WHERE IS MY JURY?
Everything you know about litigation as a U.S. lawyer is wrong for a German lawsuit. Brace yourself for a court room culture shock.
German trial lawyer Bernhard Schmeilzl heads the litigation team of Graf & Partners LLP, a German law firm for Anglo-American clients.
In German court, it’s never too late to agree to arbitration instead of litigation
If you find yourself entangled in German litigation (Zivilprozess), in particular business litigation, you and your opponent may not want to discuss your quarrels in the public eye. But can you still opt for arbitration even if the agreement between you and your German business partner does not contain an arbitration clause? Yes, you absolutely can. In fact, German civil procedure rules do encourage the parties to apply for the civil case to be transferred to a so called “Güterichter” (arbitration judge).
German civil courts have installed special chambers for such arbitration proceedings at all levels, see for example High Court Hannover. That way, the parties get a fully qualified and independent German judge as their mediator / arbitrator and they do not have to shop around. Costs for such a professional judge as arbitrator are also considerably lower than those of private arbitrators, because – from a cost perspective – the arbitration is still part of the official lawsuit. Therefore, arbitration proceedings before a German state judge (instead of a private arbitrator) have become increasing popular in Germany over the last 15 years and there are hardly any high profile business lawsuits in open German court anymore.
Arbitration before a professional German judge
The only requirement for this switch from German civil litigation (i.e. a classic civil lawsuit) to German arbitration before a professional judge is that the parties agree to it. Acording to section 278 para. (5) German Cicil Procedure Rules, the court shall suggest such arbitration to the parties. In fact, even if the German court does not initiate such a transfer, the parties to the legal dispute can “force” the court to transfer the case to the arbitration judge (Güterichter). From that moment on, the parties discuss the case in private, the hearings are no longer open to the public and everything that is discussed during the arbitration proceedings remains confidential. Not even the civil case judge (Richter im streitigen Verfahren) who has transferred the matter to the arbitration judge (Güterichter) will be informed about what went on in the arbitration proceedings. So even if the arbitration attempt ends up being unsuccessful, the parties go back to the initial judge and the original civil trial proceeds, neither party must fear to have disclosed any information detrimental to their German court case. Another advantage is that the parties can include additional aspects in an overall settlement agreement, i.e. they are not being bound by the core of the initial lawsuit.
Arbitration outside the German state court system
An alternative to having the civil lawsuit transferred to an arbitration judge (Güterichter) at the same German civil court, the parties can also opt for private arbitration. In that case, they choose their own arbitrator or arbitration panel and decide on their arbitration rules. The German civil court will then simply stay the proceedings according to section 278a para. (2) German Cicil Procedure Rules. In that case, costs will be higher, because such private arbitration is a separate proceeding and thus takes place outside the official cost schedule. Should the private arbitration attempt fail, each party can motion to the German civil court to resume the civil trial.
German Litigation vs. German Arbitration
In summary, switching from German civil litigation to arbitration (either before a German state judge or a private arbitrator) is usually a very good idea. Especially, if the parties do not wish the details of the civil dispute to become public. If the arbitration attempt fails, nothing is lost. Each party can simply state that they consider the arbitration unsuccessful. Then the regular civil lawsuit is continued and the German civil court will eventually issue a judgment.
More information on litigation and legal fees in Germany is available in these posts:
- German Litigation Experts explain Civil Procedure Rules
- How expensive is a German Lawsuit?
- Expert Reports on German Law
For legal advice on German civil procedure and how to successfully litigate in Germany, contact the international litigation experts and trial lawyers of GrafLegal.
Copyright & Disclaimer All posts are copyrighted material. This blog is made available by Graf & Partners for educational purposes as well as to give you general information on German law, not to provide specific legal advice. Simply reading this blog does, of course, not result in any attorney client relationship between you and Graf & Partners. The blog should not be used as a substitute for competent legal advice provided by a licensed professional attorney in a specific legal matter.
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Checklist: Effective Defense against a Civil Action in Germany
In this post, we explain how to best react and defend your case when you find yourself at the receiving end of a German civil lawsuit. More specifically, how to avoid making major blunders right at the early stages of German civil proceedings.
Rule 1: Do not ignore letters from a German civil court
This piece of advice appears obvious but, in our experience, it nevertheless happens quite often: Many clients tend to either fully ignore such legal correspondence or to at least delay dealing with the matter until important procedural deadlines have already expired. Such deadlines, for example for the submission of a formal reply and for the application to dismiss the case, are set by the German civil court in the very first court order. These initial deadlines set by the German court are so called “Notfristen” which means that they cannot be extended and you can not be reinstated if you miss to adhere to them.
Thus, whatever you will eventually decide to do about the lawsuit, you must first ensure that you fully understand what the letter from the court (or from the opponent’s lawyer) says and what the relevant time limits are. Such initial letters from a German civil court typically inform you about the fact that you have been sued in Germany and for what. They usually also contain either a specific calendar date or a period of time (e.g. two weeks from the date of service of the letter) within which you need to respond to the court.
