Commercial Arbitration: Germany

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Germany

Yes. Germany signed the New York Convention in 1958 – subject to the reservation made under article I(3) regarding reciprocity – and ratified it in 1961.

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

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Germany

Yes. Germany is party to the European Convention on International Commercial Arbitration 1961 (Geneva Convention) and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Germany

Arbitration proceedings in Germany are governed by the 10th book (section 1025 et seq) of the Zivilprozessordnung (ZPO), the German Code of Civil Procedure. It largely follows the UNCITRAL Model Law. However, unlike the UNCITRAL Model Law, German arbitration law does not distinguish between domestic and international arbitration proceedings.

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Germany

The leading German arbitration institution is the Deutsche Institution für Schiedsgerichtsbarkeit (DIS), the German Institution of Arbitration. The DIS administers national and international proceedings. The DIS also acts as appointing authority for ad hoc proceedings and provides general advice on the selection of potential arbitrators.

On 1 March 2018, the new 2018 DIS Arbitration Rules entered into effect, replacing the DIS Arbitration Rules of 1998. The new rules include provisions for improved procedural efficiency and increased transparency and integrity of the arbitration proceedings.

In addition, there are numerous smaller arbitration institutions in Germany that specialise in different sectors, such as the German Maritime Arbitration Association and the Chinese–European Arbitration Centre. Moreover, some regional chambers of commerce (Industrie- und Handelskammer) also function as arbitration institutions on a regional level.

5. Can foreign arbitral providers operate in your jurisdiction?

Germany

Yes. 

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Germany

There is no "specialist" arbitration court in Germany. However, judicial supervision of the arbitration process in Germany is delegated to the higher regional courts (Oberlandesgerichte or OLG). Within these higher regional courts, specific chambers are generally designated to deal with arbitration matters.

The German judiciary is very familiar with arbitration. German courts are considered to be very supportive of the law and practice of domestic and international arbitration.

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Germany

In line with the UNCITRAL Model Law, arbitration agreements must generally be in writing (section 1031(1) ZPO). However, an arbitration agreement can be accepted by implicit consent provided that such consent is in accordance with common usage (section 1031(2) ZPO). Yet, arbitration agreements with consumers require that stricter formalities be observed: such arbitration agreements must be signed by both parties separately from the main contract to which they relate (section 1031(5) ZPO).

Defects affecting the formal requirements may be cured by entering into arbitral proceedings without raising any objections concerning such defects (section 1031(6) ZPO).

In addition to formalities, German courts will also review whether an arbitration agreement is compliant with competition law. For example, in 2016, the German Court of Justice (BGH) considered whether a sports organisation’s requirement that athletes enter into an arbitration agreement abused the organisation’s dominant position. It found, however, that this was not the case and held that the arbitration agreement between the sports organisation and the athlete was valid (BGH SchiedsVZ 2016, 218; 2016, 268).  

Arbitration agreements can cover future disputes in connection with an already certain legal relationship (section 1029(1) ZPO) (see also BGH, SchiedsVZ 2017, 144; BGH BeckRS 2018, 31390, paragraph 11).

8. Are any types of dispute non-arbitrable? If so, which?

Germany

Generally, all disputes involving an economic interest may be submitted to arbitration (section 1030(1) ZPO). Some disputes are, however, excluded from arbitration, such as certain disputes concerning the existence of domestic residential lease agreements (section 1030(2) ZPO). Moreover, the arbitrability of certain types of disputes is restricted by other statutes (section 1030(3) ZPO). Thus, disputes that involve certain types of employment law, criminal law, family law and patent law are not arbitrable.

9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Germany

Under German law, a third party cannot be bound by an arbitration agreement without its consent (OLG Saarbrücken, SchiedsVZ 2019, 290). Third parties may only be held to an arbitration agreement on the basis of a contractual agreement or by operation of law, for instance, as a result of an assignment of rights or legal succession. An arbitration agreement may, however, apply to the benefit of a third party, if the underlying contract has been concluded in favour of or with protective effect in favour of that party (OLG Hamburg BeckRS 2019, 42871).

