This is an Insight article, written by a selected partner as part of GAR's co-published content. Read more on Insight

Frequency of M&A disputes

The frequency of M&A disputes in Germany is difficult to determine with any certainty.

Reviewing the number of transactions and disputes in which the author’s firm has participated over the past decade, and having cross-checked these findings with warranty and indemnity insurance brokers, an estimate would be that fewer than 10 per cent of all M&A transactions in Germany result in an M&A dispute (including mediation, contractual settlements or ad hoc settlements) that go beyond dealing with general post-closing issues.

Of all M&A transactions in Germany, 3 per cent or fewer result in arbitration[2] (or, more rarely, litigation).

Form of dispute resolution

The ratio of arbitration to litigation is fairly clear. In our experience, about 1 per cent or maybe 2 per cent of all M&A disputes end up in litigation at German courts. The rest that have not been settled beforehand go to arbitration.

This experience is backed up by the fact that German courts have rendered very few decisions on M&A disputes and most of them concern relatively small businesses and transactions, such as a beverage wholesaler,[3] a fitness studio,[4] a jewellery store[5] and an advertising agency.[6] Accordingly, concerns are regularly voiced that the number of court decisions in this area of law is too low to allow for the continuous development of case law specific to M&A disputes governed by German law.

Another way to determine the frequency of arbitration over litigation is to look at the ratio of M&A deals with and without arbitration clauses. Again, in our experience, the result would be at least 98 per cent in favour of arbitration. This assessment obviously very much depends on the kinds of M&A deals examined. However, when some sources report that only about a third of M&A deals in Germany have an arbitration clause and, hence, could potentially go to arbitration, this statement seems hard to believe. Such a low ratio in favour of arbitration would also be difficult to reconcile with the small number of decisions of German courts in this area of law.

Again, these findings seem to be supported by warranty and indemnity insurance brokers who almost never see a litigation clause in the M&A deals for which they arrange insurance coverage in Germany.

Grounds for M&A arbitrations

An educated guess regarding the relevant frequency of types of M&A arbitrations is that claims for breach of warranties and for indemnification are frequent, as are, to a lesser extent, purchase price adjustments and earn-out disputes.

Disputes in connection with material adverse change clauses are very rare because they are very rarely included in M&A contracts governed by German law.

Disputes arising from a failure to complete the transaction are also rare as this does not happen often.

Under German substantive law, in the specific case of arbitration, the categories of claims mentioned above, among others, are very frequently overlaid by claims for intentional misinformation, as explained in detail in the following section. Sometimes the sole type of claim in an M&A arbitration is intentional misinformation.

Fraud and failure to disclose

The threshold for liability because of intentional misinformation is comparably low and this liability cannot be contractually excluded. It is the main tool used in an attempt to overcome any and all contractual limitations of liability.

Culpa in contrahendo

Generally, M&A transactions under German law are subject to the German provisions on the sale of goods, applied by (statutory) analogy to M&A trans­actions.[7] In practice, the parties exclude the application of these rules and replace it with contractual provisions. However, the parties might not effectively exclude, or validly change, direct[8] liability for intentional misinformation.[9] This liability is commonly referred to as culpa in contrahendo.

However, parties may contractually exclude, or limit, liability for gross negligence.

Intention – a shot in the dark

The threshold for intention is lower than one might expect. Dolus eventualis is sufficient, and the intention generally only needs to cover the misinformation as such but not the consequences (damage) caused by that misinformation.

A common phrase that is used in court decisions is that the threshold might be already met if a statement was a shot in the dark.[10] It might be sufficient that the party deems it possible that a statement is not correct and the party makes the statement anyway.[11]

General duty to disclose relevant information

Under German law, a party to an M&A transaction has a general obligation to disclose information relevant to the other party. A party must disclose information about the target to the other party that might damage the other party’s intended purpose of the transaction and about which the other party might reasonably expect disclosure.[12] The Munich Court of Appeal held in December 2020 that this was the case with respect to information about the target company, which had generated only negative returns in the past and thus far had not been able to support itself. Accordingly, the Court found the seller liable for not voluntarily disclosing this information.[13]

Likewise, a seller could equally be held liable if it had provided information about current and expected turnover but obtains new information about turnover, and the buyer would have had a reasonable interest in that new information. The seller in this situation might be able to exclude its liability contractually if the parties agreed on a cut-off date for any such information, such as if the buyer knew it would not get new information after a specific agreed date.

