Germany

Applicable requirements as to the form of arbitral awards


Applicable legislation as to the form of awards

1     Must an award take any particular form?

German law establishes form requirements for arbitral awards. Under Section 1054(1) of the German Code of Civil Procedure (ZPO), an award must be in writing and signed by the arbitrators. If there is more than one arbitrator, the award need only be signed by the majority. Furthermore, the award shall specify the date and the seat of the arbitration (ZPO, Section 1054(3)) and contain a statement of reasons, unless the parties have agreed otherwise (ZPO, Section 1054(2)). Finally, a signed version of the award shall be transmitted to each party (ZPO, Section 1054(4)). A formal transmission (e.g., service) is not required.

Applicable procedural law for recourse against an award


Applicable legislation governing recourse against an award

2     Are there provisions governing modification, clarification or correction of an award? Are there provisions governing retractation or revision of an award? Under what circumstances may an award be retracted or revised (for fraud or other reasons)?

Section 1058 of the ZPO governs the modification, clarification and correction of an award. In the absence of an agreement to the contrary, each party may request the correction, interpretation or supplementation of an award within one month of receiving it. The tribunal has one month to correct or interpret the award and two months to supplement it. The correction, interpretation and supplementation of an award is subject to the formal requirements under Section 1054 of the ZPO.

German law does not provide for the retractation or revision of awards by arbitral tribunals.


Appeals from an award

3     May an award be appealed to or set aside by the courts? What are the differences between appeals and applications to set aside awards?

German arbitration law does not provide for an appeal mechanism. Although an award is final, the parties are free to agree on an appellate mechanism, which the German courts would then respect.

However, an award rendered in a German-seated arbitration can be challenged and potentially set aside (ZPO, Section 1059) (see also German Federal Court of Justice (BGH), SchiedsVZ 2017, 103, 106). The setting-aside proceeding is not considered an appeal against an award, as the court will not re-evaluate the merits of the case.

Applicable procedural law for setting aside of arbitral awards


Time limit

4     Is there a time limit for applying for the setting aside of an arbitral award?

An application to set aside an award must be filed with the court within three months of the award being received (ZPO, Section 1059(3)). If a party has requested correction, interpretation or supplementation of the award, the time limit is extended by one month from receiving the decision on that request.


Award

5     What kind of arbitral decision can be set aside in your jurisdiction? Can courts set aside partial or interim awards?

Only awards that finally settle the whole or a separable part of the arbitral proceeding can be challenged before the German courts (Higher Regional Court (OLG) Frankfurt, SchiedsVZ 2007, 278, 279). This includes binding decisions that resolve the complete matter in dispute (i.e., final awards) or that comprehensively deal with an independent or separable part of the main dispute (i.e., partial awards).

German courts cannot set aside awards that decide on specific issues of a claim and only bind the tribunal, which fall into the category of interim awards. This includes awards on the admissibility of the claim, preliminary substantive issues, or the basis of a claim where the arbitral tribunal still has to decide on the amount due. Furthermore, a request to set aside a decision on counterclaims is not admissible when the counterclaim is not a separable part of the dispute (OLG Frankfurt, SchiedsVZ 2007, 278, 279).

Interim measures ordered in the form of an award, also referred to as interim awards, cannot be challenged before the courts (ZPO, Section 1065(1)). However, enforcing these interim awards requires an order of execution by the respective higher regional court, which may be set aside at the request of a party (ZPO, Section 1062(1)(No. 3)).

A decision by the arbitral tribunal affirming its jurisdiction does not fall in any of the descriptions above. It can be challenged before German courts within one month of notification of the decision to the respective party (ZPO, Section 1040(3)).


Competent court

6     Which court has jurisdiction over an application for the setting aside of an arbitral award?

Higher regional courts have jurisdiction over applications to set aside an arbitral award (ZPO, Section 1062(1)(No. 4)). Jurisdiction lies with the higher regional court designated in the arbitration agreement or, absent any such designation, with the higher regional court in whose district the seat of arbitration is located (ZPO, Section 1062(1)).


Form of application and required documentation

7     What documentation is required when applying for the setting aside of an arbitral award?

The formal requirements for filing an application to set aside an arbitral award are minor. The German courts generally accept any challenge of the award addressed to the competent court as an application to set aside the award (OLG Hamburg, Order dated 12 December 2019 – 6 Sch 12/18). The application must state the grounds for setting aside the award and be directed against the opposing party.

The party seeking to set aside an award must submit the original award, or a certified copy of the award, with its application.


Translation of required documentation

8     If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with the application for the setting aside of an arbitral award? If yes, in what form must the translation be?