The rules providing for the joinder of parties in litigation do not apply to arbitral proceedings. With the consent of all parties, however, a third party may participate in an arbitration. Such consent may be given by agreeing to institutional arbitration rules that provide for the joinder (eg, articles 17 to 20 DIS Arbitration Rules).

10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Germany

German arbitration law does not contain any specific provisions on this issue. The consolidation of separate proceedings would therefore depend on the consent of the parties. Parties may provide for consolidation in the relevant arbitration agreements or agree to consolidate once the proceedings have commenced.

11. Is the "group of companies doctrine" recognised in your jurisdiction?

Germany

In principle, German law does not recognise the “group of companies doctrine”. The German Federal Court of Justice (BGH), however, has clarified that the mere application of the “group of companies doctrine” under the applicable foreign law does not per se amount to a violation of German public policy (BGH, SchiedsVZ 2014, 151).     

The concept of piercing the corporate veil is recognised under German law only under specific circumstances: typically, where it can be established that a party misused the limited liability of a corporate entity to avoid liability. We are not aware of any instance in which a party was bound to an arbitration agreement on the basis of “piercing the corporate veil”.

12. Are arbitration clauses considered separable from the main contract?

Germany

Yes. An arbitration clause that forms part of a contract shall be treated as an independent agreement (section 1040(1)(2) ZPO). Under certain limited circumstances, however, the underlying contract and the arbitration agreement might be tainted by the same defect (eg, forgery), and thereby both rendered invalid.

13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal's jurisdiction and competence?

Germany

Yes, the principle of competence-competence is recognised in Germany (section 1040(1)(1) ZPO). However, a competence-competence clause, which excludes subsequent judicial review of the tribunal’s decision on its jurisdiction, is impermissible (BGH, SchiedsVZ 2014, 303).

Any objection to the tribunal’s jurisdiction must be raised no later than with the submission of the statement of defence (section 1040(2)(1) ZPO). The tribunal must then render a decision on jurisdiction, which may be challenged before the courts (section 1040(3)(2) ZPO) (see also BGH, SchiedsVZ 2017, 197, 198).

A prior judicial determination of the admissibility of arbitration is available on the application of a party before the tribunal has been constituted (section 1032(2) ZPO). In the context of such an application, the competent higher regional court examines whether an arbitration agreement exists, is enforceable and covers the subject matter of the arbitration proceedings (BGH BeckRS 2019, 26414). The arbitral proceeding can, nevertheless, be initiated and continued pending such determination (section 1032(3) ZPO).  

14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Germany

Clearly worded arbitration clauses are obviously preferable. German courts, however, take an "arbitration-friendly" approach to ambiguously drafted arbitration clauses and try to give them effect (see, for example, BGH, NJOZ 2018, 1268). Nevertheless, arbitration agreements should be unambiguous with respect to the parties’ intention to opt out of court proceedings. Thus, a party’s agreement to “aim” at having recourse to arbitration is not a valid submission to arbitration (BGH, SchiedsVZ 2016, 42).

15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Germany

In Germany, DIS and ICC arbitration are very popular for international arbitration proceedings. According to DIS statistics, in 2020, half of the commenced DIS proceedings involved non-German parties and one-third of the DIS proceedings have English as the procedural language. According to ICC statistics, Germany was chosen as arbitral seat 16 times in 2020.  

We are not aware of any statistical data regarding ad hoc international arbitration proceedings. However, there appears to be a fair number of ad hoc arbitrations in Germany. Disputes among shareholders of medium-sized German companies and domestic joint venture disputes are, for example, typically resolved by way of ad hoc arbitration. In international cases, the parties will usually agree on the UNCITRAL Arbitration Rules.

16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Germany

German arbitration law does not provide for any specific requirements dealing with multi-party arbitrations. The main issue with regard to the drafting of a multi-party arbitration agreement is the nomination process for arbitrators (unless the applicable arbitration rules already address this issue, eg, articles 17 to 20 DIS Arbitration Rules). In principle, all parties should be in a position to have equal influence on the nomination of arbitrators (section 1034(2) ZPO).

