Heirs’ right to access information from banks in Switzerland

1. Introduction

Following the Supreme Court’s most recent decision on 18 July 2019 (4A_522/2018), we have set out below a review of heirs’ rights to access, as part of the succession process, information from banks where the deceased held or was the beneficial owner of an account.

This decision provides some welcome clarification, especially as Swiss cantonal court practices in this area have not always been consistent.

2. Background to the case

Shortly before she died, Mrs X, the holder and beneficial owner of a bank account, instructed her bank to transfer all of her assets to the account of a third party at the same bank, and then to close her account.

Following her death, in response to a request from certain heirs with a statutory entitlement, the bank provided bank statements covering the full period during which Mrs X had held an account with them together with a portfolio statement as at 31 December of each year. The instruction letter and debit and asset transfer advices relating to the closure of the account were also provided, but the bank refused to communicate the identity of the holder and beneficial owner of the account to which Mrs X’s assets had been transferred, claiming that client confidentiality rules prevented it from doing so. The heirs took legal action against the bank to have this decision reversed.

The Federal Supreme Court refused to uphold the heirs’ request. Firstly, it considered that the request was founded in the contractual relationship between the bank and the deceased. Secondly, it considered that it was highly unlikely the heirs’ reserved portion had been encroached upon. Therefore, they had no right to access information regarding the identity of the holder of the account to which the deceased had transferred her funds.

3. Analysis: introductory remarks

Here is our explanation of the Supreme Court’s reasoning.

Firstly, it is important to understand that Switzerland has no specific law dealing with the right to access information. Consequently, in each case we have to identify a legal provision under which a right to access information could exist (ATF 132 III 677). In the case of a bank and the heirs of a deceased account holder, the right to access information could arise firstly from the contractual relationship between the account holder and the bank, and secondly from inheritance law.

“The Federal Supreme Court makes a distinction between the right to access information under contract law and the right to access information under inheritance law.”

So, the court identifies the right to access information on a contractual basis and the right to access information on an inheritance/succession basis, stating that one does not exclude the other, but that the two can come into conflict. In order to determine the nature of the legal action initiated (under contract law or under inheritance law), the courts will look at the specific case and in particular the reasons for bringing action, the submissions provided by the heirs, the alleged facts and the claims on which the bank bases its refusal to provide information. The legal provisions invoked are not relevant because the judge will apply the law in an ex officio manner.

4. Heirs’ right to access information under contract law

In Switzerland, an heir’s right to access information based on the contract with the bank stems from article 400, paragraph 1, of the Swiss Code of Obligations (CO). It stipulates that:

 “The agent [here the bank] is obliged at the principal’s request [the client], which may be made at any time, to give an account of his agency activities and to return anything received for whatever reason as a result of such activities.”

According to the principle that on the death of the deceased the estate vests by operation of law in the heirs set out in article 560, paragraph 1, Swiss Civil Code (CC), at the time of the death the heirs acquire not only the deceased’s pecuniary rights but also the right to access information about the contractual relationship between the deceased and their bank.

Although article 405, paragraph 1, CO states that “unless otherwise agreed or implied by the nature of the agency business, the agency contract ends on […] death of the principal […]”, banks systematically opt to continue the contractual relationship with the heirs of the deceased, in order to avoid being held responsible in a situation where they were unaware that a customer had died. This has also been accepted by jurisprudence (ATF 101 II 117/JdT 1976 I 329).

The question here concerns the scope of the heirs’ right to access information founded in the contractual relationship between the bank and the deceased. In the past, we have seen divergences between doctrine and the approach taken by the courts.

It is clear that all heirs, whether they have a statutory entitlement or not, have the right to access information about the assets of the deceased at the time of their death (asset portfolio composition, account balance, etc.) (ATF 135 III 185). Each heir holds this right individually, provided of course that they can demonstrate to the bank their rights to succession (capacity to bring proceedings under inheritance law) (ATF 133 III 664). The estate administrators (composed of all the heirs), have the right to receive the assets contained in the estate.

