• Internal stability, external neutrality and tradition of government non-interference.

• Independence (not part of the European Union), open market and own currency (Swiss Franc).

• Tradition of successful companies and entrepreneurship combined with innovation, top-notch technology and developed financial services.

• Business friendly and reliable civil law system with economic freedom and freedom of contract. Chinese civil law has partly been based on German and Swiss law.

• Swiss law is often used as a neutral, predictable and flexible law for international contracts with or without a Swiss angle. It is the number one substantive law in ICC arbitrations.

• Transparent legislation with no overregulation of business and markets.

• Cooperative authorities and no corruption.

• Reasonable tax rates.

• Excellent education and flexible labour market.

• Highly-developed place of arbitration and litigation.

• Numerous small and large companies from all over the world, including China, the US, the EU, Japan, Russia, India, Middle East, Latin America and Africa invest or list in Switzerland, acquire Swiss companies, use Swiss law for international agreements or choose Switzerland as a hub for their international activities or for dispute resolution.

2. To what extent is foreign involvement in M&A transactions in Switzerland regulated or restricted?

There are no general restrictions on capital transactions between Switzerland and foreign investors that would allow government agencies to influence or restrict the completion of business combinations or other M&A transactions. However, there are industry-specific regulations and approval requirements (see question 8). Considering real estate, the Federal Act on the Acquisition of Real Estate by Persons Abroad restricts the acquisition by a foreign person or a foreign-controlled company of non-commercial real estate in Switzerland. Furthermore, the Swiss constitution stipulates a general limitation insofar that no more than 20% of the total stock of residential units and the gross residential floor area in any commune can be used as a second home. The acquisition of shares in a company whose statutory or factual business purpose is trading in non-commercial real estate is also subject to approval, except for listed companies.

3. What investment options are available to prospective foreign investors and acquirers of companies in Switzerland?

Chinese investors can invest in or through a Swiss or a foreign company without any particular restrictions. In terms of Swiss legal entities, the most common Swiss legal forms are the AG (Aktiengesellschaft: stock corporation) and the GmbH (Gesellschaft mit beschränkter Haftung: limited liability company). Generally, no government approval is required for the formation of a Swiss company.

The stock corporation is a legal entity with one or more shareholders (physical persons, partnerships or legal entities), and a minimum share capital of CHF100,000, of which at least CHF50,000 must be paid up. It must be registered in the commercial register of its domicile, which does not list the shareholders of the corporation or their respective holdings in the corporation. Fundamental decisions require approval by the shareholders' meeting. Management is carried out by the board of directors or management. There are no citizenship requirements for shareholders or the board or management. However, at least one person with residence in Switzerland must have the power to bindingly represent the corporation.

The limited liability company is a legal entity with one or more members (physical persons, partnerships or legal entities), and a minimum nominal capital of CHF20,000. It must be registered in the commercial register of its domicile, which lists the members and their quota in the company. The company acts through the members' meeting, which can delegate management to managers. At least one person with residence in Switzerland must have the power to bindingly represent the company.

Acquisitions: Prospective Chinese acquirers may acquire a Swiss business or parts thereof by purchasing the shares of a company (share deal), by purchasing all or specific assets (asset deal), by a statutory merger or, in the case of listed companies, by a public offer for the shares (public takeover).

Co-investments: In case of venture capital and other direct investment transactions, several investors often join forces for the investment and to govern the company. For this purpose, the articles of incorporation and a shareholders' agreement provide for board representation, preference rights, veto rights, information and other rights of the investors and regulate rights of first refusal and co-sale rights and obligations in view of a potential exit.

Corporate reorganisation structures: The Federal Merger Act provides for a variety of instruments to accomplish corporate reorganisations. For example, merger, demerger or transformation (change of corporate form).

