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Res Judicata Effect of Decisions on Partial Claims

16.04.2021

The question of the res judicata effect of a court decision dismissing a partial claim has been a longstanding topic of discussion in Swiss doctrine and jurisprudence. In its decision of 23 March 2021 (4A_449/2020), the Swiss Federal Supreme Court clarified a further relevant aspect of this topic. The Court held that if a (genuine) partial claim (echte Teilklage), i.e. a claim limited only in terms of the amount, is rejected in a final and binding decision, the plaintiff is as a rule precluded from bringing another claim for a further part or the remainder of the overall amount. According to the Court, it is irrelevant under which type of proceedings or by which court the partial claim was decided.

1. Facts

In 2014, company C initiated legal proceedings against bank B before the District Court of Zurich, claiming only part of an alleged total amount of CHF 5m. The partial claim was rejected in simplified proceedings for lack of legal standing, lack of direct damage to company C and because it was time-barred. In 2019, foundation A filed a partial claim in the amount of CHF 100'000 with the Zurich Commercial Court based on the same alleged total claim of CHF 5m, which it asserted had been reassigned to it by its asset manager C. Foundation A argued that neither the subject-matter of the dispute nor the parties were identical and further claimed that the decision of the District Court had no res judicata effect beyond the partial claim on which the Court had rendered a decision. The Commercial Court did not follow A's reasoning and dismissed the second partial claim on the basis that it was res judicata. This decision was upheld by the Federal Supreme Court.

2. Res Judicata of Decisions on Partial Claims

The Federal Supreme Court started by setting out the principles to be applied when assessing the identity of the subject-matter of two disputes. The Court recalled that res judicata encompasses all legal bases of a claim, irrespective of whether or not they were considered by the court deciding on the partial claim. Further, the Federal Supreme Court confirmed that res judicata extends to all facts existing at the time of the decision, regardless of whether they were known to and/or presented by the parties, or acknowledged by the court at that time. The Court also clarified that, where a claim that has already been decided is assigned to a third party, the res judicata effect applies also to the assignee. Based on these considerations, the Federal Supreme Court confirmed that, in the present case, both the subject-matter of the dispute and the parties were identical.

With regard to the scope of the res judicata effect, the Federal Supreme Court stated that such effect only applies to the extent that the claim in question was ruled upon in the operative part of the judgment. However, particularly in a case where the first court has rejected a claim, the second court must take into account the considerations of the earlier decision so as to determine the scope of its operative part. In the case at hand, company C limited the first partial claim only in terms of the amount, and not e.g. to certain damage items. Thus, to reach a decision rejecting the partial claim, the District Court had to continue its review until it reached the conclusion that the plaintiff had no claim at all. According to the Federal Supreme Court, this aspect must be taken into account when interpreting the operative part of a decision so as to determine its res judicata effect. Due to the principle of singularity of legal protection, it was therefore not permissible in the case at hand for foundation A to bring a second action relating to another part of the same claim.

With reference to some of its earlier decisions, the Federal Supreme Court clarified that this case law applies only to partial claims which are merely limited in terms of the amount claimed. If a partial claim is upheld or if a non-genuine partial claim (e.g. a claim limited to one of several damages items; unechte Teilklage) is dismissed, the res judicata effect does not extend to the whole of the claim, as the court did not have to examine the entire claim when dismissing the partial claim. In these cases, the general principle applies that the first decision does not set a precedent for later proceedings related to the remaining amount or to further damage items.

3. Practical Impact

Partial claims are an interesting and frequently used alternative to asserting the entire claim in court, as the associated cost risk is substantially reduced. At the same time, partial actions raise various legal issues. In recent years, the Federal Supreme Court has provided clarity in various respects, such as with regard to the necessity of sufficiently determining the prayers for relief in partial claims or with regard to the interplay between partial claims and negative declaratory counterclaims when they are subject to different types of procedures (see SW Newsletter of August 2019). With the decision of 23 March 2021 (Schellenberg Wittmer represented the prevailing defendant in these proceedings), the Federal Supreme Court has clarified another intensely debated topic. In doing so, it addressed – albeit somewhat cursorily – the concerns of those scholars who call for a strict limitation of the res judicata effect to the partial amount claimed, arguing that otherwise the costs, the type of procedure, the subject-matter jurisdiction for and the appeals against the first decision would also have to be based on the total amount of the claim. According to the Federal Supreme Court, the type of procedure, the competent court and the available legal remedies are irrelevant to the question of the res judicata effect, since the plaintiff always has the option to bring a claim for the total amount instead of only a part of it.

 

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