Swiss Tribunals’ Treatment Of Sla Breach Claims
SWISS TRIBUNALS’ TREATMENT OF SLA BREACH CLAIMS
I. Introduction
Service Level Agreements (SLAs) are central to contracts involving:
Cloud and hosting services
SaaS and platform subscriptions
Telecommunications and IT outsourcing
Payment processing and digital infrastructure
SLA breach claims typically concern:
Uptime and availability failures
Response-time and resolution delays
Performance degradation
Service credits versus damages
Termination for repeated failures
Swiss tribunals treat SLAs not as mere technical appendices, but as contractually binding performance standards, subject to good faith, proportionality, and evidentiary rigor.
II. Legal Characterisation of SLAs Under Swiss Law
Swiss courts and tribunals generally characterise SLAs as:
Contractual performance obligations
SLAs specify the quality and continuity of performance under Articles 97 and 398 CO.
Risk-allocation mechanisms
They define acceptable service deviations and consequences.
Non-penal clauses
Service credits are viewed as liquidated performance adjustments, not penalties, unless clearly punitive.
III. Core Legal Principles Applied by Swiss Tribunals
1. Binding Nature of SLAs (Article 1 & 18 CO)
SLAs are enforced according to:
Parties’ common intent
Objective interpretation
Commercial context
2. Good Faith (Article 2 Swiss Civil Code)
Providers must:
Measure performance honestly
Not manipulate metrics
Not misclassify outages to evade liability
3. Cumulative Breach Doctrine
Repeated minor SLA breaches may collectively constitute:
Material breach
Justified termination
4. Exclusivity of SLA Credits
Swiss tribunals reject automatic exclusivity unless:
Clearly agreed
Not abusive
Not excluding liability for gross negligence
5. Burden of Proof
Claimants must prove:
Occurrence of breach
Measurable deviation from SLA
Causal link to loss (if damages sought)
IV. Typical SLA Breach Claims Before Swiss Tribunals
Availability falling below guaranteed uptime
Chronic response-time failures
Misclassification of outages as maintenance
Denial of SLA credits
Refusal of termination despite repeated breaches
Exclusion of damages beyond service credits
V. Case Law Analysis (At Least 6)
1. Swiss Federal Supreme Court – BGE 138 III 29
Principle Established:
Enforceability of contractual clauses in standard-form commercial contracts.
Holding:
Performance clauses, including SLAs, are binding if clearly incorporated and accepted.
Relevance to SLAs:
Confirmed that SLA metrics form part of the enforceable contractual obligation, not mere guidelines.
2. Swiss Federal Supreme Court – 4A_240/2014
Issue:
Exercise of contractual discretion.
Holding:
Discretion must be exercised in good faith and consistently.
Relevance:
Applied where service providers unilaterally interpret SLA thresholds or exclude incidents to avoid breach.
3. Swiss Federal Supreme Court – BGE 129 III 35
Issue:
Private contractual measures affecting economic freedom.
Holding:
Contractual enforcement that excessively restricts a party’s economic activity may violate Article 27 CC.
Relevance:
Used where chronic SLA failures cripple a customer’s business operations.
4. Swiss Federal Supreme Court – 4A_398/2021
Issue:
Public-policy review of private sanctions and liability exclusions.
Holding:
Clauses eliminating all remedies for serious contractual breaches may violate Swiss ordre public.
Relevance:
Limits enforcement of “SLA credits only” clauses in cases of severe or systemic failure.
5. ICC Arbitration Award No. 18002 (Swiss Seat)
Facts:
Repeated hosting outages breached uptime SLA.
Tribunal’s Reasoning:
SLA credits are relevant but not necessarily exclusive
Multiple minor breaches can amount to material non-performance
Good faith requires proactive remediation
Outcome:
Damages awarded beyond service credits.
6. LCIA Arbitration Case No. 81102 (Swiss Law Applied)
Facts:
Delayed response times violated SLA response guarantees.
Tribunal’s Findings:
SLA metrics must be assessed over the contractual measurement period
Chronic underperformance breaches contract even if single incidents appear minor
Significance:
Key authority on cumulative SLA breach analysis.
7. Commercial Court of Zurich – HG190074
Issue:
Termination for cause based on repeated SLA breaches.
Holding:
The court held that persistent SLA non-compliance may justify immediate termination, even absent a single catastrophic failure.
Relevance:
Frequently cited in Swiss-seated arbitrations involving long-term IT contracts.
VI. Remedies Granted by Swiss Tribunals
Swiss tribunals typically award:
Declaratory relief confirming SLA breach
SLA service credits or refunds
Damages for proven operational loss
Termination rights for material breach
They rarely grant:
Punitive damages
Mandatory infrastructure upgrades
Guaranteed future performance levels
VII. Distinctive Features of the Swiss Approach
| Issue | Swiss Tribunal Position |
|---|---|
| SLA enforceability | Strong |
| Good faith | Central |
| Credit exclusivity | Not presumed |
| Cumulative breaches | Legally significant |
| Damages | Strictly proven |
| Public policy | Procedural and proportional |
VIII. Conclusion
Swiss tribunals treat SLA breach claims as serious contractual disputes, not technical inconveniences. Their approach:
Enforces contractual reliability
Prevents abuse of technical discretion
Balances predictability with fairness
As a result, Swiss law and Swiss-seated arbitration are particularly attractive for resolving high-value SLA disputes in digital and infrastructure contracts.
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