law as a coherent system and deducing the role that the interpreted provision plays into it;
3. Teleological interpretation, based on the finality that the provision was meant to achieve;
4. Historical interpretation, based on the preparatory legislative documents, to deduce the intention of the legislator at the time the provision was written.

Starting with literal interpretation, the Federal Supreme Court considered that the word “contract” could be understood as limiting the scope of art. 103a SICA to the contractual relationship between the policyholder and the Insurance Company. However, the contract could also be understood more broadly as a temporal reference point for the applicability of all provisions of the SICA, since they all presuppose the existence of an insurance contract. Additionally, the title of the provision, “Transitional provision to the amendment of June 19, 2020”[3], was not found to limit the scope of art. 103a SICA to strictly contractual matters but rather to plead for a wider scope of application.

From a systematic standpoint, the Federal Supreme Court reminded that the SICA regulates not only the contractual relationship between policyholders and insurance companies but also all legal relationships involving third parties. All of these third-party legal relationships require an insurance contract to exist and could hence be regarded as “insurance-contractual”. Therefore, the word “contract” in art. 103a SICA should be interpreted in a broad sense. The limited number of provisions designated by art. 103a SICA as retroactively applicable to contracts concluded under the old law should also be a sign that the legislators intended retroactivity to remain exceptional.

Regarding teleological interpretation, the Patient argued that the new provisions of the SICA regarding liability insurance (in particular art. 60 para. 1bis SICA) were intended to strengthen the position of the injured third party and should therefore apply immediately, even to earlier contracts. The Federal Supreme Court rejected this argument. It considered that the main reason for the partial amendment of the SICA was to strengthen the position of the policyholder, and that it would be inconsistent if contractual provisions designed to achieve this objective were not retroactively applicable under art. 103a SICA while art. 60 para. 1bis SICA was. Additionally, the Federal Supreme Court noted that the risk of a direct right of action from the injured third party had an influence on premium calculations, demonstrating that art. 60 para. 1bis SICA cannot be considered entirely independent from contract law provisions.

Finally, historical interpretation revealed that preparatory documents regarding the amendment of the SICA, particularly the Federal Council’s message, mentioned the transitional provision of art. 103a SICA as only applying to formal requirements to the exclusion of “all other provisions”. The Federal Supreme Court added that, even in an early, ultimately abandoned amendment project from 2011 where the direct right of action was included in the transitional provision, it was not distinguished from “direct contractual law”.

In light of these considerations, the Federal Supreme Court ruled that only the provisions exhaustively listed in art. 103a SICA apply retroactively to insurance contracts concluded before the 2020 SICA amendment entered into force. Consequently, art. 60 para. 1bis SICA was inapplicable in the case at hand, and the Patient’s appeal to the Federal Supreme Court was dismissed.

Key Takeaways

This decision provides a welcome clarification regarding the transitional regime applicable to art. 60 para. 1bis SICA, which had previously been a source of uncertainty. The Federal Supreme Court confirms that this provision does not apply to liability insurance contracts concluded before January 1, 2022.

Comments

1. A key provision of the SICA reform: the generalized direct right of action

Art. 60 para. 1bis SICA, which entered into force on January 1, 2022, establishes a generalized direct right of action in the field of liability insurance. Under the new legal regime, any injured party – or their heirs in the event of death – may bring a direct claim against the insurer of the party liable for the damage, in the context of a liability action[4].

This mechanism strengthens victim protection by allowing claims to be brought directly against the insurer – either alone or alongside the liable party – thereby offering greater financial security, especially in cases where the liable party is insolvent.

2. A doctrinal controversy over the transitional law

The temporal applicability of art. 60 para. 1bis SICA has divided legal scholars, due to the ambiguous wording of art. 103a SICA.

Article 103a SICA reads as follows:

“The following provisions of the new law shall apply to contracts concluded before the entry into force of the amendment of June 19, 2020:

(a) the formal requirements;

(b) the right of termination under Articles 35a and 35b.”

Based on this article, two interpretative approaches are possible:

• According to the first view, art. 103a SICA refers only to contractual provisions governing the relationship between the insurer and the policyholder. Since the direct right of action is a statutory (rather than contractual) right, this interpretation supports the immediate applicability of art. 60 para. 1bis SICA to any event occurring after January 1, 2022, regardless of when the insurance contract was concluded.

• Conversely, a second interpretation, grounded in a literal reading of art.103a SICA, considers that only the provisions expressly mentioned in that article – i.e., those relating to form and the right of termination – apply retroactively. As a result, art. 60 para. 1bis SICA would be excluded from the scope of retroactive application.

