In the Swiss courts, holders of about $17B in Credit Suisse Additional Tier 1 bonds challenge FINMA’s order writing their bonds down to zero in the 2023 UBS rescue. The Federal Administrative Court annulled the order in October 2025, but the write-down stands while the Federal Supreme Court hears appeals by FINMA and UBS. In July 2026, a U.S. appeals court upheld the dismissal of a parallel suit on sovereign immunity grounds.
Latest development Jul 16, 2026
On July 16, 2026, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of a $372M AT1 bondholder suit against Switzerland. In a published opinion, it held that Switzerland acted as a sovereign regulator and was immune under the Foreign Sovereign Immunities Act (FSIA). Appeals by FINMA and UBS against the Swiss Federal Administrative Court’s annulment of the write-down remain pending before the Swiss Federal Supreme Court.
Why it matters
The case tests whether a regulator can wipe out Additional Tier 1 (AT1) bondholders ahead of shareholders in a state-orchestrated bank rescue. The answer matters to the $275B global AT1 market and could decide whether Switzerland must compensate thousands of investors worldwide.
Background
In March 2023, with Credit Suisse close to collapse, the Swiss government arranged an emergency takeover by UBS. As part of the rescue, the Swiss Financial Market Supervisory Authority (FINMA) ordered that all of Credit Suisse’s Additional Tier 1 (AT1) capital instruments be written down to zero. The instruments were worth roughly CHF 16 billion (about $17B), yet Credit Suisse shareholders kept value in the UBS share swap. That result reversed the usual insolvency order, under which bondholders are paid before shareholders. AT1 investors around the world objected at once, including large institutional holders in the United States, Japan, Singapore, and the Gulf.
Thousands of bondholders filed appeals with the Swiss Federal Administrative Court in St. Gallen. Competing groups organized by firms including Quinn Emanuel Urquhart & Sullivan and Pallas Partners LLP argued that FINMA’s order lacked a legal basis. They also argued that the contractual trigger for a write-down, a capital shortfall or state aid, had not occurred. About 3,000 complainants ultimately lodged appeals across some 360 cases, with B-2334/2023 designated the lead case. In June 2024, a group led by Quinn Emanuel also sued the Swiss Confederation in the U.S. District Court for the Southern District of New York, seeking full compensation.
On October 1, 2025, the Federal Administrative Court ruled for the bondholders, confirmed their standing, and annulled FINMA’s March 19, 2023, order. It found that the order lacked a sufficient legal basis under the Banking Act, the Financial Market Supervision Act, and the Federal Council’s emergency ordinance. FINMA and UBS both announced appeals to the Federal Supreme Court, Switzerland’s highest court. That court granted suspensive effect, so the write-down remains in place while the appeal is pending. The Federal Administrative Court suspended the roughly 359 other pending AT1 cases to await the ruling in the lead case.
On October 1, 2025, a New York federal court dismissed a $372M AT1 suit against Switzerland on sovereign immunity grounds. On July 16, 2026, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal under the Foreign Sovereign Immunities Act (FSIA). It held that Switzerland acted as a sovereign regulator, not a commercial actor. Meanwhile, on December 4, 2025, 184 Japanese investors filed an ICSID arbitration against Switzerland, alleging that the write-down violated the Japan-Switzerland free trade agreement. By April 2026, ICSID had registered a third claim by Japanese investors, and Switzerland had reportedly received at least nine notices of dispute under investment treaties.
Timeline 13 events
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AppealSecond Circuit affirms Switzerland’s sovereign immunity in $372M AT1 suit
In a published opinion, the Second Circuit held that Switzerland acted as a sovereign regulator, not a commercial actor, in the Credit Suisse rescue. It affirmed dismissal under the Foreign Sovereign Immunities Act (FSIA).
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FilingICSID registers third Japanese investor claim against Switzerland
Global Arbitration Review reported that ICSID had registered a third claim by Japanese investors over the Credit Suisse AT1 write-down. Six further notices of dispute had yet to progress to arbitration.
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FilingSwitzerland faces multiple investor-state notices over AT1 write-down
Reports indicated that Switzerland had received at least nine notices of dispute under investment treaties from AT1 bondholder groups. Two investor-state claims had already begun.
Switzerland faces ISDS claims over Credit Suisse AT1 bond write-off
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FilingJapanese AT1 bondholders file ICSID arbitration claim against Switzerland
A group of 184 Japanese investors alleged that the AT1 write-down violated the Japan-Switzerland free trade agreement. The filing opened an investor-state track parallel to the Swiss and U.S. court proceedings.
Japanese investors sue Switzerland over Credit Suisse's AT1 write-down, law firm saysJapanese investors file suit against Switzerland over Credit Suisse bonds
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OrderFederal Administrative Court suspends other AT1 cases pending Supreme Court ruling
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AppealFINMA announces appeal to the Federal Supreme Court
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JudgmentU.S. court dismisses $370M AT1 suit on sovereign immunity grounds
A New York federal court found that Switzerland acted as an immune foreign sovereign in the Credit Suisse rescue.