General duty to state only correct information

The duty to state correct information is broader than the duty to disclose relevant information. Any information provided must be correct. Any information specifically requested must be accurate, or the request must be denied.[14]

A party breaches its obligation to make correct statements if the party intentionally (dolus eventualis) provides incorrect information to the other party, no matter whether the information is provided voluntarily, owing to a disclosure obligation, on one’s own initiative or on request. This also includes the duty to provide complete information.

Burden of proof


German law has a number of substantive law rules governing the burden of proof. Although one might question the reasonableness of these rules in arbitration where a tribunal has more discretion to come to a decision than a (German) state court has,[15] there are some significant rules as regards M&A claims, as described below.

General attribution

Under German statutory law, if a breach of duty is established, the burden of proof is shifted to the breaching party to demonstrate that liability for the breach should not be attributed to it.

However, this rule does not apply if the level of attribution is intention.[16] Thus, a buyer making a claim for culpa in contrahendo needs to prove that the seller committed the breach intentionally.

Causation and quantum of claims for culpa in contrahendo

Under the general rules of burden of proof, a seller making a claim for culpa in contrahendo would need to demonstrate a causal link between the breach and the damage, and the quantum of damages.

However, German case law provides for an assumption that, if a buyer had been informed correctly, then the buyer would have been successful in concluding the transaction at a lower purchase price, reflecting the influence of the misinformation on the overall purchase price. These reliance damages are calculated as the difference between the agreed and the lower purchase price. The buyer does not need to demonstrate that the seller would have agreed to the lower price.[17]


General procedural rules for taking of evidence

A tribunal with its seat of arbitration in Germany generally has discretion to determine the rules of procedure for its arbitration unless mandatory provisions, or provisions agreed between the parties, apply.[18] Obviously, the parties have to be treated equally and the parties’ right to be heard must be upheld. Other than for these fundamental principles, it is commonly accepted that a tribunal’s discretion is rather wide. German case law suggests that this discretion is, in any case, exercised properly if a tribunal, at the least, follows the rules laid down in the Code of Civil Procedure (ZPO) for state court proceedings.[19] As a result, tribunals might take guidance from the German procedural rules for state courts even though they are not, at least not fully, compatible with arbitration proceedings, and those rules, not surprisingly, are different from what is, or is evolving into, the inter­national standard for conducting commercial (and M&A) arbitrations.

As expressly stipulated in the same ZPO provision, a tribunal may – again at its discretion – determine whether evidence is admissible, whether it will be taken and what the result of the taking of evidence is.[20] This provision makes it clear that it is not the parties who decide what evidence is presented and taken, as in state court proceedings under common law, but the tribunal. However, the rule does not per se exclude the taking of evidence by way of, for example, pretrial discovery or extensive disclosure.


Most arbitral tribunals in Germany tend to take a cautious approach towards document disclosure. Much in line with the procedural principle that a party needs to rely on, and only on, documents in its possession, tribunals may grant limited document disclosure for a specific document that is relevant and material (also taking into account which party bears the burden of proof in relation to the facts to be established by the document).

Although extensive disclosure, as mentioned above, is not prohibited, it is most likely to be used only under special circumstances.