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Germany

Unless agreed otherwise, the arbitral proceedings commence on the date the respondent receives the request for arbitration (section 1044 ZPO). In contrast to the statutory default position, institutional rules generally provide that the proceedings commence when the institution receives the request for arbitration (eg, article 6.1 DIS Arbitration Rules and article 4(2) of the 2017 ICC Arbitration Rules).    

There are no specific provisions on limitation periods for arbitration. The statute of limitations will depend on the applicable substantive law.

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Germany

The applicable law is determined by the parties’ choice (section 1051(1)(1) ZPO). If not stated otherwise, it is assumed under German law that the parties’ choice of law merely refers to the substantive law of the designated state, rather than to the conflict of laws rules of that state (section 1051(1)(2) ZPO).

Absent any agreement by the parties on the applicable law, the tribunal "shall apply the law of the state with which the subject matter of the proceedings is most closely connected" (section 1051(2) ZPO). Note that, in this regard, German arbitration law deviates from the wording of article 28(2) UNCITRAL Model Law, which provides that the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable.

19. Does the law of your jurisdiction place any limitations in respect of a party's choice of arbitrator?

Germany

Except for the minimum requirements of "impartiality and independence", German arbitration law, in line with the UNCITRAL Model Law, does not place any restrictions on a party’s choice of arbitrator (section 1036(2) ZPO). Admission to a bar or qualification as a lawyer is not required to be appointed as an arbitrator. The parties are, however, free to agree on certain minimum requirements (eg, qualification as a lawyer, specific language skills).

In addition, the German Judiciary Act (DRiG) prohibits German judges from being party-appointed arbitrators (section 40(1) DRiG).

20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Germany

Foreign arbitrators may be appointed without any restrictions. Non-EU nationals may be subject to standard immigration requirements.

21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Germany

Where parties fail to agree on the appointment of arbitrators, the ZPO provides for a default mechanism (section 1035(3) ZPO). In relation to both a sole arbitrator and a tribunal, a party may request the competent court to make the appointment, if the parties fail to appoint or the arbitrators fail to agree on a presiding arbitrator within one month (section 1035(3) ZPO).

A party can also apply to the competent court for the appointment of an arbitrator in the event the other party or a third party does not comply with the agreed appointment procedure (section 1035(4) ZPO). However, applications for a declaratory decision on the validity of existing arbitrator appointments and their compliance with the procedural rules are inadmissible under section 1035(4) ZPO (OLG Munich, SchiedsVZ 2019, 283).

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Germany

There are no specific rules on the immunity of arbitrators. Arbitrators may be liable for contractual breaches or tortious behaviour under the general German law provisions. Arbitrators are generally liable for breach of their arbitrator’s agreement, typically in the following circumstances: failure to disclose circumstances that could potentially give rise to a lack of impartiality and independence; unjustifiable delay; resignation without cause; or breach of confidentiality. Parties may agree to limit the liability of the arbitrator to intentional or grossly negligent conduct (see, eg, article 44.2 DIS Rules).

In any event, the arbitrators’ liability does not extend to the procedural or substantive correctness of their decisions, even if they act with gross negligence (BGH, BGHZ 15, 12).

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Germany

German arbitration law does not contain any provisions on securing arbitrator fees. It is, however, general practice in Germany for arbitral tribunals to request an advance payment upon commencement of the arbitral proceedings (and at later stages, as necessary).

In institutional proceedings, this issue may be governed by the applicable arbitration rules. For instance, the DIS Rules require parties to pay an advance payment as security on the arbitrator fees prior to the constitution of the arbitral tribunal (article 35.1 DIS Rules). Moreover, the DIS may terminate the proceedings pursuant to article 42.5 DIS Rules if the parties fail to pay the initial deposit for the fees in full to the DIS (article 35.5 DIS Rules). With the implementation of the 2018 DIS Arbitration Rules, the DIS, like the ICC, now provides fundholding services and will manage all deposits of securities for fees until the termination of the arbitration.

In the absence of any provision on securing arbitrator fees, this issue may be construed as a question of substantive law. The tribunal may base its claim for advance payment on a statutory provision (see section 669 Bürgerliches Gesetzbuch (BGB), German Civil Code) or customary law. Failure to make the advance payment entitles the tribunal to withhold its services (section 273 BGB; see also BGH, SchiedsVZ 2012, 154, 155).

