Facts
The Basel Cantonal Bank, a cantonal, state-owned universal bank, granted a loan of 9 million Swiss francs to the Municipal Municipality of Leukerbad in 1995. This loan was extended for an additional two years in 1997. However, the Municipal Municipality of Leukerbad increasingly encountered financial difficulties, as it made significant investments in the tourism sector and the municipal debts increased significantly. The Canton of Valais only took measures to control the municipality's finances in 1998. The Basel Cantonal Bank then claimed that the Canton of Valais had breached its supervisory duty and was therefore responsible for the default on the loan.
Considerations
Legal Assessment:
The Federal Supreme Court concluded that the supervisory duties incumbent on the Canton of Valais towards its municipalities do not establish a guarantor position of the canton towards the creditors of the municipalities. The municipal supervisory regulations primarily serve to protect the public interest, the municipalities themselves and their inhabitants, but not the protection of creditors. While the supervisory rules…