In its ruling 4A_149/2025 of 12 January 2026 — designated for official publication — the Swiss Federal Supreme Court, sitting as a five-judge panel, denies any duty to surrender retrocessions in a pure execution-only relationship. An analysis of the conflict-of-interest doctrine as the dogmatic hinge, of the constellations the Court deliberately leaves open, and of the consequences for discretionary asset management, investment advice and retrocession-related claims enforcement.
By its judgment 4A_149/2025 of 12 January 2026 — designated for official publication — the First Civil Law Division of the Swiss Federal Supreme Court, sitting as a five-judge panel composed of Hurni, Kiss, Denys, Rüedi and May Canellas, has resolved a question that had been the subject of contested doctrinal debate for nearly two decades: banks are not obliged under Art. 400 para. 1 of the Swiss Code of Obligations (CO) to surrender to their clients those retrocessions that they receive in the context of a pure execution-only relationship. The decision, made public on 13 February 2026, closes a gap that the Federal Supreme Court had explicitly left open in its earlier landmark rulings on discretionary mandates and investment-advice mandates; it also brings to an end a notable cantonal divergence between the Commercial Courts of Zurich and Bern on the one hand and the Geneva and St. Gallen courts on the other. As a matter of substance, the Court clarifies that the duty of restitution under the law of mandate is necessarily anchored to an inner nexus between the execution of the mandate and the pecuniary advantage received — and that this inner nexus is absent in a structure that functionally reduces the bank to the mere execution of investment decisions taken autonomously by the client.
The plaintiff, a company specialising in the acquisition of claims and the financing of litigation, asserted — in its capacity as assignee of a Geneva-based bank client — a claim against a Geneva private bank for the surrender of retrocessions in the amount of CHF 31,477 plus default interest. These payments had accrued to the bank between 2010 and 2017 from the distribution of fund units and structured products; the underlying banking relationship was structured as a pure account and custody relationship, without discretionary asset management and without investment advice. The bank's general terms and conditions, in their 2011, 2015 and 2017 versions, contained an Art. 13 stipulating that the bank was entitled to claim third-party indemnities as additional remuneration without any corresponding right of the client; the magnitude of these benefits was disclosed by means of a band-width grid, with concrete quantification assured upon request. The claim was assigned to the plaintiff by the client on 6 July 2020. Both the Geneva Tribunal de première instance and the Cour de justice dismissed the action; the Federal Supreme Court likewise dismissed the plaintiff's civil-law appeal.
The Court situates the disputed relationship within its established typology of banking contracts and reaffirms that such relationships are regularly to be qualified as mixed contracts with elements drawn from the law of mandate (consid. 3.1, 3.2). The precise typological classification determines the scope of the contractual duties of care, information and warning that the Court derives from Art. 398 para. 2 CO. In an execution-only relationship, the bank confines itself to executing the client's individual investment instructions; the rules of the commission contract (Art. 425 et seq. CO) apply on a subsidiary basis, themselves referring back to the law of mandate via Art. 425 para. 2 CO. In this constellation the bank is not subject to a general duty to safeguard the client's interests; nor is it required to assess the appropriateness of individual transactions or to inform the client of the prospective performance — at any rate not where, as in the present case, the clientele is found to possess the requisite experience and knowledge (consid. 3.2.1).
By contrast, the duties of information and loyalty are at their fullest in the discretionary mandate (consid. 3.2.2). It is here that the duty of accounting and surrender under Art. 400 para. 1 CO operates, in the lineage of the doctrine developed in BGE 132 III 460 (2006), extended to intra-group retrocessions in BGE 138 III 755 (2012) and refined as to limitation periods in BGE 143 III 348 (2017). According to the Court, this duty extends also to such pecuniary advantages as the agent receives from third parties — provided that there exists between their receipt and the execution of the mandate an intrinsic connection capable of giving rise to a risk that the agent will fail adequately to safeguard the principal's interests.
The dogmatic core of the judgment lies in its reaffirmation that the mere fact that the agent is enriched does not, in and of itself, trigger the duty of restitution (consid. 3.6.1). What is required, rather, is a cumulative test: first, the benefit accruing from the third party must stand in an inner nexus with the execution of the mandate; second, that nexus must be capable of giving rise to a concrete conflict of interest between agent and principal. The Federal Supreme Court answers both questions in the negative for the execution-only relationship, on three mutually reinforcing grounds.