The issue of information relating to the period prior to the death, and in particular transfers made by the deceased while they were alive, is far more problematic. Jurisprudence recognises heirs’ rights to access information in two situations.

1. Firstly, a right of information is granted to heirs so that they can check the good and faithful performance of the bank’s mandate, and if the bank is found to be lacking in this area, take legal action against it (ATF 141 III 564). Consequently, the heirs’ rights cover all facts and documents (including any relevant internal memos) that will enable them to determine whether the bank has performed the contract and carried out the customer’s instructions correctly (ATF 139 III 49).
2. Secondly, the courts give heirs a right to information as regards transactions made by the deceased in favour of third parties before their death. However, this is not an unlimited prerogative, in so far as it conflicts with the deceased’s right to confidentiality which includes “not only strictly personal information but also financial aspects relating to the deceased’s assets and the instructions issued by them, regardless of whether they specifically instructed the bank to keep these confidential” (decision 4A_522/2018 of 18 July 2019). Consequently, given that all legal proceedings are dependent on the claimant having a legal interest for their claim, the heirs’ right to access information is only granted to those with a statutory entitlement so that they can take action in abatement (article 522 and following CC) or hotchpot (article 626 CC). Consequently, the claimant will need to prove, firstly, that their reserved portion has been encroached on and, secondly, that their claim has not expired (under inheritance law).

If these conditions are fulfilled, the bank is required to give the name of, for example, the third party to whom a transfer was made so that the heirs can take action against this person. Bank secrecy cannot take precedence in this case. In all other situations, the deceased’s right to keep their decisions confidential takes precedence, and heirs without a statutory entitlement do not have any right to access information from the bank as regards transactions made before the death of the deceased. In all cases, any facts of a strictly personal nature which the deceased may have communicated to the bank are excluded.

We must make it clear that this right to access information applies to individual heirs, and not solely to the heirs as a group. Consequently, each heir can assert their right to obtain information from the bank without the involvement of the others.

Also, it is important to note that the rules laid out above only apply where the relationship was between the bank and the deceased in person. If the deceased was only the beneficial owner of an account (for example, in the case of a domiciliary company, trust or family foundation), the heirs have no contractual right to obtain information from the bank. Their only potential approach would be to take action under inheritance law. This is because the beneficial owner has not entered into a contract with the bank, as the contract is between the bank and the domiciliary company, trustee or foundation (ATF 138 III 728).

Lastly, note that the presence of an estate administrator does not eliminate or suspend the heirs’ rights to obtain information from the deceased’s bank individually. The only rights held by the estate administrator are to manage and dispose of the assets.

5. Heirs’ right to access information under inheritance law

In Switzerland, the right of heirs to access information under inheritance law can be found in articles 607, paragraph 3, and 610, paragraph 2, CC.  The first of these provisions requires heirs who are in possession of assets belonging to the estate or are debtors of the estate to provide detailed information to their coheirs. The second places a wider requirement on them to communicate all information regarding the situation between them and the deceased so that the estate can be divided out in a fair and equitable way.

By analogy, case law extends this right of the heirs to third parties and in particular to banks (ATF 132 III 677). Consequently, the heirs have the right to obtain from the bank not only information about assets that could potentially form part of the estate in question (including those of which the deceased was the beneficial owner), but also as regards the identity of third parties to whom these assets may have been given or transferred and of which they may have become the holders or beneficial owners, so that the aggrieved heirs can take action against these third parties. This right of the heirs to access information presupposes however that they have in all probability a legal interest.

It follows from the above that each heir can obtain information about the deceased’s assets on the date of their death. The heirs with a statutory entitlement or legal heirs (only) can in addition obtain information relating to the period before the death if they can prove that their reserved portion has been encroached upon (article 522 and following CC) or they have a hotchpot duty (article 626 CC).

“The heirs do not have the same right to access information from the bank as the deceased had.”