4. What requirements are placed on foreign investors?

Generally, there are no particular requirements with regard to investments in private companies. For companies listed on a Swiss stock exchange, the requirements that need to be observed by any investor, irrespective of nationality, include:

• Notification to the target and the stock exchange if a bidder (directly, indirectly or in concert with a third party) acquires or sells shares or equity-linked securities and thereby reaches, exceeds or falls below the thresholds of 3, 5, 10, 15, 20, 25, 331/3, 50 or 662/3% of all voting rights in the target company;

• Listed corporations need to disclose, in their annual business report, the identity of shareholders or organised groups of shareholders with a beneficial interest of more than 5% in the corporation's shares, to the extent that the interest is known to the corporation; and

• In the context of a public offer for the shares of a listed company, the bidder and all shareholders holding more than 3% of the voting rights of the target must report all acquisitions and sales of equity securities in the target and, if applicable, in the company whose securities are offered in exchange for the equity securities of the target.

5. Are there any specific regulations or regulatory bodies governing public takeovers?

The Swiss Takeover Board (TOB) and the Swiss Financial Market Supervisory Authority FINMA supervise public takeover offers. The TOB's orders are binding and enforceable, unless appealed.

6. What are the methods by which a public takeover can be achieved?

Stake building: Potential bidders often seek to acquire a significant stake in the target via acquisition of shares prior to the launch of the public tender offer (see question 4). This can be achieved through undertakings from the target's major shareholders to tender their shares or an outright purchase before the offer is announced. If undertakings or acquisition agreements are entered into during the 12-month period before the public tender offer is announced, the offer documentation must disclose the relevant details of these transactions.

Transaction agreements: If an offer is recommended, the bidder usually enters into a transaction agreement with the target. The terms of such agreement are subject to review by the TOB and must be disclosed in the offer prospectus. The transaction agreement sets out: the terms and conditions of the offer; the target's duty to support the bid and to recommend its acceptance to its shareholders; and the target's future management structure. No-shop undertakings by the target are also frequent and, in principle, permissible under Swiss corporate and takeover law.

Break fees: Usually, transaction agreements provide that the target can withdraw against payment of a break fee if a competing offer is superior. There is no specific restriction, like percentage of transaction value, on break fees. However, they are restricted as a result of directors' fiduciary duties and the purpose of the takeover rules to create a level playing field for offers and to safeguard the freedom of choice of shareholders.

Mandatory offer: A person holding, directly or indirectly, or acting in concert with another person, more than 331/3% of the voting rights of a company with a primary listing on a Swiss stock exchange is required to submit a public tender offer for all listed equity securities of that company. A potential target's articles of association may, however, provide for an opting-out (no mandatory offer obligation) or an opting-up (increase of the triggering threshold to up to 49% of the voting rights).

Minimum price rule: In case of a mandatory offer (including offers that would exceed the triggering threshold), the offer price may not be set below the minimum offer price, which is the higher of the following:

• The volume-weighted average price of the stock exchange transactions in the 60 trading days before formal preannouncement or publication of the offer (or a valuation in case of illiquid stock); or

• The highest price paid by the bidder or persons acting in concert with the bidder for shares in the company in the preceding 12 months.

Conditions for a takeover: Voluntary public takeover offers may be made subject to conditions precedent only if the conditions are beyond the bidder's control. Where the nature of the conditions precedent is such that the bidder's cooperation is required for their satisfaction, the bidder must take all reasonable steps to ensure that the conditions are satisfied. With the approval of the TOB, the offer may be made subject to subsequent conditions if the advantages of the conditions for the bidder outweigh the disadvantages for the target's shareholders (e.g. obtaining regulatory approvals). Typical conditions include the following:

• Minimum acceptance threshold. The TOB requires that the threshold not be unrealistically high also considering shares already owned by the bidder. Typical thresholds are 67% in solicited offers and 51% in unsolicited offers. In practice, most offers reach acceptance levels of over 95%, thereby permitting a squeeze-out of minority shareholders (starting at 90%).

• Merger control, regulatory (including regarding listing or registration of shares offered in exchange for the target's shares) or shareholder approval.

• Material adverse effect (MAC) conditions. The typically accepted thresholds are 10% of EBITDA, 5% of turnover or 10% of the target's net asset value.

A bidder required to submit a mandatory offer cannot make that offer subject to conditions, other than those required to comply with regulations, aimed at registration with voting rights or protecting the economic substance (crown jewels) of the target.

