Germany

First instance

In Germany, the Local Courts (Amtsgericht) have jurisdiction in the first instance if the amount in dispute is up to EUR 5,000, whereas the District Courts (Landgericht) have jurisdiction in matters with an amount in dispute exceeding EUR 5,000. It should be noted that a legislative process is currently underway to raise this threshold to EUR 10,000.

Second instance

In the second instance, the District Courts have jurisdiction for appeals on the merits (Berufung) against the decisions of the Local Courts, whereas the Higher Regional Courts (Oberlandesgericht) have jurisdiction for appeal on the merits (Berufung) against the decisions of the District Courts.

Third instance

The third and last formal instance is the Federal Court of Justice (Bundesgerichtshof) which is responsible for appeals on a point of law (Revision) against the second-instance decisions of the District Courts and the Higher Regional Courts. The Federal Court of Justice can also have jurisdiction in the case of first-instance decisions of the Local Courts and the District Courts in cases of so-called “leapfrog appeals” (Sprungrevision).

Commercial matters

Matters between merchants pertaining to their respective business can be brought before the so-called Chambers for Commercial Matters (Kammer für Handelssachen) where a professional judge sits alongside two lay judges. More recently, certain District Courts have established specialised Commercial Chambers specifically for commercial matters. Furthermore, so-called Commercial Courts have been newly established at certain Higher Regional Courts, which specialise in specific commercial law disputes (for example, post M&A disputes, insurance law, banking and finance law). These courts have jurisdiction in the first instance only if the parties agree and if the amount in dispute exceeds EUR 500,000. Decisions of the Commercial Courts may only be appealed to the Federal Court of Justice. While the language before German courts is generally German, proceedings before the Commercial Chambers and Commercial Courts may also be conducted in English.

The main procedural rules governing commercial litigation are regulated in the German Code of Civil Procedure (Zivilprozessordnung (ZPO)).

Furthermore, the following — unwritten — procedural principles play an important role in German civil procedure:

• Principle of party disposition (Dispositionsgrundsatz). The parties control the subject matter of the dispute. They decide whether, on what issues, and to what extent the court should adjudicate. The court cannot go beyond what the parties claim or grant relief that was not requested.
• Principle of party presentation (Beibringungsgrundsatz). The court generally bases its decision only on the facts and evidence presented by the parties. Each party must bring forward the facts and evidence supporting its case, the court does not collect evidence on its own initiative. The court does not investigate the truth ex officio. Only in limited exceptional cases may the court act on its own initiative.
• Principle of orality (Mündlichkeitsgrundsatz). The main proceedings are conducted orally in a public hearing; written submissions alone are generally not sufficient for a decision (with the exception that the parties can agree to proceedings based on written pleadings only).
• Principle of immediacy (Unmittelbarkeitsgrundsatz). The judges who decide the case should hear the parties, witnesses, and evidence directly themselves.
• Principle of publicity (Öffentlichkeitsgrundsatz). Court hearings are open to the public to ensure transparency and public control of the judiciary. Exceptions exist for certain sensitive matters, but the general rule is for open proceedings. This, however, only pertains to the oral hearing. Court files are generally not accessible to the public except in cases where there is a justified interest.
• Principle of the right to be heard (Anspruch auf rechtliches Gehör). Each party has the right to present its arguments and evidence as well as to respond to the opponent’s submissions before a judgment is rendered.
• Principle of procedural expedition (Beschleunigungsgrundsatz). Proceedings should be conducted efficiently and without unnecessary delay. This principle is intended to ensure both legal certainty and access to justice.

In Germany, there is no formal pre-action protocol. Nevertheless, it is considered best practice to send a pre-action demand letter and to request performance or payment one final time before commencing court proceedings. This is advisable for two primary reasons:

• To establish default (Verzug). To claim damages for delayed performance, a creditor generally must place the debtor in default. This is typically achieved by sending a written demand letter that clearly outlines the obligations and sets a reasonable deadline for compliance.
• To avoid adverse cost consequences. According to section 93 of the ZPO, if the claimant initiates proceedings without having sent a pre-action demand letter, and the defendant immediately and unreservedly acknowledges the claim in court, the claimant may be ordered to bear the costs. In other words, even if the claimant is substantively successful, failure to send a pre-action demand letter can effectively result in cost sanctions. The rationale is to discourage unnecessary litigation in cases where the defendant would have fulfilled the obligation upon simple request.