6. International aspects

The rules detailed above relate only to situations where Swiss law applies exclusively. However, these types of cases are often complicated by transnational considerations. For example, the deceased may have been domiciled in a foreign country at the time of their death. In such situations, it is important to begin by resolving questions relating to private international law, and in particular whether the Swiss courts have jurisdiction and which law applies.

So, where there is an international dimension to the situation, action for presentation of the account based on the contractual relationship between the deceased and the bank is governed by the Lugano Convention (LC) and in particular article 1, paragraph 1, and article 2, paragraph 1, LC. Legal action must be taken in the courts of the state where the defendant bank is based, and more precisely in the court of the place where it has its headquarters (article 112, paragraph 1, of the Federal Code on Private International Law (CPIL)). Also, in general, the contract between the bank and the deceased falls under the jurisdiction of the Swiss courts as a result of a choice of law (article 116, paragraph 1, CPIL). Even where there is no choice of law clause, article 117, paragraph 3, CPIL provides that Swiss law will apply because of the “party required to perform the characteristic obligation” mechanism. Here, the bank is the agent.

Consequently, when heirs bring a case against a bank under contract law, the Swiss courts local to the bank’s headquarters will apply Swiss law, and in particular Swiss jurisprudence, and the legal bases set out above.

Conversely, action brought under inheritance law is subject solely to the CPIL, as the LC expressly excludes this type of case (article 1, paragraph 1, letter a, LC). Under article 86, paragraph 1, CPIL, “Swiss judicial or administrative authorities at the last domicile of the deceased have jurisdiction to take the measures necessary to deal with the inheritance estate and to entertain disputes relating thereto”. As a result of this provision, in international cases the Swiss courts will not in principle consider heirs’ right to access information based on inheritance law (ATF 135 III 185).

Similarly, as regards applicable legislation, articles 91, paragraph 1, and 92, paragraph 2, CPIL stipulate that “the inheritance estate of a person who had his or her last domicile in a foreign country is governed by the law referred to by the private international law rules of the state in which the deceased was domiciled.” Consequently, the existence and scope of heirs’ rights to access information will not be considered in relation to Swiss law but in relation to the law applicable to the succession. Where relevant, the foreign courts will be responsible for requesting international judicial cooperation in the case against the bank under the Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters or the heirs will be responsible for having the foreign court’s decision recognised and enforced in Switzerland ATF 142 III 116).

7. Conclusion

The Federal Supreme Court’s decision provides a number of useful clarifications. It establishes that under contract law, heirs cannot secure access to facts of a strictly personal nature which the deceased may have communicated to the bank. In addition, where this right is not being exercised in order to verify the good and faithful performance of the contract, only heirs with a statutory entitlement and legal heirs have the right to obtain information relating to the period before the death, in order to assert their rights which have been aggrieved (action in abatement or hotchpot).

Although this jurisprudence relates specifically to access to information held by a bank, the preamble can be applied to other mandates and in particular to independent wealth managers and family offices. In fact, although there is no provision similar to article 47 of Switzerland’s Banking Act, which imposes penalties for breaches of bank secrecy, a wealth manager or investment advisor’s duty of confidentiality is also covered by this in so far as it results from a contract entered into with the client and the client’s right to confidentiality.

Also, while the rules established by the Federal Supreme Court appear clear, practical difficulties do remain. One particular issue is establishing the exact nature of the documents that the bank or advisor is required to communicate to the heirs (for example, a report on a visit to a deceased client). This aspect is particularly important for family offices in that the relationship of trust is often much closer and clients often give more extensive information to a family office than they would communicate to their bank. Clarification of the notion of “strictly personal elements” would have been welcome.

Regardless of the situation, it appears prudent to carefully examine the rules laid out above before sending any documents to the heirs. It may be beneficial to take relevant legal advice.  Another, more radical, solution would be to have clients sign in advance a waiver of bank secrecy as regards their heirs.