Estimating causation of damages and amount of damages

German procedural law has a provision that, once a breach of duty is established, a court might estimate the causation of damage, and quantum, resulting from the breach if the court is provided with sufficient facts to make causation and quantum probable.[21] The question whether this provision is procedural or substantive law is rather academic. As explained above, applying this provision is considered to be at the tribunal’s discretion, as confirmed by German case law.[22]

Knowledge sharing

A seller is liable for the actions and knowledge of its legal representatives. However, the liability for other individuals involved in the transaction may be contractually excluded, even if those persons act with intention.[23]

Generally, a seller is liable for actions of individuals who perform any of the seller’s obligations in the course of a transaction; for example, the duty to disclose relevant information. The group of individuals is determined case by case. The members of a seller’s transaction team as well as third-party consultants, such as legal counsel, tax counsel or M&A advisers, might fall into this category.[24]

Whether even actions of target representatives may be attributed to a seller mainly depends on the actual involvement of the target company in the overall transaction process. For example, the more a target representative is actively involved in negotiating and managing the transaction, the more likely that its actions would be attributed to the seller.

Any and all attribution of actions (of performance agents) can be contractually limited or excluded. Furthermore, the seller (or the individual) may make it clear to the buyer that actions of the individual shall not be relied on and, thus, prevent the attribution of actions of that individual to the company.[25] A unilateral statement of the seller would be sufficient to exclude reliance; the buyer does not need to accept it, or agree to it.

Similarly, the knowledge of an individual may be attributed to the seller if the individual can be deemed to be a representative of the seller in connection with the transaction.[26] Whether an individual qualifies as a ‘knowledge representative’ of the seller might, again, depend on the individual’s involvement in the overall transaction. Likewise, the attribution of knowledge can be contractually limited or excluded.


Unwinding – in theory yes, in practice less

In principle, a claim based on intention might result in the right to unwind the contract. However, the unwinding of an M&A transaction is, factually at least, difficult, if not impossible, and becomes even more difficult over time. As a result, unwinding is rarely requested.

Avoidance – but generally only one year after knowledge

As with liability under intentional culpa in contrahendo, the right of avoidance owing to intentional misinformation may not be limited contractually.

Avoidance has a strict time limit of one year after the party became aware of the intentional misinformation. Avoidance makes the M&A transaction invalid ex tunc and gives both parties claims for unjust enrichment to re-transfer anything exchanged under the contract.

Avoidance of M&A transactions is rare in practice,[27] even though claims for culpa in contrahendo are quite common in arbitration and both legal concepts have many of the same legal prerequisites. Culpa in contrahendo might generally be more attractive because of the longer time limits (a time-bar of three years at year end, or contractual time-bar provisions) and because its legal effect of award of damages is often more desirable (and easier to achieve) than a re-transfer of anything exchanged under the rules of unjust enrichment.


Damages are by far the most common form of remedy requested in M&A arbitrations (see ‘Measure of damages’, below).


If there are contractual indemnifications (generally against known risks), a party may request not only compensation for the damage already suffered but also to be held harmless and to be indemnified.

Measure of damages

Reliance damages

The common remedy for intentional culpa in contrahendo is the payment of reliance damages. The seller would have to put the buyer in the position the buyer would have been in if the buyer had not relied on the misinformation. Effectively, the buyer can claim a reduction of the purchase price[28] (see ‘Causation and quantum of claims for culpa in contrahendo’, above).

Expectation damages

In the case of contractual warranties, which under German law are treated as independent guarantees, the usual remedy – if not contractually altered – is the payment of expectation damages. The seller puts the buyer in the position the buyer would have been in if the guarantee had been observed.

Availability of tort claims

There are no laws or doctrines that prevent an injured party from recovering in tort as opposed to contract in cases where the same set of facts give rise to both contract and tort claims. However, in line with the principle of iura novit curia, the parties generally only present the tribunal with the facts of the case and the tribunal then decides on the arising legal questions. The parties therefore cannot necessarily limit the tribunal to considering a case only under the aspect of potential tort claims but rather the tribunal could decide that a party has a contractual claim for recovery and leave the question of whether it has a corresponding (additional) tort claim open, or vice versa.

Law applicable to tort claims

Commercial parties can choose that foreign law shall apply not only with respect to contractual claims but also to tort claims already within the respective trans­action documents.[29]

Special substantive issues

A few specific substantive law issues are addressed in the following sections.