Funding commitments: Funding must be in place before the offer is announced. The bidder can make a formal pre-announcement of the offer before it has committed to funding. The actual offer must contain details of the sources of financing and confirmation by the independent review body that financing is available. The certain funds requirement imposes restrictions on permitted conditions of the financing commitment.

7. To what extent have material adverse change (MAC) clauses become more important in light of the current economic climate?

The Swiss economy and Swiss companies have not been as severely affected by the financial crisis as other Western jurisdictions. Rather, businesses headquartered in Switzerland do and, throughout the crisis, did fairly well. Since Switzerland has, with the Swiss Franc, its own and traditionally stable currency, the Euro crisis had limited effects on the economic climate for Swiss companies, except that exports have been affected by weak foreign currencies. Companies typically hedge against exchange rate risks. In addition, the Swiss National Bank supported the Euro if the exchange rate dropped below CHF 1.20 for 1 EUR until January 15 2015. Together with the discontinuing of the minimum exchange rate, the Swiss National Bank lowered the interest rate on sight deposit account balances that exceed a given exemption threshold to -0.75%.

Nevertheless, the financial crisis has led to more carve-outs from MAC conditions for adverse effects that are the result of general market conditions and the financing environment. In addition, commitment letters that secure the financing of an acquisition have become common also in private acquisitions and more often allow the seller to rely on the commitment.

8. Which regulated financial industries have maximum foreign ownership thresholds?

There is no limitation on foreign ownership in the financial industry. However, owners or acquirers of important stakes in financial institutions are subject to scrutiny over reputation, compliance and sound business conduct, and financial institutions under foreign control may require a special licence.

Banks and securities dealers: All banks or securities dealers incorporated or having a place of business in Switzerland must have a FINMA licence before starting operations. Qualifying shareholders, like individuals or entities owning directly or indirectly 10% or more of the bank's or securities dealer's capital or voting rights or otherwise exerting a significant influence, are also subject to scrutiny by FINMA. Shareholders who acquire or sell a qualifying shareholding, or who increase or decrease their shareholding beyond 20, 33 or 50%, must notify FINMA before completing the transaction. An additional licence is required for a Swiss bank or securities dealer under foreign control or in case of changes in the foreign control.

Insurance companies: If an individual intends to, directly or indirectly, acquire a participation in a (re-)insurance company domiciled in Switzerland, it must notify FINMA if, as a result, it reaches or exceeds the thresholds of 10, 20, 33 or 50% of the capital or voting rights of the Swiss (re-)insurance company.

Investment fund managers: Qualifying shareholders, i.e. persons or entities owning directly or indirectly 10% or more of the capital or voting rights of the fund manager or otherwise exerting a significant influence on the fund manager, are subject to scrutiny by FINMA.

9. What policies are in place for Chinese companies wishing to list on capital markets in Switzerland?

Switzerland's regulated securities market consists mainly of the SIX Swiss Exchange (SIX). SIX is a regulated securities exchange market in Zurich and the reference market for more than 40,000 securities, connecting investors, issuers and participants from all over the world. Within SIX, the Regulatory Board determines listing admissions and ensures that issuers fulfil their obligations during listing.

Typically, admission is granted based on a prospectus in line with international standards. Prospectus review by the listing authorities is a formal one (mainly completeness) and does not extend to verification of the content. However, incomplete, incorrect or misleading information in the prospectus may trigger prospectus liability of those responsible for the misinformation.

For the primary listing, non-Swiss issuers have to comply with the same listing requirements as domestic issuers. Requirements include that:

• at least 25% of the issuer's shares will be free-floating;

• the free-float has an expected market capitalisation of at least CHF25 million; and

• the issuer's reported equity capital must be at least CHF25 million.

Once listed, the issuer is subject to ongoing obligations for maintaining the listing. Such continuing obligations include (in case of equity securities):

• periodic reporting in compliance with financial reporting standards recognised by SIX;

• disclosure of price-sensitive facts (ad hoc publicity);

• disclosure of management transactions; and

• disclosure of substantive shareholdings.

