Governance, disputes and arbitration

Family governance

The legal instruments described so far give a structure to family wealth. They do not by themselves ensure that the family remains united around it. The St Gallen study found that only 37 per cent of Swiss single family offices had a defined mechanism for resolving intrafamily disputes.¹ Families that address this question typically adopt a family charter or constitution, which sets out the family’s values, the rules for the involvement of family members in the family business and the family office, the composition of family councils and the procedure for resolving disputes. Such charters are usually not legally binding in themselves. Their provisions are then implemented in binding instruments: the articles of association and shareholders’ agreements of the family holding, the deeds of trusts and foundations, and inheritance contracts. Zurich lawyers and consultants who work in this field often combine legal expertise with experience in mediation and family business consulting.

Disputes before the Zurich courts

When disputes arise, the Zurich courts are frequently the forum. Trust disputes may reach the district courts, while disputes about company matters of the family holding may be brought before the Commercial Court of the canton of Zurich, which specialises in commercial disputes and sits with commercial judges drawn from business. Foundation disputes may take the form of supervisory complaints under Article 84(3) of the Civil Code or of civil actions. Swiss courts treat foreign trust law as law to be established by the court itself, and they may obtain expert opinions on its content. The public nature of court proceedings, however, deters many families. Court proceedings can expose private financial arrangements and family conflicts to the press, which is a particular concern for families known to the public.

Arbitration clauses in trust and foundation instruments

Arbitration offers confidentiality and the choice of specialised arbitrators, but traditionally faced a doctrinal obstacle in trust and foundation disputes. An arbitration clause requires the consent of the parties, while beneficiaries of a trust or foundation have not signed the instrument that creates it. The revision of Chapter 12 of the PILA, adopted by Parliament on 19 June 2020 and in force since 1 January 2021, addressed this issue. Article 178(4) PILA now provides that the provisions of the chapter apply by analogy to arbitration clauses contained in unilateral legal acts, such as wills, foundation deeds or trust deeds, or in articles of association.² Article 358(2) of the Civil Procedure Code contains a corresponding rule for domestic arbitration.

The Swiss Arbitration Centre built on this legislative basis. Its Supplemental Swiss Rules for Trust, Estate and Foundation Disputes entered into force on 1 July 2025. They require the parties to ensure that beneficiaries, including minors and unborn persons, receive notice and the opportunity to be represented in accordance with mandatory law. Identified beneficiaries may comment on and challenge the appointment of arbitrators even if they are not formal parties. The confidentiality obligations under the Swiss Rules extend to beneficiaries who receive case documents. The rules also exclude, for disputes concerning successions, the parties’ freedom to choose the applicable law under Article 35 of the Swiss Rules, in order to protect mandatory succession law.³ Zurich, as the seat of many international arbitrations and home to a large community of arbitration practitioners, is well placed to host such proceedings. Whether trust and foundation arbitration will develop into a significant practice area remains to be seen. The instruments are in place, while the first published experience is still limited.

The enforceability of arbitration clauses against beneficiaries raises questions that the rules cannot answer by themselves. The explanatory note assumes that beneficiaries who accept benefits under an instrument implicitly accept its arbitration clause. Whether courts will uphold this view in every case, particularly against beneficiaries who have received nothing and wish to challenge the trustee’s decisions, is an open question. So is the arbitrability of disputes involving the compulsory portions of heirs, which touch on mandatory law. Practitioners drafting trust deeds and foundation charters with arbitration clauses therefore pay attention to the governing law of the instrument, the seat of arbitration and the potential need for recognition of the award in other jurisdictions.

Notes

1. Schmid and Redemann, The Swiss Single Family Office Landscape (2026), pp. 36–37, URL as above. ↩
2. MLL News, “Internationale Schiedsgerichtsbarkeit: Das revidierte Schiedsgerichtsrecht der Schweiz ab dem 1. Januar 2021”, https://www.mll-news.com/internationale-schiedsgerichtsbarkeit-das-revidierte-schiedsgerichtsrecht-der-schweiz-ab-dem-1-januar-2021/. The same revision permits appeals against arbitral awards to be filed with the Federal Supreme Court in English. ↩
3. Swiss Arbitration Centre, “Ergänzende Schweizerische Schiedsordnung für Trust-, Erb- und Stiftungsrechtsstreitigkeiten – Erläuterungen”, 2025, https://www.swissarbitration.org/wp-content/uploads/2025/07/Explanatory_Note_TEF-Rules_DE.pdf. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.