Final Judgments issued by United States Courts in Civil Law and Commercial Law Matters can be recognised and eventually also enforced in Germany
It is, however, a somewhat tedious procedure and there are a number of exceptions to this principle. This post explains how the domestication of United States court orders in Germany works and provides a practical guideline for U.S. lawyers and their clients who have obtained a U.S. court order against a German defendant or a debtor who owns assets in Germany. In short: this is how you enforce a U.S. judgment in Germany.
No International Treaties
Between the USA and Germany there exist no bi-lateral or multilateral international treaties with regard to the mutual recognition and enforcement of foreign court orders. Thus, when it comes to the domestication of U.S. judgments in Germany (and vice versa), the respective national laws apply. We must therefore look at the relevant German laws which regulate if, when and how foreign (i.e. non-German) court orders and judgments can be recognized and enforced within Germany.
The German Legal Framework regarding Domestication of Foreign Judgments
Domesticating an existing United States judgment in Germany is a three step legal procedure which is spelled out in the German Zivilprozessordnung (ZPO), i.e. the German Code of Civil Procedure:
- Step 1: Recognition of the Foreign Judgment The U.S. judgment must first be recognized (Anerkennung ausländischer Urteile) by the competent German court according to sec. 328 German Code of Civil Procedure. The wording of said German statute is available in an English translation here: www.gesetze-im-internet.de/englisch_zpo/englisch_zpo.html#p1264
- Step 2: Enforceability Order by a German Court Then, a petition to make the U.S. judgement enforceable (Klage auf Vollstreckbarerklärung) must be filed with the locally competent German court according to sec. 722 and 723 German Code of Civil Procedure: www.gesetze-im-internet.de/englisch_zpo/englisch_zpo.html#p2460
- Step 3: Enforcement of the Foreign Judgment in Germany Finally, the U.S. judgement must then be actually enforced in Germany. This stage is no different from the enforcement of a German judgment. In most cases, enforcement means that assets of the defendant located in Germany shall be seized. This is usually done by sending a German Gerichtsvollzieher (a court official with similar responsibilities as a U.S. marshall, a sheriff or a British bailiff) to the debtor. Alternatively, the applicant obtains a distress warrant (attachment order) from the local German circuit court (Vollstreckungsgericht), for example to freeze a German bank account and transfer the credit balance.
What are the Requirements to get a U.S. Judgement domesticated in Germany?
Roughly, the requirements under German law for the recognition of U.S. judgment are similar to those in the United States Uniform Foreign Money Recognition Act. Similar, but far from identical.
While the requirements for step 1 and step 2, i.e. the recognition of the United States judgment and the declaration of its enforceability under the German Code of Civil Procedure, somewhat differ in various minor aspects, the general premises are essentially identical:
- It must be a judgment handed down by a foreign court in a civil or commercial law matter, i.e. a court decision (not a settlement) which is the result of a formal judicial proceeding in which the defendant was heard, and in a matter over which the decision making United States court did have proper jurisdiction (both personal and subject matter jurisdiction). The applicant must provide a certified and legalised copy (apostille) of said foreign judgment as well as a certified translation into German. Additional documents, like proof of proper service, will also be required.
- Second, the foreign decision (here the U.S. judgment) must be final (endgültig), binding and effective (rechtskräftig). This means that the judgment must no longer be appealable. It also means that preliminary injunctions or interim judgments (e.g. temporary restraining orders) can, as a matter of principle, not be recognised or enforced in Germany (some exceptions to this rule may apply, particularly in family law matters). Such interim decisions and non-final court orders are explicitly excluded by German law from the list of foreign court orders that can be domesticated.
- The applicant must demonstrate that the defendant was properly served to ensure he could be heard (see sec. 328.I.2 German Civil Procedure Code). However, the defendant cannot raise the argument of faulty or short-notice service if the defendant has actually participated in the United States court’s proceedings, either in person or through U.S. legal counsel. Furthermore, under certain circumstances, flawed service of documents can be cured at a later stage, for instance if it can be shown that the defendant definitely received the papers later and was given sufficient time to defend himself or herself in the US court.
- The U.S. court decision which an applicant wants to be recognized in Germany must not contradict an existing judgment (i.e. either any previous domestic or foreign judgment in the same matter). Furthermore, the matter in question must not be pending in any other German court (see sec. 328.I.3 German Civil Procedure Code).
- The foreign decision must not violate German ordre public principles, i.e. the decision must not be contrary to fundamental German legal principles (with regard to the USA, punitive damages judgments are sometimes considered to be contrary to German ordre public)
Take Home Message for U.S. Lawyers and their Clients
As a rule, you can have a United States court judgment recognized and enforced (domesticated) in Germany as long as the U.S. judgment satisfies the criteria listed in sections 328 and 772 German Code of Civil Procedure.
However: The foreign judgment must be final. Temporary court orders and preliminary injunctions are never admissible for domestication. Neither are U.S. judgments which can still be appealed. Settlements can also not be recognised as foreign court orders, even if the settlement agreement was officially recorded by the U.S. court.
The process has three steps: Once officially recognized according to sec. 328 German ZPO, the foreign judgment must then be declared enforceable by the competent local court in Germany (sec. 772 ZPO). Finally, the judgment must then be enforced according to the usual measures of sequestration and foreclosure (Zwangsvollstreckung) in Germany.
For more information about German civil procedure and the execution of foreign judgments in Germany, contact the international litigation experts and trial lawyers of GrafLegal.
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