First, in the pure execution business the bank lacks any latitude of action enabling it to influence its own remuneration through a particular selection of products or transactions. Where, as established here, the investment decisions are taken autonomously by a client of sufficient experience, the level of retrocessions depends exclusively on the client's behaviour, not on that of the bank. The bank is thus functionally incapable of generating that very situation of conflict whose prevention is the raison d'être of Art. 400 para. 1 CO (consid. 3.6.1).
Second, the disputed distribution commissions cannot be construed exclusively as pure intermediation fees; as the Court observes, they also serve to cover the infrastructure and network costs that the bank maintains in order to make the financial products available (consid. 3.6.2). This economic function reinforces the view that the receipt of the third-party payment is not intrinsically tied to the execution of the mandate, but rather embedded in an upstream, distribution-contract relationship between the bank and the product issuer.
Third — and this may prove practically just as significant for the reach of the case-law — the Court rejects the argument that a latent risk of conflict could arise from the bank's choice between different trading platforms or brokers, some of which pay higher retrocessions (consid. 3.6.3). The lower court had explicitly found that no such selection power existed on the present facts; the Federal Supreme Court is bound by that finding of fact pursuant to Art. 105 para. 1 of the Federal Court Act (BGG). The question of how the assessment would turn out in a constellation in which the bank effectively wields broker-side selection power is therefore left expressly open in the judgment — a nuance likely to become central to future proceedings.
The plaintiff's attempt to derive an analogy from BGer 4C.125/2002 (free shares granted to insurance brokers) is rebuffed: in that case, no pre-existing contractual relationship existed between the agent and the third-party payor; in the present case, by contrast, the bank was bound ab initio by the distribution agreement with the product issuer, which already provided as a matter of course for the distribution remuneration (consid. 3.6.4). A comparable basis for an extensive interpretation of the duty of restitution is therefore lacking.
Nor, in the Court's view, does supervisory law dictate a different solution. Although the Dispatch on the Financial Services Act states that Art. 26 FinSA may, in principle, also reach execution-only business, the provision shares — by virtue of its systematic placement within the section on conflicts of interest — the teleological orientation of the private-law law of mandate: in the supervisory context, too, it is concrete risk of conflict that is decisive for the duty to surrender third-party indemnities (consid. 3.6.5). Where that risk is absent, FinSA, no less than Art. 400 CO, lacks the substantive foothold for a claim of restitution. The Court thereby decouples two lines of argument that parts of the doctrine had occasionally combined in support of a more extensive reading.
Consistently, given its denial of the claim of restitution, the Court did not need to reach the validity of the GTC-based waiver clause (consid. 3.7); contrary to certain abbreviated press commentary, that question therefore remains dogmatically unresolved and awaits a constellation in which it is dispositive.
The analytical force of the decision lies, not least, in what it omits. Three constellations remain expressly or implicitly unresolved.
For one, the Court does not rule on investment advice. The reasoning is admittedly framed in such a way that the conflict argument might prima facie be transposed to advice-free constellations; in a regular investment-advice mandate, however — whether agreed in writing or implicitly — accompanied by point-by-point recommendation of specific products, the inner nexus between recommendation and retrocession flow is structurally preserved, and so, in principle, is the risk of conflict. Anyone tempted to flag a advisory context with no asset-management element as mere execution-only therefore risks operating in a protective zone not covered by the Federal Supreme Court.
For another, the judgment leaves open how to treat hybrid mandates in which the bank, while formally acting on instruction, in fact exerts a substantial influence on client investment behaviour through the architecture of product selection, through suggestive pre-selection on platforms, or through intra-group distribution incentives. The Court ties its denial of the risk of conflict closely to the concrete finding that no selection power existed; the decision contains no abstract general clause but rather a carefully circumscribed application to a particularly clear-cut set of facts.
Third, the validity of blanket or retroactive GTC waivers continues to be governed by BGer 4A_496/2023 of February 2024 and the May 2024 ruling on the differentiated business-model approach. Anyone treating the requirements of an informed waiver for discretionary and advisory mandates as settled overlooks that the present judgment makes no statement whatsoever on the point and that the very concept of waiver is conditioned upon the existence of a duty of restitution — a linkage whose reach must be redetermined with every step taken at the boundary of asset management.