For secondary listed foreign issuers at SIX (issuers with a primary listing elsewhere), regulatory and ongoing disclosure requirements are relaxed and largely refer to the filings and rules of the primary stock exchange.

10. What are the main features of Swiss merger control?

Legal framework: Merger control in Switzerland is governed by the Federal Act on Cartels and Other Restraints of Competition (Cartel Act) and the Ordinance on the Control of Concentrations of Undertakings (Merger Control Ordinance).

Notification duty: Planned concentrations of undertakings, mergers as well as acquisitions of sole or joint control, must be notified to the Swiss Competition Commission (ComCo) prior to their implementation if the statutory turnover thresholds are met. This is the case if in the last business year preceding the concentration:

• the undertakings concerned achieved a combined turnover of at least CHF2 billion worldwide or, alternatively, a combined turnover of at least CHF500 million in Switzerland; and cumulatively

• each of at least two of the undertakings concerned achieved a turnover of at least CHF100 million in Switzerland.

However, a notification duty exists irrespective of these turnover thresholds if an undertaking participates in a concentration which has been established in a final and binding decision under the Cartel Act that it has a dominant position in a specific market in Switzerland and which concerns this market or an upstream or downstream or neighbouring market. Special rules apply to insurance companies, banks and other financial intermediaries.

Substantive test: The ComCo may prohibit a concentration or authorise it subject to conditions and obligations if the concentration:

• creates or strengthens a dominant position in a market by which effective competition can be eliminated; and cumulatively

• does not lead to any improvement of the competitive situation in another market which outweighs the disadvantages of the dominant position.

Procedure (with suspensive effect): The Cartel Act distinguishes between the preliminary investigation, (Phase I – one-month waiting period) and a possible in-depth investigation (Phase II – four months) as follows:

• Phase I (preliminary investigation): Phase I starts on the day following the receipt of the complete notification. The ComCo then is required to notify the parties within one month whether it intends to initiate an in-depth investigation. In most cases the ComCo will issue a so-called comfort letter. It can also authorise a concentration subject to conditions and obligations in the form of a formal decision. The law states that a concentration is deemed to be cleared if no notice is given within the period of one month. This is a rather theoretical case because in practice the ComCo always informs the notifying party that there is no reason to open an in-depth investigation.

• Phase II (in-depth investigation): The decision to enter Phase II is officially published and the subsequent in-depth investigation has to be completed within an additional four months. Phase II may be terminated as follows: unconditional authorisation; authorisation subject to conditions and obligations; prohibition; or withdrawal of notification.

11. What have been the major recent developments in competition policy?

On May 17 2013, the Swiss Federal Council and the European Commission signed a bilateral agreement concerning cooperation in the application of their competition laws which entered into force on December 1 2014. This agreement allows competition authorities to exchange information they have obtained in their respective investigations. However, the exchange of information, according to the European Commission, is subject to strict conditions for protecting business secrets and personal data. The bilateral agreement foresees specific prerequisites for information exchanges. As an example, without the respective parties' consent, both authorities have to investigate the same or a related conduct or transaction and the receiving authority can use the evidence only for the enforcement of its competition rules. In addition, no evidence can be used to impose sanctions on individuals. However, the agreement remains a purely procedural one and does not provide any substantive harmonisation of competition laws.

12. What tax treaties has Switzerland signed that would benefit Chinese investors?

Switzerland has concluded over 90 double taxation treaties, including treaties with China, Hong Kong and Singapore. In addition, it has concluded an agreement with the EU that grants full relief from withholding tax on intra-group payments of dividends, interest and royalties.

On September 25 2013, China and Switzerland signed a revised treaty, which entered into force on November 15 2014. This treaty provides for maximum withholding tax rates of 5% on intragroup dividends, 10% on interest and 9% on royalties.

The treaty with Hong Kong, which entered into force on October 15 2012, provides for maximum withholding tax rates of 0% on intra-group dividends, 0% on interest and 3% on royalties.

The revised treaty with Singapore, which entered into force on August 1 2012 , provides for maximum withholding tax rates of 5% on intra-group dividends, 5% on interest and 5% on royalties.