An application for setting aside an arbitral award must be in German and should be accompanied by a translation of the award if it is in a language other than German. The court may request a certified translation of the award by a certified translator (ZPO, Section 142).


Other practical requirements

9     What are the other practical requirements relating to the setting aside of an arbitral award? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

The party seeking to set aside an award may submit its application to the court without representation by an attorney. Following the mandatory order of an oral hearing by the court, each party has to be represented by an attorney admitted to the German Bar (ZPO, Sections 78(3), 1063(2), 1063(4)).

Moreover, the applicant is required to make an advance payment for the costs of the court based on the amount in dispute (Courts Costs Act (GKG), Section 10 et seq.).

There is no limitation to the length of submissions and documents filed by the parties. An application for setting aside an award must be in German.


Form of the setting-aside proceedings

10     What are the different steps of the proceedings?

The court orders an oral hearing (ZPO, Section 1063(2)) and may decide on the number of rounds of written submission before the hearing. The burden of proof is borne by the party applying to set aside the award. Although the arbitral tribunal’s factual findings are not binding, no new procedural material may be introduced, and the assessment of evidence is excluded.


Suspensive effect

11     Do setting-aside proceedings have suspensive effect? May an arbitral award be recognised or enforced pending the setting-aside proceedings in your jurisdiction?

Setting-aside proceedings do not have suspensive effect. However, the German courts may suspend recognition and enforcement proceedings pending the setting-aside decision (ZPO, Section 148). In exercising its discretion, the court must weigh the prospects of success of the setting-aside proceedings against the delay in the recognition and enforcement proceedings resulting from the suspension (BGH, NJW-RR 1992, 1149).


Grounds for setting aside an arbitral award

12     What are the grounds on which an arbitral award may be set aside?

The grounds for setting aside an award are exclusively enumerated in Section 1059(2) of the ZPO and match those set out in the New York Convention:

  • invalidity of the arbitration agreement;
  • violations of the right to be heard and to fairly present one’s case;
  • the tribunal exceeding its jurisdiction;
  • incorrect constitution of the tribunal;
  • incorrect conduct of arbitral proceedings;
  • a violation of public policy; and
  • non-arbitrability of the dispute.

German courts generally construe the public policy exception narrowly (BGH, SchiedsVZ 2018, 53, 59), and will only set aside an arbitral award on public policy grounds if the award runs counter to fundamental, value-based decisions of the German legislature or EU law.


Decision on the setting-aside application

13     What is the effect of the decision on the setting-aside application in your jurisdiction? What challenges are available?

The state court can set aside an arbitral award in whole or partially but cannot modify it. The decision has retroactive effect and results in the revival of the arbitration agreement. If an award is set aside, the court has discretion to remand the dispute back to the arbitral tribunal in appropriate cases (ZPO, Section 1059(4)), such as in the case of a rectifiable procedural error.

If the court rejects the application, the grounds for setting aside the award examined by the court cannot be reasserted in recognition and enforcement proceedings (ZPO, Section 1060(2)).

The decision may be appealed before the German Federal Court of Justice, which will accept the appeal only if the dispute is of fundamental importance, or if the development of the law or the consistency of jurisprudence requires a decision of the highest German court (ZPO, Sections 574(2), 1065(1)).


Effects of decisions rendered in other jurisdictions

14     Will courts take into consideration decisions rendered in the same matter in other jurisdictions or give effect to them?

German courts will generally decide on an application for setting aside an award irrespective of decisions rendered on the same matter in other jurisdictions. However, German courts are free to consider decisions on recognition and enforcement of the award in other jurisdictions in its analysis.

Applicable procedural law for recognition and enforcement of arbitral awards


Applicable legislation for recognition and enforcement

15     What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction? Is your jurisdiction party to treaties facilitating recognition and enforcement of arbitral awards?

Arbitration proceedings in Germany are governed by the 10th book (Section 1025 et seq.) of the ZPO. Recognition and enforcement of arbitral awards are dealt with in Chapters 8 and 9 of the 10th book.

German arbitration law provides for different regimes regarding the recognition and enforcement of domestic (ZPO, Section 1060) and foreign awards (ZPO, Section 1061).

Germany is party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) as of 30 June 1961, the 1961 European Convention on International Commercial Arbitration (the Geneva Convention) as of 27 October 1964 and the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) as of 18 April 1969.


The New York Convention

16     Is the state a party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under Article I(3) of the Convention?

Germany signed the New York Convention in 1958 – subject to the reservation made under Article I(3) regarding reciprocity – and ratified it on 30 June 1961. The Convention entered into force in Germany on 28 September 1961.

