No Exclusive Law Governs Bank-Customer Relations in Liechtenstein

In a surprising revelation, it has emerged that there is no specific law governing the relationship between banks and their customers in Liechtenstein. Instead, general rules and provisions on contracts and legal transactions laid down in the Liechtenstein Civil Code (ABGB) will apply.

Framework for Contract Law

According to experts at Marxer & Partner, attorneys-at-law, the ABGB provides a framework for contract law in Liechtenstein, including provisions related to agency agreements. These agreements are commonly used in banking transactions, where banks act as agents on behalf of their customers.

“In this context, the agent (the bank) is obliged to procure the transaction diligently and honestly in accordance with his promise and the granted power of attorney,” explained Mag. Dr. Daniel Damjanovic, LL.M., a leading expert in banking regulation at Marxer & Partner.

General Terms and Conditions

Banks may also use their General Terms and Conditions (GTCs) to govern their relationships with customers. While GTCs must meet certain criteria to be valid and applicable, they are not immune from challenge if deemed unfair or abusive.

“In particular, unusual provisions in GTCs that are detrimental to the customer may not become part of the contract unless the bank has explicitly made the customer aware thereof,” noted Damjanovic.

Consumer Protection Act

Additionally, Liechtenstein’s Consumer Protection Act (KSchG) contains more favorable provisions for customers and may supersede certain ABGB provisions applicable between individuals.

Cross-Border Banking Activities

Cross-border banking activities in Liechtenstein are subject to specific regulations. While banks from European Economic Area (EEA) countries can operate in Liechtenstein without a licence, provided they have notified the Financial Market Authority (FMA) in advance, banks from non-EEA countries must establish a branch in Liechtenstein and obtain a licence.

Dispute Resolution

In the event of disputes between customers and banks, an extrajudicial conciliation board has been established to settle such matters. The board acts as a mediator, encouraging discussions between disputing parties to resolve complaints, but its decisions are not binding on either party.

“By navigating these intricacies, banks and customers alike can ensure that their interests are protected and disputes are resolved efficiently,” emphasized Mag. Dr. Daniel Damjanovic, LL.M., a leading expert in banking regulation at Marxer & Partner.