With respect to Swiss taxes, these rates apply to the extent that the Swiss taxes are not lower. In particular, they do not apply to royalties since Switzerland does not levy any withholding taxes on them. Further, Switzerland does not levy any withholding taxes on certain types of interest, in particular, interest on intra-group loans or on loans that do not qualify as bonds or notes.

13. What tax advantages does Switzerland offer for Chinese investors?

Switzerland offers relatively moderate corporate income tax rates (depending on the region, i.e. state, between 12% and 24%) and value added tax rate (8%). Interest expenses on loans from related parties are deductible provided that they are in line with the thin capitalisation rules and the arm's length rules for related party loans.

Switzerland unilaterally, irrespective of the application of any double taxation treaty, exempts all the profit attributed to foreign permanent establishments and foreign real estate from its tax base.

In addition, the Swiss participation exemption regime applies at the federal and regional levels to all Swiss resident companies and permanent establishments of foreign companies that own a qualifying participation in a subsidiary. The participation exemption is granted regardless of whether there is any taxation at the level of the subsidiary or whether any double taxation treaty applies. Switzerland has not introduced any Controlled Foreign Corporation (CFC) rules. A qualifying participation has different thresholds depending on whether the exemption is granted for dividends or for capital gains from the disposal of shares. The thresholds are:

• for dividend income: an equity investment of at least 10% or with a value of at least CHF1 million; and

• for capital gains from the disposal of shares: an equity investment of at least 10% that has been held for at least one year.

Several further special regimes and reliefs are beneficial for investments:

• Regional holding company: Not only the income from participations but all income is exempt from regional and communal corporation tax, if a company qualifies as a holding company. At the federal level, on the other hand, a holding company is an ordinary taxpayer at standard rates of 8.5% (7.8% before taxes), but the participation exemption regime described above applies to income from participations. Holding company status is granted if the following requirements are met: the main purpose of the company is the holding and management of long-term financial participations in the subsidiary companies; at least two-thirds of either the assets or the income is composed of or derived from participations; and the company is not engaged in any commercial activity in Switzerland. There are certain differences in which activities are accepted by the regions. In general, management and administration of the company itself is tolerated.

• Mixed companies (trading, IP, etc.): A Swiss company or a branch of a foreign company qualifies for the tax privilege of a mixed company at the regional and communal level if it does not engage in any commercial activity within Switzerland or if it engages in such activities to only a small extent. In general, at least 80% of the income must be derived from abroad and at least 80 % of the expenses have to be foreign expenses. Therefore, mixed companies are often used for international trading, licensing and franchising activities. Swiss source income is taxed at standard rates, whereas foreign source income is only partially included in the Swiss tax base. Thus, depending on the specific regional requirements, the specific regional tax rates and the amount of Swiss source income, the overall tax rates of mixed companies in Switzerland for federal, regional and communal tax purposes vary between 8% and 11%.

• State aid: Since Switzerland is not a member of the EU, it is, in principle, not limited by the European prohibition on state aid. However, Switzerland has introduced unilateral rules that limit the application of state aid to certain regions that are economically not well developed. Depending on the size and the function of the newly established business, an exemption of up to 50% from regional or communal income taxes and, in specified areas, also from federal income taxes for a period of up to 10 years, may be granted. Depending on the area and the structure, the exemptions may even be extended after the 10-year period has lapsed.

• Principal structures: Swiss principal companies of international groups can benefit from a special tax treatment for federal income tax purposes. A principal company is a company with several high-level employees that assumes risks and responsibilities for certain activities, such as purchasing, research and development, manufacturing, distribution, marketing strategy and logistics. Provided that the sales are made exclusively through commission agents or limited risk distribution companies of the group, the principal company can reach a reduced Swiss tax base that results, in combination with the regional tax regime of the mixed company, in tax rates as low as approximately 5 to 7%, depending on the set-up and location.

• No withholding tax on royalty income and certain types of interest payments: see question 12.

