WP successfully claims liquidated damages before the Commercial Court of Zurich and subsequently successfully defends against an appeal before the Federal Supreme Court

The client, domiciled in Germany, initiated legal proceedings against a US company for liquidated damages before the Commercial Court of Zurich. The lawsuit arose because the defendant, which had previously sourced its hearing aid batteries from the plaintiff, decided to cover its future needs through newly acquired companies. The defendant subsequently reduced its order quantities and ultimately ceased procuring hearing aid batteries from the plaintiff. The plaintiff believed that the defendant had breached an exclusive supply relationship by ceasing its purchases. It invoked a contractual provision that stipulated liquidated damages in the event of such a breach of contract.

The Commercial Court of Zurich largely upheld the claim. It agreed with the plaintiff's position that the defendant was not justified in fulfilling its demand for hearing aid batteries through affiliated companies rather than procuring them from the plaintiff. The defendant had therefore breached its contractual obligations and owed the plaintiff liquidated damages of nearly USD 11 million.

The defendant filed an appeal with the Federal Supreme Court. It argued, among others, that the lower court had erroneously presumed that damage had occurred. However, the Federal Supreme Court acknowledged the possibility of liquidated damages, despite the absence of explicit provisions in the Swiss Code of Obligations. Such an agreement aims to facilitate the creditor's enforcement of its claim for damages. The precise extent of the relief from the burden of proof intended by the parties must be evaluated according to the specific agreement. The Federal Supreme Court ultimately deemed the objections in this case to be unfounded. Consequently, in its judgment of 28 April 2025, the Federal Supreme Court dismissed the appeal to the extent that it was deemed admissible.

BGer. 4A_526/2024