Capital: Berlin
Largest city: Berlin
Official Language: German
Government: Federal Parliamentary Republic
Area: 357,022 km2
Population: 83,166,711
Currency: Euro (EUR)
GDP total: EUR3.905 trillion (USD4.743 trillion)
GDP per capita: EUR46,893.19 (USD56,956)
Time zone: UTC +1/UTC+2
Calling code: +49
Internet TLD: .de

[Source: Wikipedia]

Q&A on Commercial Litigation
  1. What is the court structure applicable to commercial disputes in Germany?
    In respect of the court structure, there is no difference between commercial and other private matters; we have a maximum of 3 instances for a proceeding.
    Disputes between private (i.e. non-governmental) parties are heard by the ordinary courts – the local courts (Amtsgericht), regional courts (Landgericht), higher regional courts (Oberlandesgericht) and the Federal Supreme Court (Bundesgerichtshof) in Karlsruhe.
    In the first instance, the local court (Amtsgericht) is in charge of amounts in dispute up to EUR5,000 and the regional court (Landgericht) for amounts in excess of EUR5,000. Disputes can be brought before the Regional Courts at the Chambers for Commercial Matters. In some courts, there are also English-speaking chambers for international commercial matters or civil courts for disputes with an international connection. Here, the oral proceedings generally begin with the conciliation hearing, in which the possibilities of an amicable settlement of the dispute are discussed with the parties. The courts support amicable dispute resolution at every stage of the proceedings.
  2. Who decides questions of law and fact in German courts?
    The questions of law are decided by the judges (“Iura novit Curia”). They also decide the questions of fact, however, the principle of submission applies: The court does not investigate the facts of the case on its own initiative, but in principle (only) deals with those facts that the parties submit to it.
    There is no jury in civil law matters.
  3. What is the nature of legal representation in Germany? Do foreign lawyers have a right of audience in the German courts?
    Lawyers in Germany must be admitted by the competent bar association in order to practice within the legal profession and represent their clients. They are also bound by strict professional law and must represent the interests of their clients. This makes a German lawyer a state-recognised institution.
    The Act on the Activity of European Lawyers (Gesetz über die Tätigkeit europäischer Rechtsanwälte in Deutschland, EuRAG) in Germany allows lawyers registered in the EU to appear in court. However, a serving European lawyer may act in proceedings with compulsory representation only if they have an agreement on this with a German lawyer (Einvernehmensanwalt).
  4. What types of legal fee arrangements are generally adopted by German lawyers? To what extent are legal fees fixed by law?
    Lawyers’ fees are charged either in accordance with the Lawyers’ Remuneration Act (Rechtsanwaltsvergütungsgesetz, RVG) or on the basis of fee agreements. If the lawyer represents a client in court, the agreed fees cannot be less than those laid down by law. Remuneration higher than that prescribed by law may be agreed at any time. The fee level is normally determined by reference to the value of the claim, e.g. if the claim is EUR100,000, then lawyer’s fee will be calculated as a proportion of that amount. In each case, the appropriate fee from the prescribed range must be determined ex aequo et bono, taking into account all the circumstances, in particular the scope and difficulty of the work involved, the importance of the case and the client’s income and financial circumstances. Success fees are allowed only in certain cases.
  5. What are the time limits applicable to commercial disputes in Germany?
    There is no procedural time limit for bringing an action. However, the claims to be pursued with the action are subject to the statute of limitations and then an action has no chance of success.
    There are also no limits in regards to the length of the legal dispute itself, a normal procedure of the first instance takes 1-2 years.
  6. Are there any pre-action discovery procedures available to a party who wishes to initiate a claim?
    There is no pre-action discovery permitted. It is possible to conduct independent evidence proceedings (selbständiges Beweisverfahren). This process makes it possible to gather evidence relatively quickly, even before the main trial begins.
  7. What role does mediation play in the litigation process? Is mediation imposed as a prerequisite to a commercial claim or is strongly encouraged by the German courts?
    Mediation has gained importance in Germany in recent years. The court may propose mediation or another out-of-court alternative dispute resolution procedure to the parties, but it is not a prerequisite.
    Unless it has been expressly agreed in a contract, it is not possible to immediately initiate a mediation procedure instead of a normal procedure before the trial court.
    Mediation can also be proposed by the judge. In this case, they are conducted before a court of arbitration (Güterrichter). The referral rate is relatively low. The procedure plays a greater role in family law matters.
    In some federal states, a mediation before the main trial is compulsory in certain cases.
  8. How is a commercial claim initiated in the German courts?
    A statement of the claim in a certain form and with certain compulsory content must be drawn up and filed with the competent court. The filed statement of claim, if properly prepared, is served to the opposing party and is then deemed to have been filed. A first date is set for the oral hearing or a written preliminary procedure is arranged. In preparation for each hearing, the court may order the parties to supplement or clarify pleadings, it may also set a time limit for the parties to explain certain points that need clarification. With the consent of the parties, the court may make a decision without an oral hearing.
    At the regional court and higher-ranking courts (e.g. Higher Regional Court), the parties must be represented by a lawyer.