In order to maintain a sustainable and advantageous tax environment, the current consultation draft for a corporate tax reform includes several measures replacing the regimes of the holding company, mixed company, principal company and finance branch. Among others, the consultation draft proposes the introduction of a licence box regime as well as a notional interest deduction. Moreover, a general reduction of the cantonal corporate income tax rates is being considered. Some cantons have already decided to decrease the tax rates. The new regulations are likely to enter into force in or after 2019. Overall, the measures proposed under the corporate tax reform will further expand the spectrum of investors that can benefit from Switzerland's favourable tax environment.

14. What exit mechanisms are in place in Switzerland and how will these affect investors when they want to get their money out?

There are no restriction on, or approval requirements for, capital transfers from Switzerland abroad. Generally, exits can take the form of a sale of shares or assets, dividend payments, capital reductions, liquidation, initial public offering (IPO), cross-border merger or redomiciliation. Flows of funds may, however, also take the form of advisory or management fees, royalties, payments for supply or manufacturing and other commercial activities.

Switzerland does not levy any withholding tax on capital gains from the disposal of the shares of a Swiss company. Only if the Swiss company is a real estate company, a regional capital gains tax may be due in the case of the sale of the shares.

However, since Switzerland normally levies a 35% withholding tax on dividends, investments into Switzerland are usually structured in such way that a double taxation treaty applies which reduces this withholding tax. Many Swiss treaties, including the one with Hong Kong, provide for 0% withholding taxes on intragroup dividends.

An exit by way of redomiciliation is deemed to be a liquidation for tax purposes and thus triggers corporate income tax and withholding tax on dividends (liquidation proceeds). The general principles apply including the participation exemption for equity investments and the reduction of the withholding tax in cases of the application of a double taxation treaty (see questions 12 and 13).

15. What protection is available for intellectual property (IP) in Switzerland?

Swiss law provides for the protection of registered IP rights (patents, trademarks and design rights) as well as unregistered IP rights (copyright, trade secrets and confidential information).

Patents are registered protective rights granted for technological inventions. Protection is granted upon registration in the patent register. An invention is only eligible for patentability if it is new compared to state of the art, as of the application or priority date, and if it is non-obvious to the man skilled in the relevant art. The patent is valid for a maximum duration of 20 years from the application date.

Trademarks are registered protective rights that protect signs (letters, words, numbers, designs, three dimensional forms, colour combinations or sounds) or denominations in order to distinguish goods or services from one another. Protection is granted upon registration of the trademarks in the trademark register for an initial period of 10 years. It may be extended for an unlimited number of subsequent periods of 10 years each.

Design rights are registered protective rights that grant protection for visible forms of two-dimensional (patterns, such as fabric designs) or three-dimensional (such as furniture) objects. Protection is granted upon registration of the design in the design register. In order to be eligible for registration, the design has to be significantly new and distinctive from prior forms. Further, it is required that the design is not exclusively owed to the technical function of the relevant object. Protection is granted for an initial period of five years and may be extended for four subsequent periods of five years each.

Copyright protection is granted for works of literature and art, such as books, paintings, architecture, photography, music and computer programs. In general, only creations of the human mind which are of individual nature qualify as protected works. Registration is neither required nor possible; thus, protection is granted upon the creation of the work without further steps required. The author has the right for commercial exploitation and is further the holder of a number of moral rights (for example, the right to be acknowledged as the author). Copyright protection expires 70 years (general rule) and 50 years (computer programs) after the death of the author, respectively.

Trade secrets and confidential information are protected by various provisions of Swiss law. Civil law protection of trade secrets is most importantly addressed in the Swiss Act Against Unfair Competition (UCA). The UCA makes it civil tort to entice workers, agents or ancillary persons to disclose or uncover trade secrets of their employer or principal. Further, anyone who exploits results of work entrusted to him (for example, tenders, calculations and plans) without authorisation commits an act of unfair competition. Finally, the exploitation or disclosure of manufacturing or trade secrets is deemed to be an act of unfair competition and, thus, unlawful if such secrets have been obtained in an unfair or otherwise unlawful way. Apart from the legislation against unfair competition, other civil law provisions also address the protection of trade secrets such as the statutory employment law, which stipulates confidentiality obligations. From a criminal law perspective, the violation of certain provisions of the UCA related to trade secrets qualifies as a criminal offence. Besides, the Swiss Penal Code (PC) penalises the betrayal of a trade or manufacturing secret as well as the exploitation of such betrayal. Furthermore, industrial espionage is penalised under the PC.