In 1998, Germany withdrew its reciprocity reservation. Thus, German courts will also enforce awards made in a state that is not a party to the New York Convention.

Recognition proceedings


Time limit

17     Is there a time limit for applying for the recognition and enforcement of an arbitral award?

There is no time limit to apply for recognition and enforcement of an arbitral award.


Competent court

18     Which court has jurisdiction over an application for recognition and enforcement of an arbitral award?

The higher regional courts have jurisdiction over applications for the recognition and enforcement of arbitral awards.

For domestic awards, the jurisdiction lies with the higher regional court designated in the arbitration agreement or, failing any such designation, with the higher regional court in whose district the seat of arbitration is located (ZPO, Section 1062(1)).

For foreign awards, if there is no specific agreement between the parties, jurisdiction lies with the higher regional court in whose district the opposing party has its place of business or place of habitual residence, or where assets of that party or the property in dispute, or affected by the measures, are located. In the absence of any of the foregoing, the Higher Regional Court of Berlin (KG Berlin) will have jurisdiction (ZPO, Section 1062(2)).


Jurisdictional and admissibility issues

19     What are the requirements for the court to have jurisdiction over an application for recognition and enforcement and for the application to be admissible? Must the applicant identify assets within the jurisdiction of the court that will be the subject of enforcement for the purpose of recognition proceedings?

There are no additional requirements for a higher regional court to have jurisdiction over an application for the recognition and enforcement of arbitral awards.

If jurisdiction is based on assets located in the district of the respective higher regional court, the applicant bears the burden of proving that the assets are in fact situated within that district. Mere speculations (e.g., based on the fact that the respondent had prior business dealings with a bank located in that jurisdiction) may not suffice (OLG Frankfurt, decision dated 23 May 2011 – 26 Sch 6/11). Moreover, it is not sufficient that the assets may have temporarily been located in that district (e.g., moving objects such as aeroplanes (OLG Munich, IPRspr 2011, 811, 812)).

For the purpose of jurisdiction, however, it is irrelevant whether the assets are sufficient to satisfy the award in full (OLG Cologne, BeckRS 2011, 19891; OLG Munich, BeckRS 2016, 09823) or whether enforcement against assets will eventually be possible (KG Berlin, SchiedsVZ 2007, 108, 111).

Moreover, only awards that are binding on the parties may be recognised and enforced. An application for recognition and enforcement of a foreign court decision, or of a settlement reached in arbitration proceedings that has not been converted into an award, is inadmissible.


Form of the recognition proceedings

20     Are the recognition proceedings in your jurisdiction adversarial or ex parte? What are the different steps of the proceedings?

Recognition and enforcement proceedings are adversarial (ZPO, Section 1063(1)(2)). The recognition and the declaration of enforceability cannot be granted ex parte.

The court may order an oral hearing at its discretion. An oral hearing is mandatory if grounds for setting aside the award exist (ZPO, Section 1063(2)).


Form of application and required documentation

21     What documentation is required to obtain recognition?

The party seeking recognition and enforcement of an award must submit the original award or a certified copy of the award with its application (ZPO, Section 1064(1)). A certified copy of a foreign award also needs to certify the authenticity of the arbitrator’s signature (OLG Munich, BeckRS 2016, 09823).

In contrast to Article IV of the New York Convention, German law does not require a party seeking enforcement to submit the original or a certified copy of the arbitration agreement. This more favourable national regulation also applies to foreign awards in light of the principle of most favourable treatment contained in Article VII of the New York Convention (BGH, SchiedsVZ 2003, 281, 282; OLG Frankfurt, BeckRS 2019, 16020).


Translation of required documentation

22     If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition? If yes, in what form must the translation be?

Under the New York Convention, an application for the recognition and enforcement of a foreign arbitral award must be accompanied by a certified translation of the award made by an official or certified translator or by a diplomatic or consular agent. However, although German courts may make such a request (ZPO, Section 142), in light of the principle of most favourable treatment, they generally apply the more generous practice pursuant to which awards and arbitral clauses need not necessarily be accompanied by a certified translation (BGH, SchiedsVZ 2003, 281, 282).


Other practical requirements

23     What are the other practical requirements relating to recognition and enforcement? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

The party seeking recognition and enforcement of an award may submit its application to the court without being represented by a member of the German bar. The parties only require such representation if an oral hearing is to be conducted (ZPO, Section 78(3)).

Moreover, the applicant is required to make an advance payment for the costs of the court based on the amount in dispute (GKG, Section 10 et seq.).