Culpa in contrahendo

Culpa in contrahendo in the context of German law is discussed in detail, above.

M&A deals and restrictions on general terms and conditions

German law has a peculiar, and often criticised, feature: it applies the limits, and the review of, general terms and conditions, as enshrined in EU consumer directives, not only to contracts with consumers but also to contracts between businesses.[30]

Against this background, a discussion exists as to whether an M&A contract could be seen as general terms and conditions, as defined under German law, since the contract has not been negotiated between the parties but simply determined by one party. If that were the case, one could, for example, not validly exclude the liability for gross negligence and even for some lesser degrees of negligence. However, as far as typical M&A transactions are concerned, this discussion is purely academic. In practice, it seems perfectly clear, and arbitral tribunals agree, that an M&A transaction is not subject to the limits governing general terms and conditions under German law.[31]

Data protection in Germany and European Union

Germany has had relatively strict data protection rules for some time. For example, when carrying out fact-finding, email accounts may not necessarily be reviewed without the consent of employees.

The German data protection rules have been overridden to a large extent by the EU General Data Protection Regulation[32] since May 2018.

Special procedural issues

Depending on the definition and depth of review, there are any number of issues that might be considered special procedural issues when an arbitration has its seat in Germany. Some of these are described below.

Interim relief

An arbitration clause per se does not limit the possibility to request interim relief from German state courts for arbitration whether its seat is within or outside Germany.[33] However, German courts need to have international jurisdiction for interim relief, and such international jurisdiction can be contractually derogated.

It is widely assumed, but not uncontested, that the parties may not – not even by way of an express agreement that goes beyond a standard arbitration clause – exclude the right of the parties to request interim relief from German courts that have international jurisdiction.[34]

Request to court of appeal to confirm validity of an arbitration clause

Even when the seat of arbitration is outside Germany, or when another domestic law might exclude the arbitrability of certain claims, a party to an arbitration agreement may request that a German court (specifically the court of appeal that has international jurisdiction in Germany) examines and determines the validity of an arbitration agreement.[35]

Court assistance in taking of evidence and confirmation by oath

Again for an arbitration with its seat within or outside Germany, German courts may provide assistance to arbitral tribunals.[36] For example, the competent district court may be requested to have a witness confirm under oath statements made in an arbitral hearing when the tribunal has doubts about their correctness.

Expert determination

M&A transactions often make reference to the findings of an expert.[37] German law provides that the findings of an expert (in that sense) might be binding on a tribunal in a later arbitration and may be overruled by the tribunal only if the assessment is significantly incorrect.

The use of an expert might result in various legal issues; for example:

  • Did the parties mean an expert (Schiedsgutachter) or an arbitrator (Schiedsrichter)?
  • Does instructing an expert (without arbitration) suspend the time-bar?
  • If arbitration is commenced without the expert having been instructed, what happens in the arbitration?
  • In the course of arbitration, who might instruct an expert to determine the findings?

The issue presents too many questions for the author to answer in this chapter, but the reader should bear them in mind.

Review of awards by two instances

In contrast to some legal systems, the (limited) court review of awards rendered in Germany is not subject to one instance but, in principle, to two: the competent court of appeal and the Federal Court of Justice.


[1] Michael Rohls is a partner at Freshfields Bruckhaus Deringer LLP. The input of the author’s fellow German arbitration partners Boris Kasolowsky, Roman Mallmann, Martin Mekat, Patrick Schroeder and Carsten Wendler is much appreciated.

[2] The general rules for arbitration in Germany are stipulated in Book 10 (§ 1025 et seq.) of the Code of Civil Procedure (ZPO). Germany’s Federal Ministry of Justice and Consumer Protection has published an English convenience translation of the ZPO, available at (last accessed 24 October 2022).

[3] See Federal Court of Justice (BGH), 28 November 2001, VIII ZR 37/01, NJW 2002, 1042.

[4] See BGH, 6 February 2002, VIII ZR 185/00, BeckRS 2002, 03131.

[5] See BGH, 12 November 1969, I ZR 93/67, NJW 1970, 653.

