Get the best of both worlds: a professional German judge in a non-public civil proceeding
Parties to civil litigation often fear the public nature of a lawsuit, be it in the USA or in Germany. This is especially true for commercial and corporate cases as well as any litigation involving celebrities. The parties do not want their competitors and the public to learn about confidential business matters or — in case of celebrities — their private lives.
Therefore, many businesses and high profile individuals use arbitration clauses in their contracts to avoid ending up in a court room ful of reporters. However, arbitration is usually significantly more expensive compared to a “normal” German court case, because the arbitrators are high profile lawyers from big law firms who charge hourly rates north of EUR 500 easily. This is particularly trie in Germany where the statutory court fees are comparatively low (see here).
Furthermore, picking the right arbitrator(s) is difficult and time consuming. The parties need to agree on a competent lawyer who is available in the near future and who’s law office does not have a conflict of interest.
Mediation / Arbitration at German High Courts
In many cases, the ideal solution to this may be to opt for a German “Güterichterverfahren“, an open mediation / arbitration proceeding which takes place before a German high court judge (Güterichter) and to which the basic principles of the German civil procedure rules do apply. However, such a Güteverfahren is entirely confidential and the parties are free to define the scope of the dispute, i.e. they can include additional matters to achieve an overall solution. The German mediation / arbitration hearings in the Güterichterverfahren usually take place at the German court house but behind closed doors. There are official hearing minutes (Protokoll) but they are only available to the parties, not to the public.
What are the advantages of German high court arbitration?
German civil law judges actively encourage the parties to a legal dispute to consider such a court arbitration proceeding, even if a “normal” civil lawsuit has already been filed, see section 278 para. 5 German Civil Procedure Code. The advantages of this German high court arbitration are:
- confidentiality, non public procedure
- experienced professional German judges who are absolutely impartial hear the case; neither party must fear that a private arbitrator (or their law firm) has any hidden stakes in the matter
- very reasonable costs since the German statutory court fee table does apply
- in case of a settlement, the judge will issue an enforceable court order
- if the parties do not reach a settlement, they have not lost anything because they can always go back to the standard civil litigation proceedings (streitiges Zivilverfahren) in which another judge will then hear the case
More information about this Güterichterverfahren (not to be confused with the Gütetermin, which is part of any German civil litigation) is available here and in these posts:
- Never too late for Arbitration: Switch from German Litigation to Arbitration
- How to settle a Lawsuit in Germany
For legal advice on German civil procedure and how to successfully litigate in Germany, contact the international litigation experts and trial lawyers of GrafLegal.
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