The principal statute governing private law proceedings is the German Code of Civil Procedure. The Code contains rules governing proceedings before state courts as well as ad hoc arbitration proceedings. Further, it deals with the enforcement of judgments of German and foreign courts, as well as of arbitral awards.
Other relevant civil procedure laws are the Act on the Constitution of Courts, the Act on Enforcement of Claims with respect to Real Estate, the Lawyers Remuneration Act, the Court Fees Act and the Act on the Remuneration of Expert Witnesses, Witnesses and Others. Finally, several EU directives and regulations on the matter of civil procedure apply, and supersede domestic German law.
ii Procedures and time frames
Any ordinary proceeding starts with the filing of a statement of claim. The timing mainly depends on the applicable limitation period, which is a matter of substantive law. The general limitation period is three years and commences on the last day of the year in which the claimant became aware of the existence of the claim and the identity of the debtor, or would have been so aware had he or she not shown gross negligence. In principle, this period applies to claims for the performance of contracts, damage, tort, restitution or unjust enrichment. The filing of a statement of claim suspends the applicable limitation period.
The German judicial system requires the parties to submit all facts supporting their case and there are only limited means to have the opponent produce documents (see below). The concept is that each case should be dealt with within one single oral hearing, although it is not unusual that more than one hearing is held, for example to allow for the taking of evidence or a discussion of issues pointed out in an earlier hearing. In preparation for the hearing, a judge may either give the parties the opportunity to present their case in a preparatory oral hearing or – as is more often the case – order the parties to submit their arguments in written briefs.
Although the Code of Civil Procedure provides for the principle that the decision of a court shall be based on the statements made in the oral hearing, the focus in almost all cases is on the written submissions of the parties (with the exception of the taking of evidence). The parties should always ensure that they plead all factual and legal submissions relevant to their case in writing. Written submissions are to be filed within the time limits set out by the judge in his or her discretion. If parties fail to comply with such time limits without proper excuse, late submissions may be precluded.
Court proceedings must be conducted in German. Since the beginning of 2010, however, proceedings can be conducted in English before specific courts in certain areas of Germany. Accordingly, complaints and other written submissions by the parties may be in English, and the court's decisions would also be rendered in English. This pilot project is an initiative to establish special chambers for international commercial matters at the regional court level. The initiative is aimed at increasing the attractiveness of German courts as a forum for international commercial litigation. The initiative has recently been further supported by the Federal State of Baden-Württemberg by establishing a Commercial Court. This Court will conduct major commercial civil proceedings, including oral hearings in English and via videoconferencing.
Oral hearings often take a surprisingly short time, during which the parties primarily refer to their written briefs. Permitted sources of evidence are documents, inspection by the court, witness statements, expert opinions and, to a rather limited extent, party testimony. As a general rule, written witness statements do not qualify as evidence. At the conclusion of a hearing, the judge usually sets a specific date on which he or she will render a decision, be it a judgment or an order as to the further procedure.
The Code of Civil Procedure provides that the court shall consider at all times during the proceedings whether a settlement can be reached. In particular, courts are required to enquire whether an amicable solution is an option prior to the first oral hearing. It is at the discretion of the judge how far he or she pursues such an enquiry. Whereas some judges merely ask whether the parties wish to settle the case and, if this is denied, promptly enter into the proceedings, other judges discuss their preliminary evaluation of the case with the parties in detail and make concrete proposals as to what the terms of a settlement could be.
While the duration of any litigation depends on the complexity of the case and, to a large extent, is subject to the discretion of the court, the average duration from the initiation of an action until the issuance of a judgment is in the range of seven months (local courts) to 15 months (regional courts) in the first instance and between 22 months (regional courts) and 27 months (higher regional courts) in the second instance.
In addition to regular court procedures, a party may initiate a number of alternative proceedings. Summary collection proceedings provide for a rapid procedure by which the applicant may obtain a collection order without an oral hearing if the subject matter is the payment of a certain sum of money. The evaluation by the court is limited to whether the claim appears to be plausible. Upon written objection by the defendant, the dispute is transferred to the competent court and the matter turns into a regular lawsuit. Generally speaking, a collection procedure is only an option if the defendant is likely to pay immediately or fail to respond, or if a limitation period needs to be suspended on short notice.