In dogmatic terms, the decision consolidates the teleological reading of Art. 400 para. 1 CO that the Federal Supreme Court has developed since BGE 132 III 460 (2006) and extended in BGE 138 III 755 (2012) to intra-group retrocessions: what is decisive is not the economic enrichment of the agent, but the legally and functionally circumscribed risk situation that the mandate generates. The attribution-based reading favoured by parts of the doctrine — the idea that mandate-related third-party benefits accrue in any event to the principal, irrespective of any risk of conflict — is firmly rejected by the Court, although it is not named as such.
This line is consistent with prior case-law in that it underscores the teleological tethering of the duty of restitution to the agent's duty of loyalty; it is at the same time visibly selective, in that it foregrounds the contractualist reading of the distribution relationship and thereby deliberately marginalises the systemic question — whether the asymmetry between a rebated bank and an uninformed investor does not structurally generate a form of concealed surplus return. Anyone seeking to read the judgment from a law-and-economics perspective will identify the boundary between the conflict doctrine and the enrichment doctrine as the true dogmatic fault line.
For banks, the ruling produces substantial legal certainty for the execution-only segment: actions resting solely on a duty of restitution arising out of pure account and custody relationships are unlikely to be pursued successfully going forward. This relieves, in particular, those private banks that had been operating with provisions for open execution-only proceedings since the 2018/2019 case-law landscape. At the same time, the real legal risk shifts to the sharpness of the demarcation between execution-only and investment advice — an area in which the evidentiary picture is typically diffuse and in which the Federal Supreme Court conducts its contractual-typological classification along the lines of the concrete information and recommendation practice.
For asset managers, the position is unchanged: the duty of restitution established by BGE 132 III 460 and BGE 138 III 755 remains in force, as do the requirements for an informed waiver that the Federal Supreme Court has refined in 4A_496/2023 (February 2024) and in the May 2024 judgment. Anyone who has failed to meet those requirements in their mandate agreements or general terms and conditions remains exposed to a substantively enforceable claim, supported by the ten-year limitation period under BGE 143 III 348.
For investment advisers, the judgment is a memento: as long as the advisory character of the mandate — whether expressly or implicitly — can be made out, the duty of restitution remains applicable in principle; the building blocks of argumentation that the Court has deployed to deny the duty in the execution-only relationship cannot be transposed without further qualification to investment-advice mandates.
For investment-related claims enforcement — and in particular for the commercial acquisition of claims and the litigation funding of retrocession actions — the judgment shifts the economically relevant corridor: proceedings whose prospects of success rested exclusively on the execution-only theory are deprived of their carrying foundation. The universe of enforceable claims nonetheless remains substantial, since it encompasses discretionary and advisory mandates in which the dogmatic position remains unchanged — and in which the operational hurdle lies not in the basis of the claim but in quantification of retrocession amounts and in the validity test of the waiver. Both aspects are shaped less by the present judgment than by the February 2024 and May 2024 decisions and by BGE 143 III 348.
BGer 4A_149/2025 fits coherently into the line that the Federal Supreme Court has developed over twenty years and carries the conflict-of-interest doctrine to its logical conclusion. The decision furnishes legal certainty in the area where cantonal practice was most divergent; it disturbs none of the principles established for asset management and investment advice since 2006. The analytical sharpness of the judgment lies, however, not in the apparent finality of its result, but in the precise demarcation of what it decides — and of what it deliberately leaves open. For practice this means: the proceedings to come will no longer revolve around the abstract applicability of the duty of restitution in execution-only relationships, but rather around the typological question of whether the disputed relationship was indeed mere execution-only — or whether its concrete configuration crossed the boundary into investment advice in such a way as to fall outside the scope of the present judgment.
This article is provided for information purposes only. It does not constitute legal advice or investment advice and is not intended for U.S. persons. The reproduction of the Court's reasoning follows the analyses available at the time of publication and the version of the judgment designated for official publication; the officially published text is authoritative.
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In this series
Further reading you may find relevant.
The Financial Institutions Act and Financial Services Act fundamentally change the regulatory landscape for trustees in Switzerland — with direct implications for retrocession obligations.
Execution-only remains the central open question. We summarise cantonal divergence, doctrinal debates (conflict prevention vs ‘general enrichment’), boundary questions on genuine services, and the supervisory/civil-law interface highlighted by Abegglen.
A practical playbook for banks and clients: govern retrocessions as incentive risk, segment relationship types, implement court-accepted disclosure, document waivers and repapering, and operationalise client inquiries—grounded in Abegglen’s 2024 reading.
Regulatory notice
This material is for information purposes only and does not constitute investment advice, an offer, or solicitation. It is directed exclusively at qualified investors and is not intended for US persons.