In a landmark decision (4A_361/2024, 4A_363/2024, 18 June 2025), published on 12 August 2025, the Swiss Federal Supreme Court ruled against a bank, determining that the intent and subsequent conduct of the parties may take precedence over the express terms of their written agreement. Therefore, the Supreme Court:
- upheld an investment commitment providing for capital guarantee and a minimum return, despite the contract specifying those as merely indicative;
- limited the effect of standard ratification clauses in banking general terms and conditions, emphasising the need for a context-sensitive application; and
- emphasised that the burden of allegation in civil proceedings also applies to defendants, particularly with respect to contesting damages calculations.
FACTUAL BACKGROUND
In 2010, an individual, his brother and two entities in the family's group of companies (the “Clients”) negotiated with a Swiss bank (the “Bank”) for credit lines to finance investments managed by the Bank and cash withdrawals, secured by a pledge of shares by the Clients. A key condition of the agreement between the parties was a guaranteed 5% annual return on the Clients' investments using the credit line, a term to which the Bank agreed after various discussions and the exchange of several draft proposals. The agreement also provided that the Bank would invest all borrowed funds, for the benefit of the Clients, in a capital-protected product, with no management or account fees, and fixed collateral and loan ratios.
When the Clients questioned the performance and mentioned a guaranteed return, the Bank stated the return was only “indicative”. After discussions, both sides signed new agreements, including asset management mandates and a credit facility. In the subsequent dispute, the Bank argued that these replaced the original agreement, while the Clients disagreed, noting the lack of clear replacement terms and incomplete documentation. The Clients also cited delays in receiving account and portfolio statements.
The Clients eventually sought payment of damages related to the losses incurred by the underperformance for failure to meet the agreed return and reimbursement of fees. The Bank refused, and the relationship ended. Litigation followed, with the Clients claiming over USD 55 million for underperformance, failure to use the credit limit, reimbursement of undue fees and capital loss. The first instance court of Geneva ruled fully in their favour, while the appellate court reduced the award to about USD 32 million. Both parties appealed to the Federal Supreme Court, which upheld the judgment of the appellate court dismissing all appeals.
FEDERAL SUPREME COURT'S ANALYSIS
WHEN FINE PRINT IS NOT ENOUGH – PARTIES' INTENT PREVAILS OVER WRITTEN CONTRACT
In its decision, the Federal Supreme Court initially confirmed that the Bank could not rely on the term "indicative" in the credit facility agreement although it had been added to its title in the final version. The mere fact that a disclaimer was included in the annex of that document stating that all the rates and returns indicated in that document were indicative only did not help either as: (i) the negotiations among the parties had precisely been on that point and (ii) the bank had amended the rate in the subsequent drafts. Also, an employee of the Bank confirmed during trial, as a witness, that the bank had guaranteed that minimum 5% return, which certainly contributed towards convincing the judges to rule against the Bank notwithstanding the wording of the actual agreement.
The Bank argued that the guaranteed minimum return was no longer relevant after new agreements had replaced the original contract, as these did not mention a guaranteed return. The Supreme Court rejected this, holding that the new documents only supplemented, not replaced, the initial contracts; there was no evidence of intent to amend the original terms, nor proof that the Clients had received the full documentation of the new set of contracts, nor any clause removing prior commitments. As a result, the Clients could reasonably believe the original return guarantee still applied.
The Supreme Court held that having an asset management agreement with moderate risk does not rule out a guaranteed return or capital guarantee. The Court did not address this argument in depth, noting the Bank had failed to present detailed allegations in this respect. Claims that wider investment authority conflicted with guarantees were also dismissed due to lack of evidence.
STANDARD CLAUSES, UNEXPECTED CONSEQUENCES – LIMITS TO THE STANDARD RATIFICATION CLAUSES
The Supreme Court rejected the Bank's reliance on a clause allowing tacit approval of the performance results by the Client after four weeks of receipt of the banking statements, stating that such deadlines must be flexible based on context. It concluded that applying a strict 30- day complaint deadline makes little sense when the Clients receive a guaranteed return that is to be assessed annually, not monthly, or face extensive documentation. The Bank could not invoke the ratification clause if it was unreasonable to expect timely objections, especially as the Clients had raised concerns, and the Bank had delayed providing documents. Enforcing the clause in these circumstances was deemed an abuse of rights, since a party cannot benefit from difficulties it has created itself.
LITIGATION STRATEGY – A CALL FOR RIGOUR AND PRECISION
The Civil Procedural Code sets a high threshold for the parties' allegations, which is regularly referenced by the Supreme Court. This requirement also applies to the defendant, who must provide specific and precise responses when rebutting the claimant's allegations rather than making general comments. In this instance, the Clients submitted detailed calculations of losses supported by private expert opinions, while the Bank responded with general denials and vague references without identifying specific evidence or amounts. The Court stated that when a claim is substantiated in detail, the opposing party is expected to present equally specific rebuttals; generic denials are insufficient. Defendants should indicate the actual grounds on which they consider a calculation to be incorrect. The Supreme Court continues to affirm the considerable responsibility placed on litigants to present and rebut facts effectively throughout legal proceedings.
PRACTICAL TAKEAWAYS
This decision of the Swiss Federal Supreme Court offers a clear reminder to banks of the standards they must meet when dealing with clients. The ruling underscores the need for precise contract drafting, meticulous documentation of amendments, timely and transparent communication with clients, and rigorous, evidence-based contestation in litigation. The following five takeaways highlight the key lessons for banking practice:
- Clearly document and prove contractual changes. Amendments, especially to financial terms like guaranteed returns, require clear evidence of mutual intent, full contract delivery and explicit rescission clauses.
- Do not rely solely on broad contractual powers. Changing permitted assets or investment mandates does not remove original obligations unless explicitly stated.
- Exercise care with standard ratification deadlines. “Tacit approval” clauses must be adapted to circumstances. They are invalid if the bank knows of ongoing objections or if late, extensive disclosures prevent timely review; enforcing them may be considered an abuse of rights.
- Contest client claims precisely. Banks should counter detailed accusations with specific, wellsupported responses, since courts require thorough evidence for a valid defence.
- Implement a thorough legal approach and address expert evidence with accuracy. When clients present detailed, expert-supported loss calculations to the courts, banks can respond with specific, evidence-based rebuttals—preferably through an independent expert report—instead of general denials or unsystematic references to documents.
CONCLUSION
Given these practical insights, the Swiss Federal Supreme Court's decision is more than a procedural milestone—it is a blueprint for banking conduct moving forward. The ruling demands banks take a proactive and detail-oriented approach to contractual management and client communication, embedding rigour throughout every stage of documentation of the client relationship and dispute resolution.
For banks, this translates into an imperative to cultivate robust internal processes: ensuring all contractual changes are clearly evidenced. Clarity is key in the contractual process and shall remain the driver.
The ruling also sets a clear procedural standard: in litigation, the burden of allegation and the burden of contestation operate as exacting tests of a party's preparation and strategic foresight. Banks must be ready not only to tell their own story with precision but also to dismantle the opposing party's case with methodology and accuracy.
Robust litigation strategy in this context requires comprehensive documentation, timely disclosure, and – when facing expert evidence – well-founded counter-analysis that leaves no material contention unanswered. The decision therefore raises the bar for banks' procedural discipline and evidentiary readiness in Swiss courts.
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