Further, a plaintiff may initiate summary proceedings that allow for documents or a bill of exchange as the only means of evidence. If a judgment is rendered against the defendant, the latter may ask for the judgment to be set aside in subsequent proceedings. If the defendant makes use of this right, the dispute remains pending as a regular lawsuit, entitling both parties to resort to regular means of evidence.
Along with these options, a party may initiate ancillary proceedings such as a procedure for the taking of evidence independent of a pending lawsuit or proceedings for interim measures.
Two different kinds of interim measures exist: attachment orders and preliminary injunctions. Both are provisional court orders issued in summary proceedings to obtain security for the future execution of a claim. While an attachment order secures satisfaction of monetary claims, a claim for payment of a purchase price or damages, for example, a preliminary injunction may be issued with regard to a non-monetary claim, for example a claim for the omission of a contractual violation.
To support a motion for interim measures, the applicant must submit facts establishing the jurisdiction of the court, the potential claim and the reasons why interim relief is required. In doing so, the applicant – unlike in regular proceedings – is not required to provide full evidence but may rely on prima facie evidence. In contrast to regular proceedings, this includes the submission of written affidavits regarding the facts of the case by the applicant or by third parties.
The execution of interim measures follows, in principle, the same rules as the enforcement of a regular judgment. Enforcement is restricted, however, to measures that safeguard the applicant's interests without fully satisfying the claim.
Proceedings concerning provisional remedies are handled with priority and can be extremely fast. In urgent cases, a judge may decide without an oral hearing. Thus, in practice, it may take no longer than a few days, sometimes only hours, to obtain a court order or injunction.
In any case, the defendant may oppose the order of the court. Upon such a motion, the court will decide by judgment. Appeals against such judgments follow the general rules.
iii Class actions
In Germany, class actions in a formal sense are not permitted. It is a fundamental principle of German law that a litigant must appeal to the court as an individual to benefit from, or to be bound by, civil litigation.
The Capital Market Model Case Act, however, provides the possibility to establish certain factual or legal aspects of claims on behalf of a group of plaintiffs. The Act is designed for certain capital market mass disputes, claims for damage due to false or omitted public capital markets information or claims based on an offer under the Securities Acquisition and Takeover Act. In these disputes, the court of first instance may initiate a model case before the higher regional court upon the application of the plaintiff or the defendant seeking the establishment of the existence of certain conditions or even the mere clarification of specific legal questions. The decision of the higher regional court will only be binding on the parties whose cases are already pending. The mere registration of a claim with the higher regional court is sufficient to suspend the running of the statute of limitations if the claim is based on the same facts as the model case proceedings.
On 1 November 2018, a new law introducing model case proceedings came into force. Unlike other forms of collective redress (e.g., under the Capital Market Model Case Act), this new procedural tool for collective redress is broad in scope and covers all disputes involving consumers on the one side and enterprises on the other.
The action aims to establish whether certain factual or legal requirements for the existence of claims or legal relationships between consumers and a business are met. However, it is limited to actions aiming at declaratory judgments and does not allow for filing payment claims. The focus on declaratory objectives (mirroring the Capital Market Model Case Act) is designed to resolve certain recurring issues of fact or law that concern all affected consumers alike. It remains to be seen how this criterion will be interpreted by courts, for example, when it comes to whether an alleged breach of a contract or tortious act caused a certain (kind of) damage.
Actions under the new law may be brought only by certain qualified entities that, among other things, have a certain number of members, have been registered for a certain time and do not file model cases in order to make a profit. When filing the suit, the institution must show that the declaratory judgment sought will be relevant for claims or legal relationships of at least 10 consumers; the action becomes admissible if at least 50 consumers register their claims or legal relationships within two months of the public announcement of the model case action. In the further course of the proceedings, consumers may register until the day before the first oral hearing; they may withdraw their registration until the end of the day on which the oral hearing took place.
An amicable settlement reached by the institution that lodged the action and the defending enterprise will be binding on every consumer registered at the time at which the court approves the settlement unless that registered consumer opts out of the settlement within one month after he or she was informed about the settlement. The settlement only comes into force if fewer than 30 per cent of registered consumers opt out.
A judgment rendered in a model declaratory proceeding is binding on the court dealing with the lawsuit between a registered consumer and the defending enterprise. Thus, after termination of the model declaratory proceedings, consumers who have registered their claims may file individual suits against the defendant in which the competent court will be bound by the established legal and factual aspects of the model case.