3. The scope of the Federal Supreme Court’s decision

With this decision, the Federal Supreme Court resolves the debate:

• It holds that art. 103a SICA constitutes a lex specialis that takes precedence over the general transitional rules contained in the Final Title of the Swiss Civil Code.

• As a result, only the provisions expressly listed in art. 103a SICA have retroactive effect. Since the direct right of action is not among them, it does not apply to insurance contracts concluded before January 1, 2022.

• Furthermore, the Court adopts a broad interpretation of the term “contracts”: the transitional regime applies not only to the internal relationship between the insurer and the policyholder, but also to relationships involving third parties, provided they are based on the existence of an insurance contract.

Accordingly, for a victim to benefit from the direct right of action, the liability insurance contract between the person responsible and its insurer must have been concluded after January 1, 2022.

This decision illustrates a characteristic feature of Swiss insurance law: it prioritizes legal certainty and predictability for insurers, including due consideration of the economic realities specific to the sector, such as long-term portfolio management and premium setting. It also highlights the autonomy of insurance law, which in certain respects departs from the general principles of the legal system, including those typically governing transitional provisions.

From the perspective of injured parties, however, this position raises significant concerns:

• It creates legal uncertainty for victims, who generally have neither knowledge of nor control over the date on which the liable party’s liability insurance contract was concluded.

• It risks unnecessarily complicating liability proceedings, which are already complex, by introducing questions of insurance law interpretation that are largely disconnected from the substantive assessment of liability.

• It may also give rise to practical difficulties. Indeed, liability insurance contracts are usually concluded for extended periods and are frequently amended, particularly with respect to premium adjustments. However, the judgment does not address the legal consequences of such amendments. It remains unclear, for now, whether a policy amendment or the tacit renewal of a contract may be considered equivalent to the conclusion of a new contract within the meaning of art. 103a SICA.

In our view, when a premium adjustment occurs, insurers must take into account the potential applicability of the revised SICA, including the direct right of action. Accordingly, such circumstances should, in our opinion, allow victims to invoke art. 60 para. 1bis SICA. These issues, however, remain unresolved to date, and it is likely that the Federal Supreme Court will eventually be called upon to clarify them.

By comparison, other legal systems – such as French or German law – adopt a more victim-friendly approach:

• In France, the direct right of action in matters of civil liability has traditionally been recognized even for ongoing contracts, on the basis of the direct effect of art. L.124-3 and L.124-5 of the Insurance Code.

• In Germany, § 115 of the German Insurance Contract Act also allows injured parties to bring a direct claim against the liability insurer, irrespective of the date on which the insurance contract was concluded.

These comparisons reveal a distinct Swiss approach, characterized by a restrictive interpretation of transitional provisions and a strong emphasis on preserving the technical balance of the insurance market.

Practitioners will therefore need to exercise heightened vigilance regarding the date on which the insurance contract was concluded, which has now become a decisive factor in determining the admissibility of a direct action.

Finally, practitioners should bear in mind that the implications of this decision may extend beyond art. 60 para. 1bis SICA. One particularly significant implication for practice concerns the new prescription regime introduced by art. 46 SICA as part of the January 1, 2022 reform, which extends the limitation period for claims arising from insurance contracts from two to five years. If the reasoning adopted by the Federal Supreme Court were to apply to all provisions of the revised SICA – as the decision appears to suggest – only insurance contracts concluded after January 1, 2022 would benefit from the extended limitation period. Such an interpretation would have far-reaching practical consequences, especially for claims that had not yet become time-barred when the reform entered into force. This means that claims arising from insurance contracts concluded before January 1, 2022 would remain subject to the former two-year limitation period – even those that were not yet time-barred when the reform entered into force – thus departing from the principle laid down in art. 49 para. 1 of the Final Title of the Swiss Civil Code.

Other sources presenting the case

Benedikt Saupe, Keine Rückwirkung des direkten Forderungsrechts nach VVG bei Versicherungsverträgen vor 2022, in REAS 2025 p. 48-52

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[1] Art. 86 of the Swiss Civil Procedure Code.

[2] The relevant part of this provision reads as follows in the official French version : “Les dispositions suivantes du nouveau droit s’appliquent aux contrats qui ont été conclus avant l’entrée en vigueur de la modification du 19 juin 2020”.

[3] The title reads as follows in the official French version: “Disposition transitoire relative à la modification du 19 juin 2020”.