Moving intellectual property to Switzerland may be beneficial from various points of view. First, Swiss tax laws offer a number of attractive opportunities, such as the holding company regime, special taxation of income generated by IP rights and no withholding tax on royalties (see questions 12 and 13). Second, Swiss contract law allows the parties a maximum of freedom to agree on tailor-made agreements, such as licensing agreements. Third, the courts (including the Federal Patent Court) provide for an efficient and impartial enforcement against infringement of IP rights of foreign owners. Generally, Switzerland has a long tradition of valuating and protecting innovations and IP and of creating a stable and moderate tax environment for their exploitation.

16. What dispute resolution procedures are available and how popular are they with foreign investors?

Switzerland is one of the leading arbitration venues in the world. Based on the latest statistics available, Switzerland takes second place in the International Chamber of Commerce's statistic of venues. In the year 2013, Switzerland saw 94 new ICC cases, versus 119 for France, 72 for the UK, 38 for the US and 33 for Singapore. Switzerland is also the home of the Court of Arbitration for Sports and thus the venue of most major sports disputes, including those in relation to the Olympics Games and FIFA. The popularity of the use of Swiss substantive law to govern international contracts is evidenced by its second position in ICC disputes (15.6 % UK law, 10.1% Swiss law and 8.7 % US law, according to the latest statistics).

Arbitration in Switzerland may be based on any set of rules that the parties may choose. Apart from ICC rules, the Swiss Chambers' Swiss Rules for International Arbitration that are based on the UNCITRAL Arbitration Rules are very popular. More than two thirds of the parties arbitrating under the Swiss Rules are non-Swiss, in line with the average percentage of foreign parties in all international proceedings in Switzerland.

Switzerland has a long tradition of solving international disputes in an efficient, neutral and professional manner, catering to the needs of international business people, governments and athletes alike. The arbitration law is attuned to the needs of international arbitration. A unique feature of Swiss arbitration law is the direct and only recourse to the Swiss Supreme Court for any challenges against an arbitral award. This setting-aside procedure typically takes less than six months, with less than 7% of all awards being vacated.

What if arbitration is not possible? Unlike courts in other jurisdictions, the Swiss commercial courts willingly assist the parties in finding a reasonable solution to their dispute early on in the proceedings and based on prima facie assessment of the strengths and weaknesses of the case by the court itself. Further, the parties need not fear expensive and disruptive document production proceedings that are known from common law jurisdictions (no discovery).

17. What bilateral agreements has Switzerland signed that would benefit Chinese investors?

On July 6 2013, Switzerland, as the first continental European country to do so, signed an FTA with China which entered into force on July 1 2014. The FTA does not only improve mutual market access for goods and services but also enhances legal certainty concerning the protection of IP and the bilateral economic relations in general. In parallel with the FTA, an agreement on cooperation on labour and employment issues was concluded on the same day which is linked to the FTA by a reference.

The FTA aims to dismantle tariffs fully or partially, sometimes subject to a transition period, for the vast majority of bilateral trade. At the entry into force of the FTA, Switzerland abolished the remaining tariffs on Chinese industrial products. Likewise, China dismantled its tariffs on Switzerland's industrial exports, either from the entry into force of the FTA or within periods of five to 10 (in a few cases 12 or 15) years. The dismantling period is applicable to products for which China has expressed to have a specific need for adjustment (e.g. selected products in the watchmaking, machinery and chemical-pharmaceutical sectors). Regarding agriculture products, the FTA will enable Swiss products to be imported tariff-free or at reduced tariffs into China. Conversely, Switzerland will grant preferential tariff treatment for selected products to be imported from China. Based on the Customs Union between Switzerland and Liechtenstein, the FTA also applies for trade in goods to the Principality of Liechtenstein.