At this stage of the proceedings you should:
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Workshop on German Civil Procedure for U.S. Litigation Lawyers
Know and effectively use the tools of German Civil Procedure
Due to Brexit, many international businesses shift their focus from Britain to Germany when it comes to contract drafting in general and jurisdiction clauses in particular (see brochure “Contracts in Continental Law“). Why? As long as Britain was still a member of the EU, many German, Austrian and other continental European CEO’s were willing to accept English law as well as the jurisdiction of English courts. This was often a compromise reached in the negotiations between the contract lawyers of the U.S. and the German parties.
Those days are over. After Brexit, European Union law does no longer apply in Britain, which makes it pretty much unacceptable for the German (Austrian, French etc) side to accept English law as the governing law for the business relationship. Instead, the contract lawyers of businesses located in continental European countries insist more and more on their domestic substantive and procedural laws to apply. Therefore, United States law firms that work internationally will be increasingly confronted with cross-border civil and commercial litigation cases that take place in Germany or Austria.
Bootcamp for practicing U.S. attorneys and in-house lawyers
Our 2 day seminar “How to litigate in Germany” introduces United States trial lawyers to the very different world of German civil procedure. The focus is on making non-German litigators aware of the many differences compared to a U.S. civil lawsuit, thus enabling them to effectively collaborate with the German trial lawyers in an international U.S.-German civil case.
Experienced German litigator Bernhard Schmeilzl cuts right to the chase: No boring lectures on theoretical isues, but hands-on practical advice on how to win civil lawsuits in Germany. Including some tips and tricks on how to unnerve your adversary by “being American on purpose”, for example by naturally applying certain U.S. procedural tools and tactics which, normally, are not used in a German lawsuit (written witness statements or even video depositions). If smartly used, such an approach can somewhat unhinge the opponent.
Who is the workshop for?
United States lawyers who wish to advise their U.S. clients with business ties to Europe on the basics of how to litigate in Germany (and Austria). U.S. law firms that provide legal advice to German business clients in order to understand their German client’s expectations with regard to litigation and arbitration. United States lawyers who are dealing with international litigation and who strive to better understand the tactics and strategies in a German civil case. American legal scholars with an interest in the practical side of German civil litigation.
What does the workshop cover?
The key topics we explain and discuss in our German civil procedure workshops for United States litigators are:
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German Court Records: The Judge decides what goes on Record
How do you order a full transcript of a German court hearing? Well, that is a trick question in two respects. First, because German civil court records are not public. Second, because there are no such full transcripts of court hearings. In German civil cases, no verbatim records of hearings, witness statements or other judicial proceedings are being made. Thus, you will not find a U.S.-style court reporter or stenographer in a German civil courtroom.
What court hearing minutes are there?
German Civil Procedure Rules (Zivilprozessordnung) cover the issue of how official court hearing minutes shall be taken in sections 159 to 165. According to section 160a ZPO:
The content of the record of the hearing may be noted in a usual form of shorthand, by using comprehensible abbreviations, or by recording oral statements on a sound or data carrier.
This shows that, instead of a court stenographer taking a verbatim record, the judge dictates a summary of what the parties or the witnesses have stated to a court secretary (Justizsekretär or Justizfachangestellte). Sometimes, especially in lower courts, there is not even a court secretary, just the judge and his/her voice recorder.
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How to litigate a personal injury claim under German civil law
The general legal requirements to successfully sue someone in Germany based on tort are set out in title 27 of the German Civil Code, sections 823 et seqq. But don’t get your hopes up too high! In comparison to the USA and Britain, German courts usually award significantly less money when it comes to damage claims. The amount of compensation for pain and suffering (Schmerzensgeld) which is granted by German civil courts in personal injury cases is ridiculously low in the eyes of a U.S. litigation lawyer. A severed thumb, for example, “gets you” roughly $5,000 to $10,000.
The concept of punitive or exemplary damages is entirely unknown in Germany. Class actions, which U.S. lawyers take for granted to be available in cases like the German diesel scandal, are also not available under the German civil procedure rules. And don’t let anyone tell you something else: The new German litigation tool “Musterfeststellungsklage“, which was introduced in 2018 and which is sometimes — misleadingly — referred to as “German class action” (Sammelklage), is something entirely different and must not be confused with a U.S. style class action. The German Musterfeststellungsklage is only available in very limited circumstances and the plaintiff can only be a consumer protection organisation (Verbraucherschutzorganisation). And even if the consumer protection organisation is successful with the Musterfeststellungsklage, each individual claimant must still go to court to have the concrete damages of their individual cases assessed by the local court. The Musterfeststellungsklage ist only the first step, the actual value of the claim is determined in a second, ancillary law suit. All this makes the German “class action” a rather frustrating instrument.
Back to normal tort cases in German civil courts: We have explained some specific aspects of German personal injury and tort claims on our civil law blog Cross Channel Lawyers (enter “tort”). This current post now demonstrates the general legal test (Prüfungsschema) which a German litigation lawyer or a German judge uses to assess the merits of a tort case.
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