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Germany

A party may challenge an arbitrator if circumstances exist that give rise to justifiable doubts as to impartiality or independence, or if the arbitrator does not possess the qualifications agreed by the parties (section 1036(2)(1) ZPO). The mere concealment of circumstances subject to disclosure does not justify such challenge, if the concealed circumstance in itself does not give rise to justified doubts as to the independence of the arbitrator (OLG Frankfurt BeckRS 2019, 848).

Parties are free to agree on a procedure for challenging an arbitrator. However, they cannot eliminate the control procedure before state courts (section 1037(1, 3) ZPO). Where parties have not agreed to a procedure, a party may challenge an arbitrator before the arbitral tribunal within two weeks of becoming aware of the constitution of the tribunal or of any circumstance that constitutes a ground for challenge (section 1037(2)(1) ZPO).

Where a challenge has been rejected by the arbitral tribunal, the challenging party may request the competent court to decide on the challenge within one month of receiving the decision on the rejection. The parties may also agree on a different time limit within which a challenge must be made to an ordinary German court (section 1037(3)(1) ZPO). While the request is pending, the tribunal in its initial formation may continue the proceedings and issue an award (section 1037(3)(2) ZPO). If the challenge is only successful after the award is rendered, this may constitute a potential ground to set aside the award (BGH, SchiedsVZ 2016, 41).

While the IBA Guidelines are not binding, unless agreed otherwise by the parties, German arbitral tribunals and courts may and do use them for authoritative guidance (eg, OLG Frankfurt BeckRS 2014, 12967; OLG Frankfurt, SchiedsVZ 2008, 98) in particular for the interpretation of the terms “impartiality” and “independence” (eg, OLG Frankfurt BeckRS 2019, 848, paragraph 58).

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Germany

Parties to an arbitration may choose between seeking interim measures from a court or from the arbitral tribunal (see section 1033 and section 1041 ZPO). Such measures will typically aim to maintain or restore the status quo (eg, through prejudgment attachments or preliminary injunctions). Interim relief is also available in exequatur proceedings (section 1063(3) ZPO).

German courts will not issue any anti-suit injunctions. The question of whether arbitral tribunals can issue anti-suit injunctions without the agreement of the parties is highly disputed in Germany. The relevant provision states that a tribunal may order such measures it considers necessary in respect of the subject-matter of the dispute (section 1041(1) ZPO); anti-suit injunctions, however, would appear to serve to protect the arbitral process and not the subject-matter of the dispute.

26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Germany

German arbitration law does not contain explicit rules with respect to a court’s or tribunal’s authority to order a party to provide security for costs in arbitration. However, courts and arbitral tribunals may (and do in practice) order such provisional relief in appropriate cases on the basis of section 1041(1) ZPO, which grants the tribunal the discretion to order "necessary" provisional measures.

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Germany

Pursuant to German arbitration law, the following mandatory rules governing the conduct of the arbitration will need to be observed, and will have effect regardless of what the parties may have agreed: the equality of parties; the right to be heard; and the right to counsel (section 1042(1, 2) ZPO).

28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Germany

A respondent’s failure to participate in the arbitration will not result in a discontinuation of the proceedings. The tribunal may proceed and render an award (section 1048(3) ZPO), but it may not treat the respondent’s absence as an admission of the alleged facts (section 1048(2) ZPO). A respondent’s failure to appear at the hearing or to meet a deadline for the submission of documents will not be taken into account by the tribunal if it is sufficiently justified (eg, the failure was caused by extrinsic or unforeseeable factors) (section 1048(4)(1) ZPO). Parties are also free to provide for different remedies with respect to a party’s failure to participate (section 1048(4)(2) ZPO).

29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Germany

A tribunal has the power to determine the admissibility of evidence, take evidence, and freely assess evidence (section 1042(4)(2) ZPO). Factual, expert and documentary evidence is commonly admitted and can usually be presented in either written or oral form. As Germany is a civil law jurisdiction, parties in German arbitration proceedings can expect the arbitral tribunal to take a prominent role in the gathering of evidence. Occasionally, only oral witness evidence (and no written evidence) will be presented – as in ordinary German court proceedings. In proceedings that follow German civil procedure rules, there will only be limited document disclosure. This civil law approach to conducting the taking of evidence has now been codified in the recently published Prague Rules. It is not expected that the manner in which arbitration proceedings, with a focus on German procedural and substantive law, are conducted will change significantly due to the Prague Rules.