U.S. court rejects $370 million AT1 suit against Switzerland, Swiss government says
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JudgmentFederal Administrative Court annuls the FINMA write-down order in lead case B-2334/2023
The court confirmed the bondholders’ standing and revoked FINMA’s decree of March 19, 2023, finding no sufficient legal basis for the write-down.
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FilingBondholders sue Switzerland in U.S. court seeking full $17B compensation
The group, represented by Quinn Emanuel Urquhart & Sullivan, sued the Swiss Confederation in the U.S. District Court for the Southern District of New York.
Credit Suisse bondholders sue Switzerland in the U.S. over $17 billion writedown of AT1 debt
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FilingQuinn Emanuel’s bondholder group grows to over 1,000 claimants
Quinn Emanuel Urquhart & Sullivan said its clients held roughly a third of the total notional value of the written-down bonds. More investors were joining the group appeal against FINMA.
More Credit Suisse bondholders join group appeal against FINMA decision
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FilingPallas Partners files Swiss appeals on behalf of two AT1 bondholder groups
Pallas Partners announced it was coordinating proceedings filed in Switzerland on behalf of two large groups of Credit Suisse AT1 holders challenging FINMA’s write-down order.
Credit Suisse AT1 Groups Represented by Pallas Issue Proceedings in Switzerland
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OrderPallas Partners and Swiss counsel begin exploring legal action for AT1 holders
Days after the write-down, Pallas Partners said it was working with Swiss counsel on possible legal action for Credit Suisse bond investors whose AT1 holdings were wiped out.
Some Credit Suisse AT1 bondholders seek legal advice -law firms
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OtherFINMA orders write-down of all Credit Suisse AT1 instruments in UBS rescue
Experimental AI forecast
How it is madeHow will the Swiss Federal Supreme Court rule on the FINMA and UBS appeals against the annulment of the Credit Suisse AT1 write-down by September 30, 2027?
- Supreme Court reinstates write-down35%
- Bondholders’ annulment upheld28%
- Still pending on September 30, 202725%
- Partial ruling or remand12%
- Resolves by
- Sep 30, 2027in 11 months
- Record confidence
- Medium
The Federal Supreme Court is most likely to rule by September 30, 2027, and reinstating the write-down is the single likeliest result at 35%. The court’s grant of suspensive effect and the novel emergency-law questions give FINMA and UBS a real path to reversal, though the bondholders hold a first-instance win.
How it resolves. Resolves on the Swiss Federal Supreme Court’s published judgment in the appeals against the Federal Administrative Court’s October 1, 2025, ruling in lead case B-2334/2023. “Bondholders” annulment upheld’ if the court dismisses the appeals and leaves the annulment of FINMA’s March 19, 2023, order in place. “Write-down reinstated” if it grants the appeals and restores the order in full. “Partial ruling or remand” if it grants the appeals only in part or sends the case back to the lower court or FINMA for new findings. “Still pending” if no judgment is published by September 30, 2027. A court-approved settlement or withdrawal ending the lead case counts as “Partial ruling or remand” only if the court issues a decision on it. Otherwise it counts as still pending.
Reasoning
Starting point. Appeals by Swiss federal authorities to the Federal Supreme Court in complex public law cases: The Swiss Federal Supreme Court grants roughly 10% to 15% of public law appeals overall, but authority appeals on novel legal questions succeed more often, perhaps 30% to 40%.
Authority appeals to the Swiss Federal Supreme Court on unsettled public law questions succeed more often than the court’s low overall grant rate, roughly 30% to 40%. This case turns on the reach of the Federal Council’s emergency ordinance and the Banking Act, where the law is unsettled. That makes reversal more plausible than in routine cases. The bondholders still hold a reasoned first-instance annulment that confirmed their standing, which keeps affirmance close behind. The court’s grant of suspensive effect keeps the write-down in place, but it signals nothing firm on the merits. A partial ruling or remand on contractual trigger issues is a credible middle path given the roughly 3,000 appellants and 359 suspended cases. Timing is the main risk, because the appeals have been pending about 11 months and the record gives no hearing date. The leading alternative to reversal is affirmance, which would expose Switzerland to large compensation claims and strengthen the parallel ICSID tracks.
Unsettled scope of Federal Council emergency powers · Bondholders’ first-instance annulment and confirmed standing · No hearing or decision date on the record · Fiscal and financial stability stakes for Switzerland · Parallel ICSID claims raising the cost of affirmance
Generated automatically by Claude Opus 5.5 on Sep 24, 2026 from this case’s record on this site, and published without editorial review. The probabilities are the model’s judgment, not measured frequencies, and they are scored publicly as cases resolve. Not legal or investment advice. How the forecasts are made