Hongkongers Join CS AT1 Legal Wave Against Switzerland
Hong Kong investors of Credit Suisse Additional Tier-1 bonds are joining the efforts to take action against Switzerland over what they viewed to be an unlawful write-down.
Hong Kong holders of the infamously written down Credit Suisse Additional Tier-1 (AT1) bonds are preparing to take legal action against Switzerland under a treaty that had promised investors in the city fair and equitable treatment.
The class action is being represented by law firms Withers and Singapore-based Drew & Napier while being backed by litigation funder Omni Bridgeway. The combined value of the bonds held by the Hong Kong investors is above $130 million with family offices accounting for the majority and the amount could rise as more join the case.
In a media briefing, Withers said that it was nearing a critical mass of bondholders in Hong Kong and it will look to issue trigger letters to Switzerland in March. A trigger letter is a legal term for a notice of dispute required to be issued under the treaty. If the matter cannot be settled within six months after the letter is issued, the parties will proceed to an arbitration process.
Confidence in Supreme Court Ruling
In October 2025, the Swiss Federal Administrative Court ruled that the order by Switzerland’s financial regulator (FINMA) to write down the AT1 bonds was unlawful and revoked it. FINMA and UBS are now appealing the decision.
“The appeal is currently pending, but based on our understanding of the facts […] we don’t see any compelling evidence or reason the Supreme Court would overturn this decision,” said Withers’ Hong Kong-based partner Gary Leung.
Recalling a Bad Memory
While Withers has already issued trigger letters for bondholders it represents in Japan and Singapore, it admits that it has taken some time to gather claimants in Hong Kong. According to Singapore-based partner Pardeep Khosa, this is due to a reluctance to recall the bad memory.
“There’s a bit of fatigue around the entire thing. Some of the intermediaries that I spoke to, like private bankers, […] don’t even want to revisit this issue with the client, because the client has already moved on. We’ve been hearing intended action for a while, but nothing has in fact progressed and so, reviving that interest, getting them to sign on and be a part of this – I think that’s one of the challenges that we’ve faced,” he explained.
“What we’re saying basically is, look, it does not require a lot of engagement on your end. All that is required is to sign some paperwork, get us the bond to prove your ownership. Leave it to us to think about it any further. We want to reach out to the actual bondholders, so that they’re aware of this, they’re aware that they don’t have to pay anything.”
“A Long, Drawn-Out Battle”
Despite the confidence, Khosa noted that the process will take time, with investment treaty arbitrations typically running for up to seven years.
“Along the way, the developments in the Swiss court proceedings may affect Switzerland’s strategy. If they aren’t successful, for example, on the appeal, Switzerland might take the view that their chances of succeeding in the arbitration aren’t that great. It might incentivize them to come to a settlement,” he added. “This is looking like a pretty long, drawn-out battle.”
Others interested in joining Withers’ investor-state arbitration group can learn more in the following link: https://www.withersworldwide.com/en-gb/insight/credit-suisse-at1-bondholders-funded-investor-state-arbitration