However, in practice, arbitral tribunals often rely on the IBA Rules on the Taking of Evidence for guidance in international cases. It may be that German parties will now also insist on the adoption of the Prague Rules with their more inquisitorial as well as limited approach to disclosure.

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Germany

Yes. Either the arbitral tribunal or a party with the approval of the arbitral tribunal may request judicial assistance in the taking of evidence or in the performance of other judicial acts that the tribunal is not empowered to carry out (eg, securing the attendance of a witness, inspection of property, administering an oath) (section 1050 ZPO).

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Germany

German arbitration law does not contain any provisions concerning document production in arbitration proceedings. Under German civil procedure law, requests for the disclosure of specific documents are only permitted in very limited circumstances (see section 142 ZPO). However, these narrow provisions are not directly applicable in arbitration proceedings. Document production will instead depend on the parties’ agreement (eg, whether they have agreed on the application of the IBA Rules) and the manner in which the arbitrators exercise their discretion (see section 1042(4)(1) ZPO).

Tribunals in international arbitrations with their seat in Germany will usually conduct a broader document disclosure than permitted under German civil procedure law – but likely less broad than in purely common law-style proceedings. In practice, proceedings inspired by German civil procedure are, therefore, generally less expensive than more common law-style arbitration proceedings.

32. Is it mandatory to have a final hearing on the merits?

Germany

No, a hearing is not mandatory per se. Subject to any agreement by the parties, a tribunal has discretion to decide whether to conduct a hearing (section 1047(1)(1) ZPO). Unless the parties have excluded that a hearing be held, a tribunal is, however, obliged to hold a hearing upon the request of a party (section 1047(1)(2) ZPO). In practice, oral hearings are the rule rather than the exception in Germany. This general practice is also reflected in the DIS Rules (article 29 DIS Rules).

33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Germany

Yes. Unless otherwise agreed by the parties, the tribunal may meet at any place it considers appropriate for an oral hearing, for examining witnesses, experts or the parties, for consultation among its members or for the review of documents (section 1043(1) ZPO). The legal place or seat of the proceedings remains unaffected by where the oral hearings are actually conducted.

34. Can the tribunal decide by majority?

Germany

If the parties do not stipulate otherwise, the tribunal decides by a majority vote (section 1052(1) ZPO). However, the presiding arbitrator may decide on individual procedural questions alone if the parties or the other members of the arbitral tribunal have authorised him or her to do so (section 1052(3) ZPO).

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Germany

The types of remedies and relief available to the parties depend primarily on the law applicable to the merits. German procedural rules do not limit the relief that can be granted by the arbitrators. However, if the tribunal is seated in Germany, it may not issue a relief that is contrary to German public policy (eg, punitive damages). The grant of such an award would constitute a ground for its annulment.

36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Germany

German arbitration law is silent on the issue of dissenting opinions in awards. The subject has not been ultimately decided by a German court. Yet, the Higher Regional Court of Frankfurt held in an obiter dictum that the disclosure of a dissenting opinion is inadmissible in domestic arbitral proceedings and that it violates the secrecy of deliberation applicable to domestic arbitral tribunals (OLG Frankfurt, Order of 16 January 2020, 26 Sch 14/18). Likewise, many commentators are also concerned that a dissenting opinion may violate the secrecy of the arbitrators' deliberations, while some seem to accept the permissibility of dissenting opinions, 

In practice, if an arbitrator dissents, the award will generally state that the decision is based on a majority decision without providing a separate dissenting opinion. Occasionally, with the consent of all arbitrators, a dissenting opinion may be issued to the parties. We are not aware of any case where a dissenting opinion was issued without the consent of all arbitrators.