[4] Previously, the direct right of action was limited to cases explicitly provided for by special statutes, the most well-known being the right to bring a direct claim against the motor vehicle’s liability insurer (art. 65 of the Swiss Federal Act on Road Traffic). Direct actions are also provided for under the Hunting Act (art. 16 para. 2 HA), the Nuclear Liability Act (art. 17 para. 1 NLA), the Pipeline Transportation Facilities Act (art. 37 para. 1 PTFA), the Inland Navigation Act (art. 33 INA), the Ordinance on Clinical Trials (art. 14 para. 2 ClinO) and the Ordinance on Human Research (art. 13 para. 4 HRO).

Judgment of the Federal Supreme Court of 19 March 2024
Case reference: 4A_489/2023

Facts

A. (the “Client”), took out supplementary insurance (the “Supplementary Insurance”) with an insurance company (the “Insurance”). Under the Supplementary Insurance, the Client was entitled to costs reimbursement for treatment in a private room. In 2005, the Client was diagnosed with leukemia. During the course of this illness, the Supplementary Insurance came into effect. Following a stem cell transplant, repeated rejection reactions occurred which led to numerous claims under the Supplementary Insurance.

In 2018, the Insurance informed the Client that the Supplementary Insurance was considered closed (closed portfolio pursuant to Art. 156 of the Ordinance on the Supervision of Private Insurance Companies [SO]). It offered her the opportunity to switch to a comparable supplementary insurance (the “Supplementary Insurance 2”). The Client refused to switch because this insurance did not provide coverage for transplants.

In 2019, the Client asserted that the premiums for the Supplementary Insurance from 2007 onwards were immoral (pursuant to Arts. 19 and 20 of the Swiss Code of Obligations [SCO]). The Insurance refused to retroactively adjust the premiums and to limit future premium increases. In subsequent correspondence with the Insurance, the Client reiterated her position that the successive premium increases were immoral. She also argued that the contract could be invalidated due to unfair advantage (Art. 21 SCO).

In 2022, the Client filed a claim before the Cantonal Court requesting that the Insurance be ordered to pay her CHF 33,489.20 corresponding to overpaid premiums. The Client essentially argued that the premium for the Supplementary Insurance had risen by 282 % between 2006 and 2019 and by 321 % between 2019 and 2022, and was therefore three times higher than that of similar insurances. Also, the premium increases were immoral, and they could even amount to a case of unfair advantage.

The Cantonal Court dismissed the claim. It considered that the Client was unable to prove that the premium increases made over the years were immoral. There was also no case of unfair advantage, namely no emergency situation or exploitation of such by the Insurance.

The Client challenged this ruling before the Federal Supreme Court.

Issue

In its ruling, the Federal Supreme Court first noted that the case of a clear discrepancy between the respective obligations of the contracting parties under a contract is exclusively covered by Art. 21 SCO (unfair advantage), and not by Arts. 19 and 20 SCO (immoral contract). Consequently, only Art. 21 SCO needed to be analyzed.

Art. 21 SCO provides that “Where there is a clear discrepancy between the respective obligations of the contracting parties as a result of one party’s exploitation of the other’s straitened circumstances, inexperience or thoughtlessness, the person suffering damage may declare within one year that s/he will not honor the contract and demand restitution of any performance already made”[1].

In this respect, it was first to be determined whether a clear discrepancy between the respective obligations of the contracting parties was given. Second, it was necessary to assess whether the Client was in an emergency situation (straitened circumstances, recklessness or inexperience), on the one hand, and whether the Insurance deliberately exploited this situation, on the other.

Decision

The Federal Supreme Court confirmed the Cantonal Court’s judgment and thus rejected the appeal filed by the Client.

The Federal Supreme Court first reminded that an emergency situation within the meaning of Art. 21 SCO exists when, at the time a contract is concluded, a party is in severe distress. Severe distress includes but is not limited to economic, personal, family and political distress. The decisive factor is that a contracting party considers that entering into a contract that is unfavorable to it is the lesser evil compared to the disadvantages stemming from not entering into the contract at all.

In the case at hand, the Cantonal Court had noted that the latest increase of the premiums (the only one relevant under the statute of limitation rule of Art. 21 SCO) could be explained by the elimination of the no-benefit discount provided for in the contract. At any rate, there was no emergency situation or deliberate exploitation of such a situation by the Insurance. On the contrary, as the Cantonal Court pointed out, Art. 10 para. 1 of the General Terms and Conditions (GTC) of the insurance contract granted the Insurance the right to modify the insurance contract in the event changes were made to premium tariffs or cost sharing. Furthermore, according to Art. 10 para. 3 of the GTC, the Client shall be notified of changes to the premium tariffs in advance. Therefore, if the Client opposed the changes, she had the possibility to terminate the contract by the end of the calendar year. Alternatively, she could have opted to switch to Supplementary Insurance 2, which would have (merely) resulted in not having expenses covered for a stay in a private room for the treatment of subsequent complications of the stem cell transplant that she had undergone in 2006. Under these circumstances, the Cantonal Court considered that there could be no grounds for the Insurance deliberately exploiting an emergency situation.