There is no limit on the length of submissions and documents filed by the parties.


Recognition of interim or partial awards

24     Do courts recognise and enforce partial or interim awards?

An award may be recognised and enforced only to the extent that it contains a final and binding decision. If a binding decision resolves the complete matter in dispute, it is referred to as a final award; if it deals merely with an independent or separable part of the main dispute, it is referred to as a partial award. Both final and partial awards can be recognised and enforced (OLG Munich, BeckRS 2016, 06078).

Awards that decide on specific issues of a claim and only bind the tribunal are commonly referred to as interim awards. They will generally not be recognised and enforced (OLG Celle, BeckRS 2016, 124988).

Interim measures ordered in the form of an award are also often referred to as interim awards. These types of interim awards have a binding character and may thus be recognised and declared enforceable by German courts (ZPO, Section 1041(2)).

Finally, decisions on jurisdiction do not fall in any of the descriptions above. Although they may be challenged before German courts within one month of being rendered (ZPO, Section 1040(3)), they are not directly enforceable. However, any decision on costs issued in a decision on jurisdiction may be enforceable (OLG Munich, BeckRS 2017, 100672).


Grounds for refusing recognition of an arbitral award

25     What are the grounds on which an arbitral award may be refused recognition? Are the grounds applied by the courts different from those provided under Article V of the New York Convention?

Germany is a UNCITRAL Model Law state. Accordingly, under Sections 1059(2) and 1060 of the ZPO, the grounds for refusing recognition of domestic awards comprise:

  • the invalidity of the arbitration agreement;
  • violations of the right to be heard and to fairly present one’s case;
  • the tribunal exceeding its jurisdiction;
  • incorrect constitution of the tribunal;
  • incorrectly conducted arbitral proceedings;
  • a violation of public policy; and
  • non-arbitrability of the dispute.

For foreign awards, the grounds for refusing recognition contained in Article V of the New York Convention apply directly (ZPO, Section 1061(1); BGH, SchiedsVZ 2017, 200).

The party opposing recognition of an award bears the burden of proof regarding the existence of a ground for refusing recognition (OLG Brandenburg, SchiedsVZ 2016, 43). German courts have also found that any aspect that could have, but negligently has not, been raised during recognition proceedings is precluded from being invoked during subsequent enforcement proceedings (Frankfurt Regional Court, SchiedsVZ 2017, 206).


Effect of a decision recognising an arbitral award

26     What is the effect of a decision recognising an arbitral award in your jurisdiction?

German arbitration law distinguishes between recognition and enforcement. The main effect of the recognition of an award is the binding decision on the question of res judicata. The recognition of the award is a prerequisite for enforcement, but it does not render the award immediately enforceable. Unlike foreign awards, domestic awards do not require a decision on recognition and automatically have the effect of a German court decision (ZPO, Section 1055). Awards require a declaration of enforceability by the higher regional court. The declaration of enforceability serves as the necessary title for undertaking execution proceedings under German civil procedure (ZPO, Section 794(1) (No. 4a)). In practice, recognition and enforcement of foreign awards will usually be applied for and decided simultaneously.

Under Section 1065(1) of the ZPO, the parties are entitled to appeal the decision on recognition and enforcement before the German Federal Court of Justice (German Courts Constitution Act, Section 133). The appeal does not have suspensive effect. A temporary suspension of enforcement is possible upon application by the respondent (ZPO, Sections 707, 1065(2)). Third parties have no standing to challenge the decision to recognise an award.


Decisions refusing to recognise an arbitral award

27     What challenges are available against a decision refusing recognition in your jurisdiction?

The higher regional court’s decision refusing to recognise and enforce an award can be appealed before the German Federal Court of Justice (ZPO, Section 1065(1)).


Recognition or enforcement proceedings pending annulment proceedings

28     What are the effects of annulment proceedings at the seat of the arbitration on recognition or enforcement proceedings in your jurisdiction?

If annulment proceedings are pending at the seat of arbitration, a German court may adjourn the recognition and enforcement proceedings (New York Convention, Article VI).

German courts have held that the party seeking adjournment in recognition and enforcement proceedings has to demonstrate the prospects of success of the annulment action (BGH, SchiedsVZ 2018, 53, 59; BGH, SchiedsVZ 2019, 353, 353). Moreover, in such instances, German courts will generally require the setting-aside proceedings to have been formally commenced and to still be pending.


Security

29     If the courts adjourn the recognition or enforcement proceedings pending annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security?

Commentators are divided as to whether Article VI of the New York Convention provides a basis for the German courts to order security. The prevailing opinion is that the courts have discretion to order security whenever they deem it necessary to preserve the applicant’s chances of successfully executing the award. However, there is no published case law available on this matter.