    It is also possible to file a commercial claim to the Chamber of Commercial Matters. The dispute can be dealt before this chamber only upon a request of one of the parties.
  9. What happens if a defendant fails to respond to a claim?
    If the facts presented by the claimant substantiate his claim, the court issues a default judgment (Versäumnisurteil). The defendant has 2 weeks to lodge an objection against the default judgment. The default judgment is provisionally enforceable.
  10. Are there any summary procedures which can be applied for by the plaintiff or defendant in a commercial claim?
    When it comes to simple monetary claims, there is the possibility of carrying out a so-called payment order procedure (Mahnverfahren). If the debtor does not object, an order for payment is issued, which is enforceable. However, if the debtor objects in due time, court proceedings must be conducted.
    There is also an abbreviated proceeding in order to get an enforceable Court decision, if all facts are proven by deeds.
  11. What interim reliefs can a party seek to maintain the status quo or prevent further loss or damage pending the final decision of the Court?
    A party may file an application for interim relief. This procedure allows for a provisional decision to prevent further loss or damage pending the actual decision.
    The factual requirements of the asserted claim and the particular urgency must be presented and explained in a comprehensible manner. The matter is only urgent if the applicant makes a credible case in his or her application that he or she has been aware of the infringement for less than one month. The applicant may not be expected to assert the claim in ordinary court proceedings.
    In particularly urgent cases, the court may decide in favour of the applicant without an oral hearing, and if necessary, even without hearing the opposing party beforehand.
    In addition, a party must convince the court that its own statements are correct (Glaubhaftmachung).
  12. What sort of evidence is required to support a commercial claim? How do the German courts evaluate oral and documentary evidence?
    The plaintiff must sufficiently prove his arguments. Both oral testimony and documents can be used as evidence. However, the court will assess their credibility and believability of this evidence.
  13. When will a court consider expert evidence and how are expert opinions treated?
    The court may call in an expert of its own motion or at the request of a party.
  14. Will parties be able to recover the costs incurred in pursuing a claim in court?
    In civil proceedings, the party who loses the case generally bears the costs of the proceedings. If no party has completely prevailed, the legal costs are usually distributed proportionally according to the outcome of the proceedings. If the parties reach an agreement in the proceedings, i.e. conclude a settlement, the costs are allocated according to this settlement, unless otherwise agreed.
    However, the maximum amount of legal fees to be reimbursed is regulated by law, and is not based on the actual costs that are necessarily incurred.
  15. How long do commercial claims take to be resolved in the German courts?
    The duration of proceedings depends on the overall circumstances. According to the report of the Federal Statistical Office Administration of Justice – Civil Courts, it is on average 12 to 15 months.
  16. How can a successful party enforce a court judgment?
    The debtor must be given a deadline for payment. If payment is not made by this deadline, the bailiff is instructed to enforce the order. The bailiff will then usually try to enforce the title by seizure, execution or compulsory auction of the debtor’s property. Enforcement measures can be taken before a judgment becomes final.
  17. Can an unsuccessful party appeal against a court’s decision?
    An appeal against first instance decisions may be lodged within 4 weeks after receipt of the reasons of a judgment. The appeal is only admissible if the value of the subject matter of the appeal exceeds EUR600 or if the court of first instance expressly allows it.
  18. How do German courts approach the choice of governing law in a contract in cross-border litigation?
    Irrespective of the question of which substantive law is applicable, jurisdiction is determined according to the Brussels I Regulation, which allows a choice of law. The place of jurisdiction and the applicable law can also diverge.
  19. Are foreign judgments recognised by the German courts?
    Foreign decisions can be recognised through a recognition procedure – “Exequaturverfahren”. This procedure involves examining whether the requirements for recognition of the judgment in Germany are met, i.e. whether the judgment is enforceable. Judgments from EU member states are declared enforceable according to the EU Regulation on Jurisdiction and Enforcement of Judgments (EUGVVO) using a simplified procedure. A judgment from a third-party country can only have legal effect in Germany, if the third-party country also recognises German judgments. The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters is now intended to standardise the rules on the cross-border enforcement of state judgments and thus increase legal certainty in international economic transactions in the future.
  20. How have the German courts responded to the Covid-19 pandemic to ensure that the litigation process remains effective while ensuring the health and safety of those involved in the process?
    In order to maintain due process of law while minimising the risk of infection, court activities can continue, with physical contact reduced as much as possible. Public court hearings can still be conducted and attended under stringent hygiene measures and as long as no flu-like symptoms are present. Hearings may be attended via videoconference if one party requests and the judge grants it. It is recommended to use written procedures and to participate in hearings via video and audio transmission in order to hear witnesses. Decisions in summary proceedings are still possible.
ABOUT THE AUTHORS