For large commercial disputes in Germany, arbitration is the primary alternative dispute resolution (ADR) method. Institutional arbitration is preferred over ad hoc arbitration, with the German Arbitration Institute (DIS) being the leading arbitral institution in Germany. Other relevant ADR methods include mediation, conciliation, adjudication, and expert determination — the latter being particularly prevalent in post-M&A disputes.

Mediation and conciliation are increasingly encouraged by German courts and business organisations, particularly where preservation of ongoing business relationships is important. While not as commonly used as arbitration, adjudication may play a role in resolving disputes in certain sectors, such as construction. Expert determination is used in cases where technical or accounting issues are to be determined, such as, for example, a purchase price adjustment based on financial data which is to be assessed.

Furthermore, ADR clauses are frequently included in commercial contracts to provide for multi-tier dispute resolution processes prior to recourse to court or arbitration.

In Germany, there is no formal distinction between pre-trial and trial proceedings. Court proceedings typically begin with an extended written phase, often lasting for a year or longer, during which the parties exchange multiple written pleadings. This is followed by an initial oral hearing, without the hearing of witness evidence. This first oral hearing is meant to clarify the issues and for the court to provide a preliminary legal assessment. Settlement discussions are encouraged by the court, and many cases are resolved without the need for a full evidentiary process. Evidentiary hearings will be scheduled only if the issues in question are based on contentious facts which require further fact finding through witnesses or experts.

No general duty of disclosure

German civil proceedings are not subject to a general duty of disclosure. Generally, there is no obligation to disclose all relevant documents, especially not those harmful to one’s case.

Each party bears the burden of proof for the facts supporting its claim or defence, and, according to the principle of party presentation, each party must bring forward the facts and evidence supporting their own case. This evidentiary approach means that thorough pre-litigation investigation and documentation are essential to build a strong case. In practice, parties commonly submit only the documents that support their claim or defence and may be cautious to avoid disclosing detrimental material.

Limited exceptions

There are limited exceptions to this general rule. Under certain circumstances, the court may order a party or even a third party to produce specific documents, but only if the requesting party can precisely identify the document and demonstrate its relevance to the dispute, as is stipulated for example in sections 142 and 421–430 of the ZPO. Fishing expeditions or broad document requests are generally not permitted.

Non-compliance with a court order to produce a specific document can result in the court considering the alleged content of the document as proven, or in rare cases, imposing administrative fines against a third party refusing production.

In German civil proceedings, witnesses can be required to attend trial if they are properly summoned by the court in accordance with section 377 of the ZPO. Should a witness fail to appear without a valid excuse, the court is authorised to impose a fine, order compulsory appearance through law enforcement authorities, and require the witness to bear any additional costs incurred pursuant to section 380 of the ZPO. Thereby, attendance can be legally enforced.

However, German court proceedings do not follow the common law practice of cross-examination. Court proceedings are judge-led, with the (presiding) judge generally responsible for the examination of the witnesses. The judge controls the scope, order, and manner of questioning, giving priority to relevance and efficiency in establishing the facts. While counsel or parties will be given permission to ask supplementary questions, there is no direct cross-examination. The primary purpose of witness examination in German civil proceedings is fact-finding by the court rather than adversarial testing by counsel. That being said, especially in complex commercial cases, there is a tendency that the counsel’s right to ask questions is increasingly extended, leading to longer and more detailed examination which may resemble cross-examination.

The general rule for cost orders in Germany is the “loser pays” principle, as set out in section 91 of the ZPO. According to this principle, the unsuccessful party must bear the costs of the court proceedings. These costs include court fees, statutory lawyers’ fees (which are regulated by the German Lawyers’ Remuneration Act (RVG), as well as the costs of witnesses, experts, and interpreters.

If both parties have had partial success and partial failure with their claims or defences, the court will apportion the costs proportionately, based on the extent of each party’s success or failure, in accordance with section 92 of the ZPO.

The amounts awarded in a cost decision are not discretionary but are fixed by statute. The court determines the amount in dispute (Streitwert), which is the basis for calculating the applicable fees. Court fees and statutory lawyers’ fees are lump-sum fees depending on the amount in dispute. While the determination of the amount in dispute is straightforward for monetary claims, the court has some discretion when assessing the value of non-monetary claims.