When ordering security in any civil proceeding, which should include proceedings for the recognition and enforcement of foreign arbitral awards, the courts generally require it to be approximately 110 per cent of the total amount claimed. The security can be – and often is – posted in the form of a bank guarantee (ZPO, Section 108).


Recognition or enforcement of an award set aside at the seat

30     Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an arbitral award is set aside after the decision recognising the award has been issued, what challenges are available?

German courts will generally deny the enforcement of a foreign arbitral award set aside at the seat of arbitration (BGH, NJW 2001, 1730, 1731; OLG Munich, SchiedsVZ 2012, 339, 341). It cannot be ruled out, however, that a German court assuming exceptional circumstances may use its discretion to proceed with the recognition and enforcement notwithstanding the annulment of the award by the court of the seat of arbitration.

A decision on recognition and enforcement of an arbitral award that has been subsequently set aside at the seat of arbitration may be annulled by the competent higher regional court (ZPO, Sections 1061(3), 1062(1)(No. 4) and 1062(2)).

Service


Service in your jurisdiction

31     What is the procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction? If the extrajudicial and judicial documents are drafted in a language other than the official language of your jurisdiction, is it necessary to serve these documents with a translation?

German civil procedure distinguishes between service of proceedings ex officio (ZPO, Sections 166 to 190) and service between the parties (ZPO, Sections 191 to 195). In the case of service of proceedings ex officio, the service may be conducted by clerks of the court, the postal service, an employee of the judiciary or a bailiff. If service between the parties is admissible or required, the parties may instruct a bailiff or rely on service between the parties’ attorneys.

Documents can be served only to a natural person, not a legal person. For legal persons, such as companies, it is sufficient to serve either the company’s legal representative or the entity’s director (ZPO, Section 170). If legal proceedings are pending, service is to be made to the attorney on record (ZPO, Section 172).

Service may be established by a certificate recording the service, service against a receipt, in person at the offices of the court, or a registered letter with acknowledgment of receipt. Service between attorneys is established by means of service against a receipt.

If none of the aforementioned means of service are available, the document may be served by publication on the court’s bulletin board and is deemed served one month after publication (ZPO, Section 188).

Extrajudicial and judicial documents drafted in a foreign language need to be served with a German translation.


Service out of your jurisdiction

32     What is the procedure for service of extrajudicial and judicial documents to a defendant outside your jurisdiction? Is it necessary to serve these documents with a translation in the language of this jurisdiction?

The procedure for service of documents outside the German jurisdiction is governed by international instruments (such as the Hague Service Convention of 15 November 1965 or Regulation (EC) No. 1393/2007), statutory provisions in the ZPO (Section 183 et seq.) and an administrative regulation regarding mutual assistance in civil matters (ZRHO).

If an international instrument provides for service by post, service shall be made by a registered letter with acknowledgment of receipt. In all other cases, service shall be made upon request by the presiding German judge directly through the public authorities of the other state (ZPO, Section 183(2)). The specific procedure for the transmission of documents through the transmitting agencies in Germany to the receiving agencies abroad is regulated in the ZRHO.

If there is no international instrument applicable, or the competent bodies of the foreign state refuse to provide legal assistance, then service may be made by the responsible German diplomatic or consular mission in the relevant country, or by any other competent German public authority (ZPO, Section 183(3)).

If the documents cannot be served abroad, the option of service by publication exists (ZPO, Section 185 (No. 3)).

German procedural law does not require a German translation of extrajudicial and judicial documents for service to a defendant outside Germany. However, acceptance of service within the European Union may be refused if the document is not written in, or accompanied by a translation into, either a language the recipient understands or the official language of the place of service (Regulation (EC) No. 1393/2007, Articles 6, 8). In contrast, service pursuant to the Hague Service Convention requires a translation of the document into the official language of the place of service.

Identification of assets


Asset databases

33     Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction?

There are several databases and registers available for identifying an award debtor’s assets. This information may be found in the commercial register, the land register, the ship register, the aircraft register and the register for intellectual property.

Moreover, schedules of assets prepared by bailiffs in enforcement proceedings are electronically stored for two years at www.vollstreckungsportal.de, to which bailiffs and other public enforcement institutions have access whenever they hold an enforcement title against a debtor. Private parties must request access through the competent bailiff (ZPO, Sections 802f(6), 802d(1)). The schedule of assets will be available in the event that a debtor has previously been ordered by a court to give full disclosure of its assets.


Information available through judicial proceedings

34     Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?

