The Swiss Federal Tribunal has published a new decision (dated 16 June 2017, 4A_508/2016) on retrocessions, ruling for the first time on the debated issue of the statute of limitations applicable to a retrocession restitution claim from an agent’s client.
The Swiss Federal Tribunal has published a new decision (dated 16 June 2017, 4A_508/2016) on retrocessions, ruling for the first time on the debated issue of the statute of limitations applicable to a retrocession restitution claim from an agent’s client, i.e. how many years of retrocession payments may be claimed by a client without the agent being entitled to object that such claim is time-barred.
This statute of limitations issue is twofold: first, what is the starting point of the statute of limitations period (dies a quo) and second, what is the duration of such period: ten years (standard statute of limitations) or five years (statute of limitations applicable to periodic payments such as a rent or interest payments).
According to this Swiss Federal Tribunal’s decision, given in an insurance brokerage context (the retrocessions received by the broker consisted of a share of insurance premiums paid by the claimant), the client’s restitution claim is subject to a ten-year statute of limitations period, starting for each retrocession as from the day the agent received the retrocession from the third party, regardless of the client’s knowledge of the existence thereof.
The Swiss Federal Tribunal has indeed considered that the agent’s duty to return retrocessions to the principal does have a different legal basis for each retrocession received by the agent, and that retrocessions do not qualify as periodic payments subject to a five-year statute of limitations period.
Even though this decision concerns retrocessions paid within an insurance brokerage relationship, it should apply to other mandate relationships, especially to retrocessions received by banks or other asset managers from third parties.
This much-awaited decision clarifies the situation and brings legal certainty that will be positively received in the industry.
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About the Authors
Fabien specialises in advising financial institutions (including banks, independent asset managers and distributors of collective investment schemes) on asset management matters and contracts, organisational rules, directives or processes, including when dealing with regulators (e.g. FINMA).
Nurith regularly assists both Swiss and foreign companies, financial institutions as well as individuals in reviewing or drafting commercial contracts and corporate documents. She assists clients in setting up or reorganising companies.