The main types of interim remedies available in Germany are the following:

• Preliminary injunctions pursuant to sections 935–940 of the ZPO. Preliminary injunctions are designed to prevent imminent harm or preserve the status quo pending a final judgment. They can order or prohibit (i.e. cease and desist) specific actions and are typically granted where the applicant demonstrates legal entitlement and urgency. A preliminary injunction may be granted ex parte, especially where prior notification would frustrate the effectiveness of the preliminary injunction. The applicant is generally required to provide prima facie evidence (Glaubhaftmachung) rather than formal proof. Preliminary injunctions are particularly significant in intellectual property, competition law, press law, employment disputes, and corporate matters.
• Arrest pursuant to sections 916–934 of the ZPO. To secure monetary claims, a party may apply for an arrest order, which allows the court to provisionally freeze a debtor’s assets, such as by freezing bank accounts, seizing movable property, or placing charges over real estate.
• Protective measures in evidence proceedings pursuant to section 485 et seq. of the ZPO. These investigative/protective measures are designed to preserve evidence at risk of being lost, altered, or unavailable. The court may order the taking of witness testimony, production of documents, or expert inspections before commencement or finalisation of the main proceedings.
• Interim measures in support of arbitration pursuant to section 1033 of the ZPO. Section 1033 of the ZPO provides that German state courts retain the power to order interim measures, unless the parties have expressly excluded this in their arbitration agreement. The remedies available from the court are generally the same as those in normal civil proceedings.

These measures can be granted very quickly, often within a few days, and may require the creditor to provide security to cover potential damages should the measure later be found unjustified. Interim measures are temporary and remain in effect only until the main proceedings are concluded.

German arbitration law is regulated in the tenth book of the ZPO (section 1025 et seq), which is based on the UNCITRAL Model Law and governs both domestic and international arbitrations seated in Germany. German courts generally adopt a pro-arbitration approach and may only intervene in arbitration where this is explicitly permitted by the provisions of this section of the ZPO.

Generally, an arbitration award resulting from an arbitration seated in Germany has the same effect as a final court judgment between the parties, as is expressly stipulated in section 1055 of the ZPO. However, an arbitration award still requires a declaration of enforceability in order to be enforced.

If a valid arbitration agreement exists between the parties and is asserted in the court proceedings, courts are required to decline jurisdiction over disputes covered by the arbitration agreement pursuant to section 1032, paragraph 1 of the ZPO. Nonetheless, courts retain the power to grant interim relief under section 1033 of the ZPO, unless the parties have expressly excluded this possibility. The purpose is to supplement, rather than contradict, the powers of the arbitral tribunal. Courts can, furthermore, assist arbitral tribunals in various procedural matters including assistance with the appointment of arbitrators or the taking of evidence.

German arbitration law provides a robust system for interim relief, enabling both arbitral tribunals and state courts to act in parallel:

• Pursuant to section 1041 of the ZPO, arbitral tribunals seated in Germany have the authority to order interim or protective measures, unless the parties have agreed otherwise. However, the measures of interim relief granted by the arbitral tribunal require a court order for enforcement.
• In addition, interim relief can also be applied for at the German state courts in accordance with section 1033 of the ZPO. The power of the arbitral tribunal to grant interim relief thus exists in parallel with that of the German state courts. In this context the role of the state courts is complementary rather than contradictory to that of the arbitral tribunal.

Some institutional arbitration rules provide for so called emergency arbitration, which allows for the appointment of an emergency arbitrator to grant interim relief prior to the constitution of the main arbitral tribunal. German arbitration law does not contain explicit statutory provisions regarding emergency arbitrators. However, parties remain free to agree on the use of emergency arbitration procedures provided for under institutional rules. In such situations, the emergency arbitrator’s power to grant interim relief would be recognised under the general principles of German arbitration law, provided the parties have not agreed otherwise.

Generally, an arbitral award rendered in Germany cannot be appealed on the merits; in other words: there is no substantive review (révision au fond) by the courts. Instead, awards may only be challenged before a Higher Regional Court on a limited number of procedural grounds.

German law distinguishes between domestic and foreign arbitral awards:

• Domestic awards (i.e. arbitral awards rendered in Germany) can be declared enforceable pursuant to section 1060 of the ZPO, which essentially treats arbitral awards in the same way as final and binding court judgments. Domestic awards may be challenged through an action for setting-aside under section 1059 of the ZPO.
• Foreign awards (i.e. awards rendered outside Germany) are generally recognised in Germany under the New York Convention of 1958, as stipulated in section 1061 of the ZPO. A German court might refuse recognition and enforcement only on the limited grounds specified in the Convention.