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Germany

The award must be in writing and signed by all arbitrators (section 1054(1) ZPO). If the arbitral tribunal consists of more than one arbitrator, it suffices that the majority of arbitrators sign the award and provide the reason for the missing signature. The award must be reasoned, unless otherwise agreed by the parties (section 1054(2) ZPO). Generally, the reasoning of an arbitral award must merely comply with certain minimum requirements, ie, it must not be obviously contradictory or inconsistent with the decision and not be limited to empty phrases (BGH, SchiedsVZ 2022, 228). Moreover, the reasoning should be sufficient to inform the parties of the essential considerations for the decision as well as to allow the state courts to examine the reasons for a possible violation of public policy (OLG Munich, SchiedsVZ 2015, 303). The award should also indicate the place and the date of its making (section 1054(3) ZPO).

38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Germany

The German arbitration law does not specify any time limits for the tribunal to render an award. The parties may, of course, agree otherwise.

German law does, however, set a time limit for the correction, interpretation or rendering of an additional award (section 1058 ZPO). Unless otherwise agreed, the party has one month after the receipt of the award to make its application. The tribunal then has one month to correct or interpret the award, and two months to render an additional award.

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Germany

Unless otherwise agreed by the parties, the tribunal shall rule on the allocation of costs of the arbitration proceedings (section 1057(1) ZPO). The arbitration costs include the costs of the arbitrators (fees and expenses) and the arbitration institution, as well as the “necessary" costs incurred by the parties, such as lawyers’ fees, travel costs and translation costs. German courts have confirmed that the remuneration set forth in the Law on the Remuneration of Lawyers does not constitute an upper limit for the recoverable lawyer fees in arbitration proceedings, and that the typically-higher remuneration agreed on the basis of hourly rates may be recovered (OLG Munich, SchiedsVZ 2012, 282).   

The Higher Regional Court Munich confirmed that the limitations of the statutory remuneration rules for court proceedings similarly do not apply to domestic arbitration cases (OLG Munich, SchiedsVZ 2017, 40).     

The “loser pays” or “cost follows the event” rule, which applies in German litigation, is generally strongly considered by the tribunal in its decision on costs (eg, article 33.3 DIS Rules). The tribunal may, however, deviate from this where it considers it appropriate.

40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Germany

German arbitration law does not address the tribunal’s power to award interest on the principal claim and costs.

The application and the actual rate of interest on the principal claim are generally considered to be determined by reference to the applicable substantive law. German substantive law, for instance, stipulates a legal interest rate of 5 percentage points above the reference rate for contractual relationships involving consumers and 9 percentage points above the reference rate for all other contractual relationships, accruing from the date of commencement of the arbitration proceedings with respect to the principal claim (sections 291, 288, 247 BGB). The same interest rates may also apply from the date of the default or breach of contract (sections 286, 288, 247 BGB).

The application and the actual rate of interest in relation to the costs incurred in pursuing the arbitration are less clear under German law. Thus, if the parties want to pursue a claim for interest on costs, it is advisable for them to agree on the admissibility of such a claim beforehand.

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Germany

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

In this context, it is important to emphasise that the setting-aside proceeding is not considered an appeal against the award since the court will not re-evaluate the merits of the case.

42. Are there any other bases on which an award may be challenged, and if so what?

Germany

An award rendered by a tribunal with its seat in Germany can be challenged and potentially set aside (section 1059 ZPO) (see also BGH SchiedsVZ 2017, 103, 106). A party has three months from the receipt of the award to challenge it. The grounds for such challenge are adopted from the UNCITRAL Model Law and are as follows:

• 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;
• non-arbitrability of the dispute; and
• violation of public policy (BGH, SchiedsVZ 2019, 150).

43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Germany

Generally, parties cannot agree to exclude recourse to set aside an award before the commencement of the arbitral proceedings or otherwise waive such a right in advance. However, the parties may consent to waive their right to assert any of the grounds mentioned in section 1059(2) No. 1 ZPO after the award has been issued and only if the defect is known to the party. The parties cannot, however, waive their right to a review where the award conflicts with German public policy or where the subject matter was not arbitrable (section 1059(2) No. 2 ZPO).

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Germany

German courts will generally deny the enforcement of a foreign arbitral award set aside at the seat of arbitration (see BGH, NJW 2001, 1730, 1731; OLG Munich, SchiedsVZ 2012, 339; BGH, SchiedsVZ 2013, 229).

