Acquisition of F-35
The fixed price promised by Viola Amherd has never been guaranteed
Experties relating to the purchase of combat aircraft reveal that the Federal Council has been poorly advised. The management committee will investigate.
Switzerland has long believed at a fixed price for the purchase of 36 F-35 fighter planes.
Giuseppe Lami
- The Defense Department has mandated several legal expertise to secure the purchase of F-35s at a fixed price.
- American lawyers have stressed that the agreed price was not legally restrictive.
- According to the contract, Switzerland must accept any additional costs, without the possibility of judicial appeal.
- Despite these warnings, a Zurich law firm confirmed that the fixed price was guaranteed.
The case seemed a little too easy. The Department of Defense (DDPS) paid dearly for the Zurich law firm Homburger for consultations which were only intended to confirm what was thought to have negotiated: a fixed price for the purchase of 36 F-35 combat aircraft.
In 2022, it was this argument of the fixed price which enabled the former Defense Minister Viola Amherd to convince the Safety Policy Commission (CPS), then the Parliament, to approve the acquisition of the jets. The CPS thus indicated in a press release that after consulting various documents, it considered that the legal uncertainties linked to the price were lifted.
For its part, Priska Seiler Graf (PS/ZH), president of the CPS, denounced the attitude of the Parliament in this file. She sees it as a “guilty negligence”. And when reading expertise, it is difficult to prove it wrong.
Naivety of the Federal Council
From the start, the Federal Department of Defense doubted the validity of the fixed price. He therefore mandated the Homburger firm to make several expertise. Two of them, dated November 30, 2023 and September 11, 2024, were made public on Wednesday, when the Federal Council admitted that the fixed price of 6 billion francs, promised by Viola Amherd, could not be held. It will cost 650 million to 1.3 billion more.
The price of 6 billion, promised by Viola Amherd, turned out to be a mirage.
Philipp Schmidli
The American cabinet Arnold & Porter (A&P) was also asked for an analysis, dated 1is March 2024. The second expertise of Homburger is based on this report.
Reading these documents leaves little room for doubt. In 2022, Switzerland signed the contract naively believing that the fixed price was guaranteed. But from 1is March 2024, it was clear that it had no restrictive value.
In its first report, the Zurich cabinet writes about the F-35: “The price increases are, in our opinion, not authorized, unless the circumstances were to change.”
However, a note in the document specifies that the report has only been established for Armasuisse and that “no third party must trust it”. The expertise of the Zurich firm obviously did not inspire total confidence, since the Confederation deemed necessary to mandate A&P for additional expertise. A&P was unaware of the reasons for this request.
“On the date of this memorandum, we do not know if the United States government has applied for price increase or if the Swiss government assesses the risk of such a demand in the future.”
Cabinet Arnold & Porter
What the Americans say
Any country that wishes to buy military equipment from an American company must go through the United States government. The procedure, called “Foreign Military Sale” (FMS), strictly supervises the sale of weapons abroad. Transactions are tripartite. In the case of the F-35, the Federal Council ordered to the United States government, which then sent request to the manufacturer Lockheed Martin.
The US government cannot record any loss and legal appeals are excluded.
Cabinet Arnold & Porter
Switzerland has ordered 36 F-35 combat planes, as well as ammunition and various services. The A&P cabinet explains: “In summary, as part of FMS contracts, the rule is that the United States government endeavors to provide military equipment and the estimated price services in contractual documents. However, as the American law prohibits the federal state to record a loss in an FMS transaction, any additional cost is automatically reflected in the foreign customer. ” Clearly, the fixed price does not apply to the ammunition and various services purchased by Switzerland.
Any appeal to a court is excluded
For planes, the situation is more complex. The report specifies that “the contractual documents relating to the F-35 provide special provisions stipulating that the devices must be delivered at a fixed price agreed”. However, according to American law, this principle is only applied exceptionally. This is only the case when the American government is itself the source of additional costs. According to the report, this scenario “should not arise in the case of the F-35”.
If a price increase should take place, two positions would compete. “On the one hand, Washington would invoke American law, which forbids him to record a loss on an FMS transaction; On the other, the Swiss government would support that the fixed price provisions, contained in the contractual documents FMS, are binding. ”
Such a dispute would probably be settled by the diplomatic route. In the event of a dispute, the US government would remain the owner of the planes. FMS documents prohibit any recourse to a court or an external mediator.
In summary, contractual documents exclude any judicial recourse. It is therefore impossible to impose a fixed price. Federal finance control had already raised this point two years ago.
What Switzerland has signed
A&P firm provides more details. In addition to the contract itself, Switzerland has signed a “letter of Offer and Acceptance (LOA)”, in which it was a question of a fixed price. But from the first page of the contract, it is indicated that this price is only an estimate. In addition, according to A&P, in section 4.4.1, the Confederation recognized that “the Swiss government will pay the US government the total cost of the contract, even if these costs exceed the amounts estimated in the LOA”.
In addition, section 7.2 of this document hires the US government and the Swiss government to “settle any dispute relating to the LOA by bilateral consultations”, and not to bring the case to an international court.
A&P lawyers conclude that “Switzerland has good arguments to consider that the LOA and its provisions relating to the fixed price are binding, but it is not certain that it can argue them”. Indeed, the document imposes an amicable regulation and prohibits any use of third parties or an arbitral tribunal. Hence the need for a “diplomatic solution”. The outcome is however predictable, since “US law prohibits the US government from recording a loss in an FMS transaction”.
How to explain then that, in its second expertise dated September 11, 2024, the Homburger office still affirms that no additional cost is to be expected? Furthermore, the report does not mention the fact that the United States government cannot legally assume any additional costs or the prohibition of any appeal to a court.
On the other hand, there is the indication that “no third party must trust the document”. As of next week, the Parliament Management Commission will look at the lessons to be learned from this fiasco.
“Latest news”
Do you want to stay at the top of the info? “24 hours” offers you two meetings a day, not to miss anything of what is happening in your canton, in Switzerland or in the world.
Other newsletters
Did you find an error? Please report it to us.