Regarding trade in services, the FTA is based on the General Agreement on Trade in Services (GATS) of the World Trade Organisation (WTO) but includes additional and more detailed rules. As in GATS, traffic rights in air transport are not covered by the FTA. Compared to GATS, China's commitment in the FTA contains additional sectors and improvements such as financial services, environmental services, air transport services and logistics services. Conversely, Switzerland improves its specific commitments in relation to financial services, air transport services, private sector training services and for additional activities by highly qualified providers of short-term contractual services. However, measures governing access to the labour market or permanent residency remain unaffected by the FTA.

The FTA also improves the level of protection and enforcement of IP rights in selected areas as compared with the multilateral standards of the WTO. As an example, besides introducing sound trademarks as a new category of trademarks, the FTA also regulates the patenting of biotechnological inventions in accordance with the European Patent Convention. Furthermore, the level of protection for geographical indications for wines and spirits according to the Agreement on Trade Related Aspects of Intellectual Property Rights of the World Trade Organisation (TRIPS) is extended to all products. Goods and services are therefore, amongst others, protected from misleading indications of origin, country names and national flags.

In parallel with the FTA, Switzerland and China concluded an agreement on cooperation on labour and employment issues. Therein, the parties reaffirm their commitments arising from their membership of the International Labour Organisation (ILO) and the Ministerial Declaration of the United Nations Economic and Social Council (ECOSOC) on Full Employment and Decent Work (2006), as well as the ILO Declaration on Social Justice for a Fair Globalisation (2008). Furthermore, besides reaffirming to enhance the fundamental rights at work and to generally improve the working conditions, Switzerland and China also agreed to effectively implement their labour legislations. Besides that, the parties acknowledge not to reduce their level of labour standards in order to attract more investment or to obtain a trade advantage.

On January 8 2014, the bilateral agreement between China and Switzerland regarding the illegal import and export of cultural assets and the return of those entered into force. This bilateral agreement regulates the trade of cultural assets as stipulated in the catalogue from the prehistoric times up to 1500 A.D. Such cultural assets can be imported to the territory of a party if the export regulations of the other party are properly followed.

China and Switzerland are currently in negotiations regarding a reciprocal social security agreement. The goal of this agreement is to regulate certain social security matters. As an example, individuals from China and Switzerland who are posted to work in the other country will only be required to pay social security contributions in their respective home country.

On January 21 2015 the Swiss National Bank and the People's Bank of China (PBOC) signed a memorandum of understanding on the establishment of a renminbi Clearing Arrangement in Switzerland. Furthermore, the PBOC decided to extend the pilot scheme of Renminbi Qualified Foreign Institutional Investor (RQFII) to Switzerland with a quota of Rmb50 billion. This arrangement will promote the use of renminbi by enterprises and financial institutions in cross-border transactions and will also facilitate bilateral trade and investment.

Author biographies

Dieter Gericke

Dieter Gericke is a partner and head of the corporate and M&A practice team and of Homburger's China group. His practice focuses on cross-border mergers & acquisitions, private equity, capital markets (including IPOs) and finance. He advises on matters of corporate law and securities regulations.

Felix Dasser

Felix Dasser heads the litigation and arbitration practice team. He advises and represents companies in international commercial disputes in litigation and arbitration proceedings, as well as on white collar crime and regulatory compliance. He also sits as an arbitrator.

Marcel Dietrich

Marcel Dietrich is a partner in the competition & regulatory and corporate practice teams, and in the white collar and investigations working group. His practice focuses on Swiss and European competition and antitrust law as well as on administrative law and regulated markets.

Gregor Bühler

Gregor Bühler is the deputy head of IP & TMT and partner in the competition & regulatory practice team. He focuses on intellectual property law, information technology and unfair competition law (advisory work as well as representation in contentious matters).

Reto Heuberger

Reto Heuberger is a partner in the tax practice team. He focuses on tax planning and the structuring of M&A transactions, reorganisations, relocations, investment management structures, family offices and trusts.

瑞士

Dieter Gericke, Felix Dasser, Marcel Dietrich, Gregor Bühler, Reto Heuberger 和 Martin Grod

Homburger