Both, section 1059 of the German Code as well as the New York Convention of 1958 provide similar limited procedural grounds that may justify the refusal of an arbitral award. These grounds include:

• lack of subjective arbitrability (one of the parties who concluded the arbitration agreement was incapable of doing so under the law applicable to them personally);
• invalidity or non-existence of an arbitration agreement;
• lack of proper notice of the proceedings or inability to present one’s case;
• the tribunal exceeding its authority (ultra vires), deciding issues beyond the scope of the arbitration agreement;
• improper constitution of the arbitral tribunal or procedural irregularities that materially affected the outcome;
• violations of public policy; and
• issues of non-arbitrability.

The last two grounds, public policy and non-arbitrability, are examined by the German courts ex officio. Generally, German courts interpret these grounds very restrictively, emphasising the finality and binding nature of arbitral awards.

Germany is party to a multitude of international conventions and agreements on enforcement of judgments and arbitral awards. Below is a selection of those that pertain to commercial disputes:

Enforcement of judgments

• Regulation (EU) No. 1215/2012 (Brussels I Recast) on recognition and enforcement of EU judgments in civil and commercial matters within the EU;
• Lugano Convention (2007) on recognition and enforcement in civil and commercial matters between EU and EFTA states (Switzerland, Norway, Iceland);
• Hague Convention on Choice of Court Agreements (2005) on enforcement of judgments from courts designated by exclusive choice-of-court agreements in international commercial contracts;
• Hague Judgments Convention (2019) on recognition and enforcement of foreign judgments in civil/commercial matters;
• Regulation (EC) No. 805/2004 (European Enforcement Order Regulation) on free circulation of court judgments on uncontested claims within the EU;
• Regulation (EU) 2015/848 (European Insolvency Regulation) on coordination of cross-border insolvency proceedings within the EU;
• Regulation (EC) No. 1896/2006 (European Order for Payment Regulation) on simplified EU-wide procedure to recover uncontested monetary claims in civil and commercial matters;
• Regulation (EU) No. 655/2014 (European Account Preservation Order Regulation) which enables creditors to secure funds held in bank accounts in another EU member state in cross-border debt recovery;
• Hague Convention on Civil Procedure (1954) on judicial assistance in civil and commercial matters; and
• bilateral treaties on recognition on enforcement of judgments.

Enforcement of arbitral awards

• European Convention on International Commercial Arbitration, Geneva 1961;
• New York Convention of 1958;
• ICSID Convention of 1965 (investment disputes, not private commercial);
• Geneva Convention on the Enforcement of Foreign Arbitral Awards, 1927;
• Geneva Protocol on Arbitration Clauses in Commercial Transactions, 1923; and
• bilateral treaties.

Under German law, enforcement is based on judgments or orders that either are or have become non-appealable and are, therefore, formally legally binding (formal res judicata) or have been declared provisionally enforceable. It should be noted that most first-instance judgments are only provisionally enforceable. This means enforcement may proceed before a judgment becomes final, often upon the provision of a security deposit. The debtor may avoid enforcement (or its effects) by providing counter-security or by applying to the court for protection against enforcement.

Examples of enforceable judgments or orders include:

• final judgments that conclude a stage/instance of proceedings by deciding the legal dispute; this includes partial judgments, default judgments, summary judgments, and judgments by acknowledgment;
• orders for payment (Vollstreckungsbescheid) issued in summary payment proceedings;
• cost assessment orders (Kostenfestsetzungsbeschluss), which determine a party’s liability for procedural costs;
• interim orders and injunctions (e.g. preliminary injunctions), which may be provisionally and immediately enforceable; and
• decisions recognising arbitral awards as enforceable, provided these are final or have themselves been declared provisionally enforceable.

However, only judgments or orders that have enforceable content under German law — specifically, those relating to performance — may be enforced. Purely declaratory judgments, for example, which merely establish the existence or non-existence of a legal relationship or right, cannot be enforced.

Judgments from EU Member States

The recognition and enforcement of judgments from EU Member States is governed by the Brussels Ia Regulation (EU Regulation No. 1215/2012). Judgments from EU Member States are generally recognised and enforceable in Germany. There is no special recognition procedure or need for a declaration of enforceability or an exequatur. Rather, a judgment that is enforceable in the Member State of origin is automatically enforceable in other Member States under the Brussels Ia Regulation as well.