Henning Von Zanthier
Founding Partner, Von Zanthier & Schulz

Following his legal studies in Germany and France, Henning von Zanthier obtained the LL.M. degree at Tulane University in the United States in 1989. In 1991, he was admitted to the Berlin bar and started working at a large international law firm. He founded the law firm “VON ZANTHIER & SCHULZ” in Berlin in 1992, with its focus on business law, tax law and bookkeeping.

In 1995, he established the first German linked law firm in Poznań, Poland. In 2003, he was the first member as a foreign lawyer at the Poznań Bar. He is the first non-Polish lawyer who has also been fully admitted to the chamber in Poznań. He lectured on Polish law at the Free University of Berlin between 2004 – 2007. He focuses on corporate law, commercial law and Polish renewable energy law. Henning von Zanthier was the chairman of the Polish-German Association of Legal Experts between 1993 and 1998.

He is one of the founders and was President of the League of Lawyers in 2014-2020 – an association of 20 medium-sized business law firms from Asia and Europe. He has authored a number of articles on German Business law. He regularly gives lectures on this subject for various institutions. He also lectured at the Adam Mickiewicz University in Poznań on the UN Convention on International Sales of Goods (CISG). His law firm has clients from China, Japan and India, who invest in Germany or Poland. He has been a member of LAWASIA since 2006 and was a constant speaker in the M&A subcommittee (2006-2015). Since 2016 he is the Chairman of the Asian-European Subcommittee within LAWASIA.

ABOUT THE FIRM

Name: Von Zanthier & Schulz
Address: Kurfürstendamm 217, 10719 Berlin Germany
Telephone: +49 30 88 03 59 0
Email: berlin@vonzanthier.com
Website address: www.vonzanthier.com
Key contact: Henning von Zanthier, Partner, vonzanthier@vonzanthier.com
Established: 1992
Number of lawyers: 17
Languages: German, English, Polish, French

Brief description:
We are an interprofessionally organised law firm of solicitors, auditors and tax consultants with offices in Berlin, Poznań and Warsaw. We offer consultancy services in Germany in the field of German business and tax law and can assess your economic situation. Since 1992, we have been dealing with international matters and guiding you in national and cross-border law. In Poland, we can support you with Polish business and tax law.

Key practice areas:
Commercial law, Corporate law, Real Estate law, IT law, Labor law, Law on Renewable Energy, Medicine law, Tax law and Bookkeeping

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