The Federal Supreme Court took a different stance.

The Federal Supreme Court reminded that under Art. 21 SCO the required discrepancy between the respective obligations of the contracting parties must exist at the time the contract was entered into, but this was clearly not the case here. Therefore, Art. 21 SCO could only be applied if it were assumed that a new contract between the parties arises with each premium increase. However, such a view is not in line with the general terms and conditions of the contract. Indeed, under these terms, the Insurance may adjust the insurance premium when changes are made to premium tariffs or cost sharing. Thus, every new adjustment to the insurance premium did not result in a new contract each time but rather constituted a mere modification to an already existing contract. Hence, Art. 21 SCO does not apply because any hypothetical discrepancy between the respective obligations of the contracting parties only materialized after the conclusion of the Supplementary Insurance.

Even if one were to side with the Client that a new contract was entered into with every premium increase, and that there was a clear discrepancy between the respective obligations of the contracting parties, the other requirements of Art. 21 SCO would clearly not be met. Indeed, the Client failed to prove that she had entered into the contract due to an emergency situation, nor did she prove that the Insurance had deliberately exploited such a situation.

In light of these considerations, the Federal Supreme Court upheld the Cantonal Court judgment and rejected the Client’s claim.

Key takeaways

Under Art. 21 SCO, discrepancy between the respective obligations of the contracting parties must exist when the contract is entered into, and not at the time of subsequent amendments.

Indeed, the amendment of an existing contract does not constitute the conclusion of a new contract for the purposes of Art. 21 SCO. In addition, clients wishing to invoke Art. 21 SCO must allege and prove the existence of an emergency situation and the exploitation of this situation by their contracting partner.

Comments

In this decision, the Federal Supreme Court concluded that, under the general terms and conditions of the Supplementary Insurance, the increase in health insurance premiums did not lead to a new contract but merely constituted a modification of the existing contract. However, the modification of a contract is subject to the same rules as those governing the establishment of the contract, in particular those relating to the establishment and exchange of the parties’ will. In other words, contract modifications operate in the same way as the conclusion of a new contract. This means that one should ensure that the policyholder’s will is intact each time premium increase results in a modification of the contract.[2] Concretely, in this case, this would mean that Art. 21 SCO could also apply to subsequent changes in insurance premiums. Such a conclusion also seems justified in view of the need to protect the establishment of the contracting parties’ will not only at the time of entering into the original contract, but also when the parties’ will is subsequently expressed in relation to any contractual modification.

In addition, the general clause on premium increases contained in the GTC does not yet make it possible to rule out any ill-intention according to Art. 21 SCO, particularly when the increase is such that it could raise the question of a clear discrepancy between the respective obligations of the contracting parties resulting from the exploitation of the other party’s weakness. Indeed, the reservations that Supplementary Insurances may impose on new policyholders make it nearly impossible in practice for a person undergoing any type of medical treatment to be offered an equivalent coverage under another insurance policy. This should be taken into account when assessing the emergency situation requirement under Art. 21 SCO.

Other sources presenting the case

Bottani Luca/Galli Dario/Vischer Markus, Starke Prämienerhöhungen sind weder sittenwidrig noch übervorteilend, indRSK Weblaw, published on November 27, 2024 (https://www.walderwyss.com/assets/content/publications/Starke-Praemienerhoehungen-sind-weder-sittenwidrig-noch-uebervorteilend.pdf).

Stacchetti Mathias, Assurances complémentaires pour les soins de santé: le piège du produit fermé: analyse de l’arrêt du Tribunal fédéral 4A_489/2023 du 19 mars 2024, in RC & Assurances.ch (rcassurances.ch).

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[1] “En cas de disproportion évidente entre la prestation promise par l’une des parties et la contre-prestation de l’autre, la partie lésée peut, dans le délai d’un an, déclarer qu’elle résilie le contrat et répéter ce qu’elle a payé, si la lésion a été déterminée par l’exploitation de sa gêne, de sa légèreté ou de son inexpérience”

[2] Tercier Pierre / Pichonnaz Pascal, Le droit des obligations, 6^e éd., Genève, Zurich, Bâle (Schulthess) 2019, N 607.