Bailiffs charged with an enforcement may require an award debtor to make full disclosure of its assets and its financial situation (ZPO, Sections 802a(2) (No. 2), 802c, 802e, 802f, 807(1)), including information with respect to immovable, movable and intangible property (ZPO, Section 802c(2)).

Additionally, bailiffs may obtain information from public entities, such as the public pension funds, the Federal Central Tax Office, or the Federal Motor Transport Authority, which has information regarding the ownership of cars registered in Germany (ZPO, Section 802l).

Enforcement proceedings


Attachable property

35     What kinds of assets can be attached within your jurisdiction?

Movable assets, including tangible and intangible property, are subject to attachment (ZPO, Sections 803(1), 829 et seq.). Enforcement concerning immovable assets is effected by registering an equitable mortgage for the claim, a compulsory sale in a public auction or by compulsory administration (ZPO, Section 866(1)).


Availability of interim measures

36     Are interim measures against assets available in your jurisdiction?

Pre-award interim measures by German courts are generally available pursuant to Section 916 et seq. of the ZPO, which provide for seizure and preliminary injunction. Although seizure serves to secure a potential monetary award (ZPO, Section 916), a preliminary injunction is available to provisionally protect other rights or to regulate legal relationships (ZPO, Sections 935 and 940).

Moreover, pre-award interim measures granted by an arbitral tribunal may be declared enforceable by German courts (ZPO, Section 1041), if the arbitral tribunal’s decision is plausible, free of obvious errors and not unreasonable in light of the purpose pursued by the applicant (BayObLG, SchiedsVZ 2020, 315 to 317).

For arbitral award creditors, German arbitration law establishes a special regime to obtain interim measures. Pursuant to Section 1063(3) of the ZPO, an award creditor may request preliminary enforceability of the arbitral award, which then forms the legal basis for interim enforcement measures. However, these may only comprise protective measures (e.g., the freezing of bank accounts, the attachment of tangible assets or company shares). In principle, the proceedings pursuant to Section 1063(3) prevail over the proceedings pursuant to Section 916 et seq. of the ZPO (Braunschweig Regional Court, SchiedsVZ 2015, 292). German courts dealing with the enforceability of the arbitral award may also issue an order that enforces the tribunal’s interim measures of protection (ZPO, Section 1063(3)).


Procedure for interim measures

37     What is the procedure to apply interim measures against assets in your jurisdiction?

An arbitral award creditor may apply for interim measures against assets before the higher regional court that is dealing with the application for the declaration of enforceability of the arbitral award (ZPO, Section 1063(3)).

Section 1063(3) of the ZPO does not contain any explicit requirements for granting interim measures. The court has wide discretion and will generally consider the prospects of success of the proceedings for the declaration of enforceability, the impact on the award debtor and, most notably, the risks of the respondent taking steps to frustrate the enforcement of the award. Courts have granted such interim measures when the award debtor had intangible and movable assets in Germany that could easily have been transferred outside the country (OLG Frankfurt, SchiedsVZ 2010, 227, 228; OLG Frankfurt, BeckRS 2014, 124232).

To ensure the effectiveness of the protective interim measures, proceedings pursuant to Section 1063(3) of the ZPO may be conducted ex parte. The interests of the award debtor are protected mainly by being permitted to provide security to prevent the enforcement (ZPO, Section 1063(3)(3)). Security may be provided in the form of a bank guarantee.

The presiding judge’s decision is final and may not be challenged (BGH, decision dated 7 July 2016 – I ZB 90/15). However, the decision may be amended and revoked at any time, especially if the original circumstances have changed.


Interim measures against immovable property

38     What is the procedure for interim measures against immovable property within your jurisdiction?

In the case of protective interim measures against immovable property, the award creditor may request the land registry to register an equitable mortgage on the award debtor’s immovable property (ZPO, Section 867). The awarded amount must exceed €750 without interest (ZPO, Section 866(3)). The respondent must either be listed as the owner of the property (Land Registry Rules (GBO), Section 39) or be a legal successor (GBO, Section 40).


Interim measures against movable property

39     What is the procedure for interim measures against movable property within your jurisdiction?

Movable assets that are at risk of being transferred outside Germany may be attached through a temporary seizure pursuant to Section 808 of the ZPO. A temporary seizure is performed by a bailiff of the local court in whose district the movable assets are located (ZPO, Section 803).

The debtor will generally be allowed to remain in possession of the assets but cannot dispose of them. The bailiff has to inform the debtor of the seizure once performed (ZPO, Section 808(3)).