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Germany

German courts are generally considered to be pro-arbitration. Recent enforcement decisions confirm the approach of enforcing awards, absent exceptional circumstances, and narrowly construing the public policy exception (see BGH, SchiedsVZ 2018, 53, 59). Thus, German courts only set aside an award on public policy grounds if it runs counter to fundamental principles of the legal, economic and/or social order, including mandatory provisions of European and German antitrust law (OLG Frankfurt, BeckRS 2019, 6220).

A violation of public policy requires that the recognition or enforcement of the award leads to a result that blatantly violates the principle of proportionality (BGH, SchiedsVZ 2022, 91). Generally, this level of scrutiny prohibits German state courts to fully review the factual and legal aspects of an arbitral award (prohibition of révision au fond). However, in a recent judgment, the German Federal Court of Justice held that state courts can conduct a full review of alleged violations of antitrust law if the relevant rules belong to public policy (BGH, NZKart 2023, 30).

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Germany

In principle, if a state agrees to arbitration, it waives its immunity for the purposes of the arbitration proceedings. German courts have interpreted such waiver as also encompassing proceedings for the declaration of enforceability before a German court. Since a state may only be deemed to have waived immunity insofar as the dispute was covered by the arbitration agreement, German courts will review the arbitration agreement. Thus, if an arbitration agreement is contained in a treaty (eg, a bilateral investment treaty), German courts will analyse whether the prerequisites of the scope of the treaty are met (BGH, SchiedsVZ 2013, 110; BGH, SchiedsVZ 2018, 53).

Immunity in execution proceedings (on the basis of the declaration of enforceability) follows different rules and may still be recognised where a state waived its immunity in the arbitration or other proceedings. In execution proceedings, the Federal Constitutional Court (BVerfG) distinguishes between sovereign and non-sovereign assets. This distinction is made on the basis of the doctrine of limited sovereign immunity. Accordingly, an award can be enforced against assets of a foreign sovereign that are situated in Germany and have a commercial use. State assets that fulfil a sovereign function are protected against an enforcement measure (BVerfG, NJW 2012, 293).

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Germany

German arbitration law does not expressly subject the parties or arbitrators to any duty of confidentiality. German commentators are still divided on whether a duty of confidentiality can be implied in an arbitration agreement. Proceedings are, however, generally conducted in private.

Thus, it is advisable that if the parties wish to ensure the confidentiality of the arbitration proceedings, they explicitly agree on confidentiality and its extent. In practice, the parties often decide on the confidentiality by selecting specific arbitration rules (eg, article 44 DIS Rules).

48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Germany

There is no general confidentiality requirement under German arbitration law (see answer to question 47). Thus, unless the parties have agreed otherwise, a party may use evidence obtained in other proceedings.

However, in the absence of a confidentiality clause and given that some commentators argue for an implied duty of confidentiality in the arbitration agreement, it is possible that a German court or arbitral tribunal would reject evidence and pleadings from other arbitration proceedings.

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Germany

German arbitration law does not contain any ethical codes for arbitration proceedings, be it for counsel or arbitrators. Counsel and arbitrators will be bound by the ethical codes and professional standards applicable in their home jurisdiction or bars. German lawyers who are admitted to a bar in Germany and act as counsel in arbitration proceedings in Germany are bound by the Federal Lawyers’ Act. These ethical rules will also apply to German lawyers acting as arbitrators. Counsel and arbitrators from other countries are, however, not bound by this act, even if the arbitration is seated in Germany.

50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Germany

While arbitral tribunals are not bound by the limited and narrow approach to document production taken by German courts, German arbitrators are generally a little more reluctant to grant document disclosure as extensive as their common-law trained peers, especially where German parties are involved.

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Germany

Third-party funding is generally permitted. German arbitration law does not expressly regulate third-party funding. In fact, no obligation exists in German procedural law or practice to disclose the existence of a third-party funding agreement in arbitration cases. However, to the extent that the funding relationship might be relevant for other judicial findings (for example, to assess a request for security for costs), a party could indirectly be forced to disclose the funding relationship.