Swiss defence firms say mercenary law is hindering their work

Swiss defence suppliers say a law designed to keep mercenary companies out of the country is complicating ordinary business abroad. The rules can affect work such as installing or maintaining military equipment and training foreign soldiers, activities that industry groups say are increasingly sought as wars in Ukraine and the Middle East drive demand for defence support.

The Federal Act on Private Security Services Provided Abroad requires companies to notify Bern before carrying out covered work. Officials decide whether a declaration needs further checks, and authorities can sometimes stop the activity. The law can reach beyond Switzerland: it also applies to overseas subsidiaries controlled from Switzerland and to Swiss branches of international companies headquartered elsewhere.

That reach has made the law a concern for firms trying to deploy technicians and support customers across borders. Swissmem, the engineering industry association, says it knows of cases where services abroad were delayed or halted, leaving companies to hire third parties at extra cost. Executives warn that moving staff or operations overseas does not necessarily remove the restrictions.

The law dates to 2015, when private military companies were establishing themselves in Switzerland. One prominent example was Aegis Defence Services, a major US government contractor in Iraq and Afghanistan. The company later left Switzerland because of the legislation.

Industry groups now argue that the law reaches further than its original target. Switzerland is among the few countries whose rules for private military contractors extend to companies operating abroad when they are controlled from Swiss territory. Swiss firms say the extraterritorial provisions can complicate work even when the service involves equipment support or training rather than combat activity.

Changes introduced in 2021 exempted some maintenance, repair and training work. The foreign ministry said the changes sharply reduced declarations, from 334 activities in 2020 to 33 in 2022. The count then climbed, reaching 60 in 2025. Companies also sought guidance on 68 activities that year to establish whether they had to file a declaration. The ministry says most cases are processed within days and that the amendments helped reduce the administrative burden.

For some firms, the uncertainty affects contracts, staffing and customer support. Peter Huber, a defence entrepreneur who sits on several company boards, said a Swiss company lost a contract worth more than CHF 5 million to a French rival because of the rules. One company he was involved with considered moving its headquarters to the United States.

Zurich-based Acutronic Group, which makes equipment used to test navigation systems in aircraft and missiles, said it had struggled to determine whether its technicians could travel abroad to install and support its machines. Chief executive Florian Aigrain called it “an example of well-intentioned legislation with a gap between its original purpose and its implementation.”

Swissmem says companies have sometimes had to rely on third parties when services were delayed or blocked. Its director, Stefan Brupbacher, said the rules were “haunting” technology-intensive manufacturers and called the law “an absolute disaster.” The foreign ministry points to the 2021 exemptions and says most declarations are processed within days. For manufacturers, the process of deciding whether routine overseas work falls under the law remains a practical concern.

Industry groups want Bern to change the law’s reach or repeal it, while the foreign ministry says parliament deliberately wrote it to cover a broad range of services. That includes work provided by foreign subsidiaries controlled from Switzerland. The dispute has also drawn criticism in parliament, where Social Democratic senator Franziska Roth said one company had told her it planned to leave for France.

For Swissmem and defence executives, the rules have become more pressing as demand grows for suppliers able to provide equipment alongside maintenance, training and other support. The association says the 2021 changes helped, but significant problems remain. Some companies are weighing whether to relocate headquarters, a prospect that could put Swiss-based expertise and business activity elsewhere.

The debate reaches beyond compliance for individual firms. It touches Switzerland’s tradition of “armed neutrality”: staying out of foreign wars while maintaining a strong military for the country’s own defence. As companies and lawmakers argue over how the law should apply to services abroad, Bern faces pressure to balance controls on private military activity with the work of a defence industry responding to a more demanding market.