Judgments from countries outside the EU

For judgments from countries outside the EU or the European Free Trade Association (EFTA), recognition and enforcement is governed by applicable bilateral or multilateral treaties, or, in their absence, by sections 328, 722 and 723 of the ZPO. Foreign judgments are generally recognised in Germany and may be declared enforceable provided there are no grounds for refusal, such as lack of jurisdiction, violation of the right to be heard in the initiation of proceedings, conflicting res judicata or lis pendens, violation of public policy (ordre public), or a lack of reciprocity of enforcement.

Arbitral awards

Regarding arbitral awards, German law differentiates between domestic and foreign arbitral awards, i.e. between awards rendered within Germany and those rendered abroad.

• To enforce a domestic arbitral award, the creditor must apply for a declaration of enforceability pursuant to section 1060 of the ZPO. Enforcement may only be refused on the limited grounds specified in section 1059 of the ZPO.
• The recognition and enforcement of foreign arbitral awards is governed by the New York Convention. Enforcement may only be refused on the limited grounds specified in the Convention; reciprocity is not required.

Once a foreign judgment or arbitral award is declared enforceable by a German court, it may be enforced using the same methods available for domestic judgments under German law.

For monetary claims, the creditor may initiate garnishment proceedings (Pfändung) against the debtor’s bank accounts, wages, or receivables from third parties. Movable property can be seized and auctioned off to satisfy the debt. If the debtor owns real estate in Germany, the creditor may apply for a compulsory mortgage (Zwangssicherungshypothek), forced administration (Zwangsverwaltung) or forced auction (Zwangsversteigerung) of the property.

For claims requiring actions or omissions by the debtor (non-monetary judgments), German law provides mechanisms for enforcement, including substitute performance or the imposition of coercive fines or detention, depending on the nature of the obligation.

Execution proceedings are initiated by submitting an application to the competent enforcement authority or, depending on the measure, the relevant court. In Germany, enforcement authorities include the court bailiff (Gerichtsvollzieher), who enforces against movable assets, performs on-site seizures, and delivers documents, as well as the Local Court.

Under German law, creditors can request interim measures to secure their rights pending enforcement. The main interim measures available are arrests and interim injunctions (einstweilige Verfügung). These measures are aimed at preserving assets or maintaining the status quo until a final decision can be enforced (see Question 9, above).

Proceeding on the assumptions outlined in the Model Answer, would a court in this jurisdiction recognise and enforce the arbitral award under the New York Convention?

In particular:

• Does the award fall within the scope of Article V(1) of the Convention, or would any of the grounds in Article V(1) justify refusal on the assumed facts?
• Is the subject matter of the dispute capable of settlement by arbitration under domestic law for the purposes of Article V(2)(a)?
• Would recognition or enforcement of the award be contrary to public policy within the meaning of Article V(2)(b)?

Response

If an agreement includes a clause stating that, following a final court judgment on the merits, any dispute regarding payment must be submitted exclusively to arbitration, and the arbitrator’s role is expressly limited to confirming the finality of the court judgment and the payable amounts (without reconsidering any substantive issues), the resulting arbitral award may be treated in Germany as follows:

• Provided that the parties’ arbitration agreement is valid, clearly applicable to the specific case, and that the arbitral procedure is fair, there are no compelling reasons under German law to deny party autonomy in this context.
• This applies particularly given that the arbitral award does not deal with the enforcement of the judgment and the ascertainment of all respective pre-requisites of declaring the judgment enforceable, but with — for this purpose — a new payment dispute with limited pre-requisites. Otherwise, if the arbitral award only served the purpose of an exequatur decision, this might lead to a prohibited double exequatur (i.e. declaring a decision about the enforceability of another decision enforceable). However, since the arbitrator’s role is limited to confirming the finality of the judgment (i.e. no appeals, and the payable amounts), but would not deal with substantive objections or annulment reasons, this should be sufficiently distinct from a double exequatur.
• From a German enforcement perspective, the fact that the underlying legal issues were previously decided by the state court does not in itself preclude enforcement of the arbitral award, since the arbitration clause relates only to the finality of the awarded payment, and not to the substantive merits of the dispute. The resulting award would likely be treated as relating to a separate contractual obligation that arises in the event of non-payment.

German courts would therefore likely recognise and enforce such an arbitral award. The arbitrator’s limited mandate to confirm solely the finality of the judgment and the payable amount, would not, in itself, constitute grounds for refusal of recognition or enforcement in Germany. The German enforcement courts would not review the merits of the case; their primary concern would be that due process and public policy requirements are satisfied. However, we consider this scenario to be rather uncommon in German practice.