[6] See BGH, 15 June 2005, VIII ZR 118/03, BeckRS 2005, 30358080.

[7] See German Civil Code (BGB), § 453.1.

[8] But the parties might validly exclude liability for intentional misinformation by third parties; see ‘Knowledge sharing’, below.

[9] Regarding claims for intentional culpa in contrahendo, see BGH, 27 March 2009, V ZR 30/08, NJW 2009, 2120, 2122. See also Siegfried Elsing, Günter Pickrahn, Karl Pörnbacher and Gerhard Wagner, M&A-Streitigkeiten vor DIS-Schiedsgerichten (1st Ed. 2022), Chapter B, para. 389 et seq.

[10] Literally ‘into the blue’ (ins Blaue hinein).

[11] See BGH, 14 June 2019, V ZR 73/18, NJOZ 2020, 440, 442 et seq.; BGH, 16 March 2012, V ZR 18/11, NJW-RR 2012, 1078–80.

[12] See BGH, 1 February 2013, V ZR 72/11, NJW 2013, 1807.

[13] See Munich Court of Appeal, judgment dated 3 December 2020 – 23 U 5742/19, BeckRS 2020, 41127.

[14] See BGH, 20 March 1967, VIII ZR 288/64, NJW, 1967, 1222.

[15] Rolf Trittmann, ‘The interplay between procedural and substantive law in international arbitration’, SchiedsVZ 2016, 7.

[16] BGH, 1 December 2008, XI ZR 411/06, NJW 2008, 2912, 2914.

[17] See BGH, 1 February 2013, V ZR 72/11, NJW 2013, 1807, 1808; BGH, 19 May 2006, V ZR 264/05, NJW 2006, 3139, 3141.

[18] See Code of Civil Procedure (ZPO), § 1042.4.1.

[19] See BGH, 17 January 2008, III ZB 11/07, SchiedsVZ 2008, 148 (with an English summary).

[20] See ZPO, § 1042.4.2.

[21] ibid., § 287.

[22] See BGH, 17 September 2019, VI ZR 396/18, NJW 2020, 236; BGH, 16 December 2015, I ZB 109/14, BeckRS 2016, 02020.

[23] See Elsing, et al., op. cit. note 9, Chapter B, para. 547 et seq.

[24] See Professor Dr Jörg Risse, Wissenszurechnung beim Unternehmenskauf, NZG 2020, 856.

[25] See BGH, 2 June 1995, V ZR 52/94, NJW 1995, 2550.

[26] See BGH, 2 February 1996, V ZR 239/94, BeckRS 1996, 02110.

[27] See, for example, BGH, 15 June 2005, VIII ZR 118/03, BeckRS 2005, 12786. See also Munich Court of Appeal, judgment dated 3 December 2020 – 23 U 5742/19, BeckRS 2020, 41127.

[28] See Elsing, et al., op. cit. note 9, Chapter C, para. 59 et seq.

[29] See Regulation (EC) No. 864/2007 on the law applicable to non-contractual obligations (Rome II Regulation), Article 14(1)(b).

[30] See BGB, § 305 et seq.

[31] See Elsing, et al., op. cit. note 9, Chapter C, para. 393 et seq. for a recent decision by an arbitral tribunal on the question.

[32] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation), applicable as of 25 May 2018.

[33] See ZPO, §§ 1033, 1025.2.

[34] See Reinhold Geimer in Zöller, Zivilprozessordnung: Kommentar (34th ed., Cologne 2022), § 1033 ZPO note 12, for the proposition that it is possible to opt out of interim relief from German state courts, also with references for the contrary proposition.

[35] See ZPO, § 1032.2 and the decision of Munich Higher Regional Court (OLG) dated 7 July 2014 in a matter in which the author represented the applicant for a decision on the validity of an arbitration clause, SchiedsVZ 2014, 262 (with English summary).

[36] See ZPO, § 1050.

[37] See BGB, § 317.

Unlock unlimited access to all Global Arbitration Review content