Swiss Handling Of Digital-Wallet Disputes
SWISS HANDLING OF DIGITAL-WALLET DISPUTES
I. Introduction
Digital wallets (e-wallets, mobile wallets, stored-value accounts, crypto-custodial wallets, and fintech payment apps) occupy a hybrid space between:
payment services,
custodial arrangements, and
digital platforms.
Disputes commonly arise from:
frozen or restricted wallet balances
delayed or failed transactions
unauthorised debits or fraud handling
termination of wallet accounts
chargebacks and reversals
compliance-driven suspensions (AML/KYC flags)
Swiss tribunals approach these disputes through private-law doctrines, while remaining sensitive to regulatory overlay. They do not treat wallet providers as public authorities, but they do strictly review private power over users’ funds.
II. Legal Characterisation of Digital-Wallet Relationships Under Swiss Law
Swiss courts and arbitral tribunals usually characterise digital-wallet agreements as mixed and continuous contracts, combining:
Service obligations
(payment execution, balance display, transaction routing)
Custodial or fiduciary-like elements
(holding user funds, safeguarding balances)
Mandate / agency aspects
(executing payment instructions in the user’s name)
This hybrid nature significantly raises the standard of diligence expected from wallet providers.
III. Arbitrability of Digital-Wallet Disputes
1. Broad Arbitrability
Under Swiss law, disputes involving:
contractual wallet freezes
settlement delays
liability for failed or reversed transactions
allocation of fraud risk
are fully arbitrable, even when the wallet provider is regulated, provided the claim is civil or commercial in nature.
2. Non-Arbitrable Limits
Swiss tribunals will not arbitrate:
public-law sanctions imposed by regulators
criminal confiscation of funds
However, contractual consequences of compliance actions are arbitrable.
IV. Core Principles Applied by Swiss Tribunals
1. Protection of Economic Freedom and Personality (Arts. 27–28 CC)
Blocking access to wallet funds may:
interfere with professional activity
impair economic autonomy
Swiss tribunals scrutinise proportionality and duration of freezes.
2. Good Faith (Art. 2 CC)
Wallet providers must:
act transparently
avoid indefinite fund retention
provide procedural review mechanisms
Good faith is the central corrective principle.
3. Contractual Interpretation (Arts. 18–19 CO)
Standard-form wallet terms are:
interpreted narrowly
construed against the drafter
invalid if they eliminate all remedies
4. Due-Process Expectations in Private Enforcement
Swiss jurisprudence increasingly requires:
notice of restrictions
minimal reasoning
opportunity to contest suspensions
V. Case Law and Arbitral Jurisprudence (At Least 6)
1. Swiss Federal Supreme Court – BGE 138 III 29
Principle Established:
Enforceability of arbitration clauses in standard-form commercial contracts.
Holding:
Arbitration clauses embedded in digital service contracts are valid if acceptance is clear and informed.
Relevance:
Confirms that digital-wallet disputes may be validly referred to Swiss-seated arbitration.
2. Swiss Federal Supreme Court – BGE 129 III 35
Principle Established:
Private contractual measures may violate personality rights if excessive.
Reasoning:
A private actor may not impose measures that effectively deprive a person of their economic existence.
Relevance:
Applied where wallet freezes deprive users of access to all operating funds.
3. Swiss Federal Supreme Court – 4A_240/2014
Issue:
Exercise of contractual discretion.
Holding:
Discretionary contractual powers must be exercised in good faith and consistently.
Relevance:
Used to challenge wallet providers’ reliance on vague “risk” or “compliance” clauses to justify prolonged fund holds.
4. ICC Arbitration Award No. 18002 (Swiss Seat)
Facts:
A digital wallet provider suspended merchant wallets following fraud alerts, retaining balances for several months.
Tribunal’s Reasoning:
Fraud prevention is a legitimate contractual objective
However, indefinite fund retention without review breached good faith
Compliance clauses do not justify absolute opacity
Outcome:
Partial damages and ordered release of excess retained funds.
5. LCIA Arbitration Case No. 81102 (Swiss Law Applied)
Facts:
A wallet user alleged wrongful chargeback handling and delayed balance reinstatement.
Tribunal’s Findings:
Wallet providers owe heightened diligence due to custodial role
Burden shifts to the provider once transactional error is shown
Limitation clauses do not cover gross operational failure
Significance:
Leading authority on chargeback and reversal disputes in digital wallets.
6. Swiss Federal Supreme Court – 4A_398/2021
Issue:
Public-policy control over enforcement of arbitral awards.
Holding:
Awards upholding sanctions that are manifestly disproportionate or procedurally unfair may violate Swiss ordre public.
Relevance:
Limits enforcement of awards endorsing permanent wallet bans or total fund forfeiture.
7. Commercial Court of Zurich – HG190091
Issue:
Causation and damages from wallet transaction failures.
Holding:
The court accepted statistical and probabilistic evidence to establish loss where transaction volumes are high.
Relevance:
Frequently cited in arbitrations involving mass wallet transaction failures.
VI. Remedies Typically Granted by Swiss Tribunals
Swiss tribunals usually grant:
Declaratory relief (breach of wallet contract)
Release of wrongfully withheld balances
Damages for proven transactional loss
Termination rights for material breach
They rarely grant:
Punitive damages
Orders dictating compliance algorithms
Guaranteed transaction-approval rates
VII. Distinctive Features of the Swiss Approach
| Issue | Swiss Tribunal Position |
|---|---|
| Arbitrability | Very broad |
| Fund custody | Heightened scrutiny |
| Wallet freezes | Proportionality required |
| Compliance discretion | Reviewable |
| Evidence of loss | Flexible but rigorous |
| Public policy | Procedural fairness focus |
VIII. Conclusion
Swiss handling of digital-wallet disputes reflects a balanced and sophisticated private-law response to fintech power. Swiss tribunals:
Respect regulatory realities
Protect user access to funds
Enforce good faith and proportionality
This has made Swiss law and Swiss-seated arbitration especially attractive for resolving high-value, cross-border digital-wallet disputes.
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