The legal fallout from the 2023 rescue of Credit Suisse has entered a materially new phase. The October 2025 decision of the Swiss Federal Administrative Court has brought renewed focus to the unprecedented write-down of Additional Tier-1 (AT1) bonds and, in doing so, has sharpened the legal questions surrounding the actions taken by Swiss authorities during the crisis.
For investors affected by the write-down, the decision marks an important inflection point not because it reverses the outcome, but because it casts doubt on the legal basis for how the decision was made. That development has immediate implications for the assessment of investor protections, regulatory limits and the viability of international claims now being pursued.
The Swiss court decision: why it matters
In its ruling, the Swiss Federal Administrative Court found that the legal foundation for the full write-down of Credit Suisse’s AT1 bonds was unclear at the time the emergency measures were taken. While the court did not reinstate the bonds or award compensation, its reasoning has proven significant.
The court questioned whether the statutory and contractual preconditions required to trigger a total write-down had in fact been satisfied. In particular, it highlighted uncertainty around the interpretation of emergency powers exercised by the Swiss regulator and the manner in which those powers were applied.
This judicial scrutiny has reframed what was previously viewed by many as a purely regulatory decision taken in extremis. Instead, it places the AT1 write-down firmly within a legal context; one in which the rule of law, procedural safeguards and investor protections remain relevant even during periods of systemic stress.
Strengthening treaty-based claims
Against this backdrop, treaty-based arbitration claims brought by foreign investors have taken on increased importance. A group of Japanese AT1 bondholders has already commenced proceedings against Switzerland at the International Centre for Settlement of Investment Disputes (ICSID), invoking protections under the Japan–Switzerland Free Trade and Economic Partnership Agreement.
These claims focus on core treaty standards, including fair and equitable treatment, due process and protection against unlawful expropriation. The Swiss court’s findings are not determinative of the arbitration, but they provide judicial confirmation that key aspects of the write-down decision are legally contestable.
In practical terms, this reduces the extent to which the Swiss authorities’ actions can be characterised as immune from review and reinforces the argument that emergency intervention does not displace international investment obligations.
The role of third-party funding
Another development shaping the current landscape is the availability of third-party litigation funding. International law firm Withers is collaborating with Singapore firm Drew & Napier to form what is expected to become the single largest coordinated treaty-arbitration group brought by AT1 bondholders anywhere in the world, with leading litigation funder Omni Bridgeway funding the combined group.
For affected bondholders, this removes a significant barrier to participation. Claims can be pursued without the need for investors to fund legal costs upfront or assume adverse cost risk. Funding also enables claims to be prosecuted at scale, drawing on specialist legal, financial and regulatory expertise across jurisdictions.
From a broader perspective, the involvement of a global litigation funder signals an independent assessment that the claims are legally and economically viable. While funding is not an indicator of outcome, it reflects confidence in the underlying merits and the seriousness with which the claims are being pursued.
Background: what happened in March 2023
In March 2023, Swiss authorities orchestrated the emergency acquisition of Credit Suisse by UBS to stabilise the financial system. As part of that intervention, approximately US$ 17.8 billion of AT1 bonds were written down to zero.
This outcome was exceptional. AT1 instruments are designed to absorb losses, but historically equity holders have been expected to bear losses before AT1 investors. In the Credit Suisse transaction, equity retained value while AT1 bondholders were entirely wiped out, reversing the conventional loss-absorption hierarchy.
The decision triggered immediate concern across global capital markets and has continued to influence how AT1 instruments are priced, structured and understood.
Why timing matters for bondholders now
The convergence of judicial scrutiny, treaty arbitration and third-party funding has created a narrow but important window for affected investors. Treaty claims are subject to jurisdictional and procedural requirements, including time limits, nationality thresholds and coordination considerations.
Participation at an early stage allows claims to be structured coherently and ensures that investors’ interests are aligned within a coordinated framework. As proceedings progress, opportunities to join may become more limited.
Our firm is proactively coordinating funded investor-state arbitration claims on behalf of Credit Suisse AT1 bondholders in Asia against the Swiss Confederation. This action aims to safeguard the rights of our clients to claim for losses incurred on their AT1 bonds. For detailed information about this initiative, read more here.
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For further information, please contact:
Pardeep Khosa, Partner, Withersworldwide
pardeep.khosa@withersworldwide.com
