ZURICH — Swatch Group is facing at least 800,000 Swiss francs, or $789,500, in legal costs after Switzerland’s highest court on Thursday threw out its final appeal against UBS, one of the world’s biggest banks, in a bitter and long-running battle over a loss-making investment dating back to 2007.
Upholding a lower court decision, the Federal Tribunal saddled the world’s biggest watchmaker with court costs of 65,000 francs, or $64,150, along with 150,000 francs, or $148,000, in compensation for the bank’s legal fees. Swatch Group will also have to pay 272,000 francs, or $268,500, in court costs and 284,000 francs, or $280,3000, in compensation from a lower court battle.
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Swatch Group said it regarded the ruling with “regret.”
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“A shame…a shame above all also for the many private small investors. And sadly nice for the investment bankers,” it said in a brief statement.
The case stemmed from a big investment Swatch Group made in a UBS asset management product in May and June 2007 on the eve of the financial crisis. As the markets turned sour and the investment values plunged, Swatch claimed it had been ill-advised by the bank. Efforts to reach an out-of-court settlement failed, leading Swatch to take legal action.
UBS argued Swatch was a professional investor and should have been aware of the risks involved. Swatch countered that the nature of the product implied it would be safe in any circumstances.
Although similar legal battles have taken place in other countries between banks and their clients in the aftermath of the financial meltdown, the case was very unusual in conservative Switzerland, where such disputes are rarely aired in public.
However, Swatch Group, always an outlier in the business establishment, has regularly gone out on a limb to criticize financial markets in general and bankers in particular.
Swatch suffered an initial setback last April, when the Zurich Commercial Court rejected its claim for 24.8 million francs in damages against the bank. At the time, Swatch implied the ruling had been biased and said it would appeal.
In its ruling, the Federal Tribunal said UBS’ advice had been reasonable. Swatch was a professional and experienced investor, which did not require all the risks to be spelled out, it added.
“The Swiss Federal Court’s decision upholds our position and the judgment of the Zurich Commercial Court in April. UBS has always indicated that it acted correctly, as now confirmed by this binding ruling,” the bank said.