Federal Supreme Court Clarifies the Scope of Article 41 CO

A recent decision of the Swiss Federal Supreme Court provides welcome clarification on a recurring practical question in contentious proceedings: can a party recover attorney’s fees as damages where those fees were not, or were not fully, compensated through the procedural costs regime? In its judgment 4A_1/2025 of 7 August 2025, reported in SJ 2026, p. 208 ff., the Court reaffirmed the general rule that unrecovered legal fees cannot ordinarily be reclaimed through a separate damages action merely because the statutory or tariff-based award of costs proved insufficient. At the same time, however, it confirmed an important exception: where the conduct of the opposing party, or even of a third party, gives rise to independent tortious or contractual liability, such costs may in principle be recoverable under substantive law, including Article 41 CO. 

The General Rule: Procedural Cost Regime Prevails

Swiss law starts from the premise that litigation costs are, in principle, governed by procedural law. As a result, where civil procedure provides the framework for compensation of necessary litigation expenses, that regime generally excludes a separate or subsequent claim under federal private law aimed at recovering the same expenses from the opposing party. In other words, a victorious litigant cannot usually bring an additional action merely to recover the portion of its lawyer’s fees that was not covered by dépens. 

This rule reflects a concern for finality and coherence in the allocation of litigation costs. A party cannot ordinarily circumvent the court’s costs ruling by repackaging dissatisfaction with the tariff-based compensation as a later claim in damages.

The Exception: Independent Liability Under Article 41 CO

The Federal Supreme Court nevertheless reaffirmed that there are circumstances in which legal fees not covered by dépens may qualify as recoverable loss. This is the case where the conduct of the opposing party, or of a third party, falls outside the ordinary procedural framework and satisfies the conditions of tortious or contractual liability. The Court referred in particular to Article 41 CO, which requires an unlawful act, damage, causation, and fault. 

The decision also ties into the Court’s prior jurisprudence recognizing that legal costs incurred before the commencement of proceedings may constitute compensable damage where they were necessary and appropriate and were not already covered, or presumed to be covered, by procedural cost awards. Likewise, a litigant confronted with unlawful procedural conduct may, in appropriate cases, have recourse to Article 41 CO in addition to the ordinary procedural avenues. 

Importantly, the Court reiterated that this exception is not confined to the formal adverse party in the original proceedings. A third party may also be liable for such legal costs if its conduct independently satisfies the requirements of tort or contract. 

The Facts of the Case

The underlying dispute arose in the context of a condominium owners’ association in Geneva. After building works had allegedly been carried out defectively, one co-owner sought to put to a vote whether proceedings should be initiated against the contractor and, subsidiarily, against an individual who had supervised the works. At the relevant meeting, that individual participated in the vote despite an alleged conflict of interest. In subsequent proceedings, the claimant obtained partial success in having the relevant vote annulled. However, because each side prevailed in part, the cantonal court split the judicial costs and awarded no dépens. 

The claimant then brought a separate damages action, alleging that the conflicted vote constituted an unlawful act and that he had thereby been compelled to incur legal costs in order to vindicate his rights. He sought compensation for three categories of alleged loss: his own attorney’s fees, the share of the opposing side’s attorney’s fees that he had had to bear, and certain judicial and expert costs. 

The Cantonal Court’s Error

The cantonal court rejected the claim essentially on the basis that no dépens had been awarded in the prior proceedings and that this precluded recovery of those legal costs in a later action. The Federal Supreme Court held that this reasoning was too cursory and legally incorrect. The absence of a prior award of dépens does not, in itself, determine the outcome of a later damages claim. The correct inquiry is whether the conditions of Article 41 CO are met. If they are, the claimant may be entitled to compensation for the damage caused, irrespective of whether dépens were previously awarded. If dépens were awarded, they are to be taken into account by way of compensatio lucri cum damno, i.e., offsetting the advantage already received. 

This point is one of the most important features of the judgment. The Court makes clear that the procedural costs decision is relevant, but not dispositive. It may affect quantification, but it does not automatically bar a claim based on independent substantive liability.

Proof of Damage Remains Critical

Although the Federal Supreme Court corrected the cantonal court’s legal approach, the claimant did not succeed across the board. In relation to his own attorney’s fees, the Court agreed that the claim had not been properly substantiated. The invoices submitted were insufficiently detailed, and the claimant had failed adequately to show that the fees were necessary. On that basis, the Supreme Court definitively rejected that portion of the claim. 

This aspect of the decision is particularly instructive. The Court did not reject the claim because attorney’s fees are never recoverable in principle. Rather, it rejected the claim because the claimant had not discharged the burden of proving necessity with sufficient precision. Attorney’s fees may constitute damage, but only where they are justified, necessary, and causally linked to the wrongful conduct relied upon. 

By contrast, the Court held that the lower court should still examine the other heads of claimed loss, namely the claimant’s share of the condominium’s legal fees and the judicial costs. Those claims were remitted for further analysis under Article 41 CO. 

Why the Decision Matters in Practice

This ruling is significant for Swiss litigators and commercial parties alike. It confirms that the Swiss cost regime is not an absolute shield against follow-on liability for legal expenses. Where litigation costs arise as a consequence of independently wrongful conduct, a claim under Article 41 CO remains possible.

At the same time, the judgment draws a clear line between a legitimate damages claim and an impermissible attempt to reopen a concluded costs allocation. The claimant must establish a genuine substantive basis of liability, not merely dissatisfaction with the level of dépens awarded in the earlier proceedings. 

From a practical standpoint, the case also underlines the importance of documentation. Parties contemplating such claims should ensure that fee records are itemised and sufficiently detailed to demonstrate necessity, proportionality, and causal connection to the alleged wrongful act. Sparse invoices or generic fee notes may prove fatal even where the legal theory itself is sound. 

Key Takeaways

The judgment can be distilled into several practical propositions.

First, unrecovered attorney’s fees are not automatically irrecoverable under Swiss law. They may be claimed where there is an independent basis for tortious or contractual liability. 

Second, the absence of dépens in the prior case does not, by itself, defeat such a claim. The court must still assess the substantive requirements of liability under Article 41 CO. 

Third, if dépens were awarded in the earlier proceedings, they do not bar recovery but must be deducted in the damages analysis. 

Fourth, legal fees are recoverable only to the extent they are shown to have been necessary, justified, and adequately substantiated. 

Fifth, different heads of loss must be analysed separately. A claimant may fail in relation to its own fees while still maintaining viable claims for other cost items. 

Conclusion

The Federal Supreme Court’s decision strikes a careful balance. It preserves the primacy of the procedural costs regime, while recognizing that exceptional circumstances may justify recovery of legal costs under substantive liability rules. For practitioners, the message is clear: Swiss law does not exclude such claims in principle, but it requires disciplined pleading, a genuine liability basis, and robust proof of necessity and quantum.

For parties involved in disputes marked by conflicts of interest, abusive procedural conduct, or other conduct outside the ordinary course of litigation, the judgment offers a meaningful, though carefully limited, avenue for recourse. At the same time, it serves as a reminder that any such claim must be prepared with the rigor of a true damages action, not as an after-the-fact challenge to the court’s original cost allocation.