Interim measures against intangible property

40     What is the procedure for interim measures against intangible property within your jurisdiction?

Intangible property is secured by attachment pursuant to Section 829 et seq. of the ZPO. In this context, the intangible assets may not be transferred to the award creditor. An application has to be made to the local court where the award debtor has its residence or place of business, or where the intangible assets are located (ZPO, Sections 828(2), 12, 13, 17, 23). The most common protective measures are the attachment (i.e., freezing) of bank accounts (ZPO, Sections 829 and 833a) and claims to money (ZPO, Section 829). Shares in a limited liability company (ZPO, Section 857) and shares in other types of companies (ZPO, Section 859) can also be subject to attachment pursuant to Section 829 et seq. of the ZPO.

Patents, trademarks, designs and utility models may also be attached. Attachment can be registered at the registry for intellectual property.


Attachment proceedings

41     What is the procedure to attach assets in your jurisdiction?

First, the award creditor has to obtain a declaration of enforceability of the award from the competent higher regional court (ZPO, Sections 1060, 1061). These proceedings cannot be conducted ex parte. Once the award has been declared enforceable, the clerk of the court will issue the certificate of execution (ZPO, Sections 794(1) (No. 4a), 795, 724(1)), which is the legal basis for the attachment proceedings.

Second, the documentation has to be served on the respondent (ZPO, Section 750(1)).

The third step is initiating the execution procedure for attaching the specific type of asset.


Attachment against immovable property

42     What is the procedure for enforcement measures against immovable property within your jurisdiction?

Immovable property is attached by registration of a compulsory mortgage in the land registry (ZPO, Section 867). The awarded amount must exceed €750 without interest (ZPO, Section 866(3)). The respondent must either be listed as the owner of the property (GBO, Section 39) or be a legal successor (GBO, Section 40).

Execution is effected by either compulsory administration or compulsory sale in a public auction of the immovable property (ZPO, Section 866(1)). Both enforcement measures have to be requested at the enforcement court (i.e., the local court of the district where the immovable property is located (Foreclosure Law (ZVG), Section 1(1)). Compulsory administration is applied for if the immovable property generates profits that can be used to satisfy the award (ZVG, Sections 146 to 161). A compulsory sale generally takes a considerable amount of time and there are various options available to the award debtor to stop the procedure (ZVG, Sections 30, 30(a)-(d), 31, 85(a)).


Attachment against movable property

43     What is the procedure for enforcement measures against movable property within your jurisdiction?

Movable property can be attached by way of seizure (ZPO, Section 803). The application must be made to the local court at the location where attachment is sought. In principle, the applicant may instruct the bailiff to attach specific objects to the extent that the performance of the instruction does not (1) infringe legitimate interests of the respondent, (2) cause unnecessary costs, or (3) put undue pressure on the respondent. Certain objects are excluded from attachment (e.g., property used in connection with the respondent’s employment) (see ZPO, Sections 811, 812). Execution is then effected by compulsory sale in a public auction (ZPO, Section 814 et seq.).


Attachment against intangible property

44     What is the procedure for enforcement measures against intangible property within your jurisdiction?

Attachment and execution against intangible property is effected by ordering its attachment and transfer. Intangible property may comprise claims against third parties, such as claims to money or to the delivery of goods, or other rights (e.g., shares in a company). This order has the legal effect of assigning the claim of the award debtor against a third party to the award creditor (ZPO, Sections 829, 835, 857, 886). Patents, trademarks, designs and utility models may also be attached and transferred to the award creditor (ZPO, Section 857).

Generally, an application must be directed to the local court where the award debtor has its residence or place of business in Germany or where the intangible assets are located (ZPO, Sections 828(2), 12, 13, 17, 23). The third party does not need to be heard prior to the attachment (ZPO, Section 834). Certain claims are excluded from attachment; for example, income earned by the award debtor may only be attached to a certain extent (ZPO, Section 850 et seq.).


Attachments against bank accounts

45     Is it possible in your jurisdiction to attach bank accounts opened in a branch or subsidiary of a foreign bank located in your jurisdiction or abroad? Is it possible in your jurisdiction to attach the bank accounts opened in a branch or subsidiary of a domestic bank located abroad?

Bank accounts opened in a branch or subsidiary of a foreign bank located in Germany are attachable pursuant to the general rules (ZPO, Sections 829, 835). In contrast, German procedural law does not allow attachment of bank accounts located abroad.

Enforcement against foreign states


Applicable law

46     Are there any rules in your jurisdiction that specifically govern recognition and enforcement of arbitral awards against foreign states?

There are no domestic, codified rules that specifically govern recognition and enforcement of arbitral awards against foreign states. Thus, German courts will apply the general rules on recognition and enforcement and the general sovereign immunity principles.

