Emergency law was used to push through the Credit Suisse takeover by UBS, with subsequent approval by the Federal Assembly as merely a formality according to the Swiss Finance Minister. Legal experts see otherwise.
After the Swiss federal government came to the rescue of Credit Suisse with a forced takeover by UBS, Swiss Federal Councillor and Finance Minister Karin Keller-Sutter said billions of government funds granted through emergency legislation were «fully committed.» By taking that route, approval through an extraordinary session of parliament was to have been a formality.
Legal experts disagree. Articles 28 and 34 of the Financial Budget Act stipulate that «urgent» credits require not only prior approval of the finance delegation but also that of parliament, as reported by the «Blick am Sonntag» (in German) over the weekend.
The word «approval» is crucial, says University of Fribourg constitutional law professor Andreas Stoeckli, «It means that the parliament's decision has legally binding force.»
Legal Obligations
Bernhard Ruetsche, professor of public law at the University of Lucerne, agrees. In the context of the genesis of federal law, from the wording «subsequent approval,» it can be concluded, «that urgent commitment credits decided by the Federal Council with the approval of the finance delegation lose their legal validity if not approved by the Federal Assembly.»
Still, according to Ruetsche, legal obligations entered into by the Federal Council before non-approval by parliament remain in place due to the protection of legitimate expectations and legal clarity. The question is whether or not such obligations exist.
Tricky Situation
A default guarantee exists for the liquidity support from the SNB, goes the argument of the Federal Department of Finance (FDF). The situation is different for the loss protection for UBS in the amount of nine billion Swiss francs ($10 billion), which has not yet been contractually set. Stoeckli says that «Written form is a prerequisite for the guarantee of a contract. The relevant article in the emergency decree is not an obligation, but merely an authorization.»
He also says not all the essential points of the guarantee are contained there. Whether or not the Federal Council's declarations of intent have legal consequences for the federal government must be clarified in detail, Stoeckli said. It's a tricky situation because the deal could fall through if the Federal Council does not sign the contract. «But it is doubtful whether the Federal Council will be allowed to sign the contract at all after the parliament's 'no' vote.»
UBS declined to comment on whether it would seek to claim damages if there is no contract. Meanwhile, the FDF maintains that «the rejection has no impact on the guarantees.»
One National Councilor said that if the Finance Department's interpretation does not pass legal muster, «this is a scandal in terms of national policy» and if true, «Keller-Sutter must resign.»
