Facts
The plaintiff Beverly Overseas SA, a company domiciled in the British Virgin Islands, sued Privredna Banka Zagreb d.d., the largest bank in Croatia, for payment under a "Promissory Note" for USD 26.1 million. The background of the dispute was arms transactions from 1992, in which Intersystems Inc. in Beirut acted as the seller and the Republic of Croatia as the buyer.
The Commercial Court of the Canton of Zurich dismissed the claim, as it considered the underlying business of arms deliveries to the Republic of Croatia to be immoral. The Federal Supreme Court upheld this decision.
Considerations
The Federal Supreme Court stated that arms deliveries to areas where an armed conflict is raging or threatening to break out are generally in violation of universal public order. This applies all the more if the prohibition is based on a global arms embargo imposed by the UN Security Council. In the absence of a domestic connection to the dispute, there was no reason why the Swiss courts should counteract the content of this arms embargo in an autonomous way by making…