The takeover of Credit Suisse and application of emergency law

In Switzerland’s history, emergency law has played a significant role, especially in times of economic uncertainty. Emergency law allows the Federal Council to take decisive measures in times of crisis to protect the common good. The most prominent use of this right took place in 2008 when UBS, threatened with imminent insolvency, was supported with a rescue package of CHF 6 billion. Recent events have again brought the activation of this mechanism to the fore: the rescue of Credit Suisse.

Reference to foreign policy

The Federal Council’s invocation of Articles 184 and 185 of the Federal Constitution, particularly in the context of the financial market, is legally interesting. While these articles primarily concern diplomatic relations and national security, the Federal Council has used them as a basis for its interventions in the financial sector. Article 184 allows the Federal Council to act in the conduct of foreign policy, including safeguarding Switzerland’s foreign policy interests.

Equating interests of the financial centre with national interests

In recent years, the Federal Council has adopted an increasingly expansive interpretation of Article 184. This development became particularly visible after the rescue of UBS, when the Federal Council argued that the reputation of the Swiss financial centre abroad was of central importance. This perspective implies that the Swiss financial centre should not only be considered from an economic perspective, but also from a foreign policy perspective. Thus, the well-being of the financial centre was considered a foreign policy interest comparable to other central national interests.

The interpretation of these constitutional articles has triggered an intense debate among scholars. There are a variety of perspectives on how and when these articles should be applied. The core of this debate revolves around the question of whether the current use of these articles is consistent with their original purpose. The balance between preserving economic stability and respecting constitutional limits is an ongoing concern.

Property law: implications and legal justification

The application of emergency law in the Credit Suisse context has profound legal and economic implications. When competition law is overruled and property rights are restricted, the question of the limits of state intervention arises. Such an intervention is in effect an expropriation of shareholders. Nevertheless, it can be argued that given the unprecedented economic urgency, such intervention is not only necessary but also legally justified.

In summary, the balance between emergency law and the fundamental principles of property and competition law is a key challenge in times of economic uncertainty. The measures taken by the Federal Council in the recent financial crisis underline the importance of flexibility and rapid action, but also raise questions about the long-term interpretation and application of the Swiss constitution.