Accordingly, foreign states are generally not subject to the jurisdiction of German courts in recognition proceedings, insofar as their sovereign and not merely commercial activities are concerned. However, a waiver of immunity by the foreign state in the arbitration agreement regarding sovereign activities continues to have effect in the recognition proceedings (BGH, NJW 2013, 3184).

Enforcement of an award is admissible against assets of a foreign state that are situated in Germany and have commercial use. State assets that fulfil a sovereign purpose are protected against an enforcement measure, unless the foreign state gives its consent to enforcement against that particular asset (Federal Constitutional Court (BVerfG), NJW 2012, 293, 295).


Availability of interim measures

47     May award creditors apply interim measures against assets owned by a sovereign state?

Interim measures may be granted against assets owned by a sovereign state. However, German courts will apply the sovereign immunity doctrine used in regular execution proceedings (BVerfG, NJW 1983, 2766, 2768). Thus, assets that serve a diplomatic purpose, for example, cannot be subject to interim measures (e.g., bank deposits for the expenses of a diplomatic mission) (BVerfG, NJW 1978, 485, 486, 487).


Service of documents to a foreign state

48     What is the procedure for service of extrajudicial and judicial documents to a foreign state? Is it necessary to serve extrajudicial and judicial documents with a translation in the language of the foreign state?

Service to a foreign state in its capacity as a defendant in a proceeding depends on whether the proceedings relate to acta jure gestionis or acta jure imperii. In the case of acta jure gestionis, the general procedure applies. It should be noted, however, that even when international agreements allow for service by other means, German authorities are likely to serve the foreign state by diplomatic means.

For acta jure imperii cases, international agreements may not apply (see, e.g., Court of Justice of the European Union, BeckEuRS 2015 432880) and service to a foreign state will be made through diplomatic or consular channels (ZPO, Section 183(3)). In practice, the German foreign mission will be commissioned with servicing the sovereign’s authority responsible for receiving extrajudicial and judicial documents. Service to the diplomatic mission of a foreign state in Germany is generally not permissible as the diplomatic mission will usually not have the authority to receive these types of documents.


Immunity from enforcement

49     Are assets belonging to a foreign state immune from enforcement in your jurisdiction? Are there exceptions to immunity?

With regard to the declaration of enforcement, German courts will have to determine whether the arbitration dealt with acta jure imperii or acta jure gestionis. By contrast, in execution proceedings, courts will have to distinguish between assets used for a sovereign purpose and assets used for a commercial purpose. This distinction is based on the doctrine of limited sovereign immunity. Accordingly, an award can be enforced against assets of a foreign state that are situated in Germany and have commercial use. State assets that fulfil a sovereign purpose, however, are protected against an enforcement measure, unless the foreign state gives its consent to enforcement against that particular asset (BVerfG, NJW 2012, 293, 295).


Waiver of immunity from enforcement

50     Is it possible for a foreign state to waive immunity from enforcement in your jurisdiction? What are the requirements of waiver?

Under German law, an agreement to arbitrate is generally understood as a waiver of immunity for the purposes of the arbitration proceedings and most likely also for the declaration of enforceability (BGH, SchiedsVZ 2013, 110, 112; BGH, SchiedsVZ 2018, 53, 54). However, a waiver of immunity resulting from an arbitration agreement will not extend to the execution proceedings (BGH, SchiedsVZ 2013, 110, 112; BGH, SchiedsVZ 2018, 53, 54). For execution proceedings, an explicit or implicit waiver is required. The latter requires the clear intent of the state to make available for enforcement those of its assets that are covered by immunity.


Piercing the corporate veil and alter ego

51     Is it possible for a creditor of an award rendered against a foreign state to attach the assets held by an alter ego of the foreign state within your jurisdiction?

Attachment of assets held by an alter ego of a foreign state in Germany is subject to the sovereign immunity doctrine applied by German courts. Accordingly, state-owned corporations that fulfil a sovereign purpose are covered by sovereign immunity, even if they are legally independent and have a separate legal personality (BGH, NJW 2010, 769). German courts will generally require comprehensive authority and control by the state to pierce the corporate veil. Bank accounts of state-owned enterprises, in contrast, do not enjoy immunity from enforcement. For example, attachment of bank deposits from a state-owned entity that shall be transferred to the foreign state’s central bank to cover its budget is admissible (BVerfG, NJW 1983, 2766, 2768).


Notes

[1] Boris Kasolowsky and Carsten Wendler are partners at Freshfields Bruckhaus Deringer.

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