In addition to the new model case law, some specific statutes provide for actions by organisations on behalf of groups of individuals: under the Act on Actions for Injunctions, certain qualified representative organisations, such as consumer protection associations and chambers of commerce, may initiate actions in the interests of consumers. In 2016, the German legislator decided to add the possibility of such an action based on specific data protection law violations.
Further, in the framework of proceedings to determine the fair compensation of minority shareholders in relation to the transformation or reorganisation of companies, the conclusion of a control agreement or a squeeze-out under the Stock Corporation Act, the court may appoint a representative to protect the rights of non-participating shareholders.
In addition to the national regimes of collective redress, the European legislative bodies agreed on a directive on an EU representative action. The directive, which came into force at the end of 2020, is not directly applicable in the Member States. Instead, the Member States must transpose the directive within 24 months; the transposed provisions must apply as per 25 June 2023 at the latest.
The directive states that – similar to the German model declaratory proceedings – qualified entities (irrespective of their domicile throughout the European Union) may file actions on behalf of consumers. However, the requirements for these entities are (at least for cross-border actions) less strict than those provided for in the German model declaratory proceedings; for example, no minimum number of members is required. Furthermore, the action may not only be for declaratory relief, but also directly aimed at an injunction or remedy. Thus, consumers will no longer have to pursue their claims individually in court after the issuance of a declaratory judgment on their claims' legal basis. Furthermore, commercial third-party funding (i.e., the involvement of litigation financiers) is explicitly provided for as long as the independence of the qualified entity is preserved, conflicts of interest are prevented and the collective interests of consumers remain in focus. Another special feature of the representative action is the disclosure of evidence. If the qualified entity has provided all reasonably available evidence sufficient to support the representative action and has indicated that additional evidence is subject to the order of the defendant or a third party, the court may, upon request of the qualified entity, order that the defendant or third party disclose evidence.
iv Representation in proceedings
The question of whether a party must be represented by a lawyer or whether it is entitled to represent itself depends on the court with which the case is pending. In all lawsuits before a regional court, a higher regional court or the Supreme Court, as well as in family courts, a lawyer must represent the parties. In all other legal proceedings the parties may represent themselves.
v Service out of the jurisdiction
Service Regulation No. 1393/2007 of 13 November 2008 governs the service of documents within the EU. The Hague Service Convention, the Hague Civil Procedure Convention and further bilateral treaties apply in the case of service of documents from Germany to any other foreign country.
Under the Service Regulation, each Member State must establish transmitting and receiving agencies responsible for the transmission and receipt of the relevant documents. The transmitting agency issues the documents accompanied by a standard form to the foreign receiving agency. In Germany, the transmitting agency is the competent court initiating the service, and the receiving agency is the local court located in the district in which the document shall be served. The receiving agency located in the state of the defendant will examine the request and take all necessary steps to serve the document as soon as possible. It will serve the document in accordance with its domestic law or, if possible under its domestic law, by the method requested by the German courts.
Under the Hague Convention, each contracting state must designate a central authority, which, in Germany, is typically the Ministry of Justice of the respective federal state. Thus, a German court will first send the request for service to the Ministry, which in turn will transfer the request to the competent authority of the foreign state. The foreign central authority will then effect service in the same manner as under the Service Regulation.
Within the scope of the Hague Convention, the procedure described above applies to the service of statements of claim and initial court orders. For any subsequent document, the German court will request that the defendant nominates a service agent or attorney in Germany. If the defendant fails to comply with the order, the court will send the documents to the defendant's foreign address by regular mail. This does not apply, however, under the Service Regulation. The Supreme Court has declared that the service of documents within the EU must adhere to the requirements provided for therein (until a domestic service agent or attorney is nominated). 14
These rules apply regardless of whether the recipient is an individual or a corporation.
vi Enforcement of foreign judgments
With effect from 10 January 2015, the Brussels Ia Regulation 15 replaced the Enforcement and Recognition Regulation. 16 The main features of the recast Regulation are the abolition of exequatur, changes to the lis pendens provisions addressing the problem of 'torpedo actions' as well as amendments to the rules relating to jurisdiction agreements. In addition, the Lugano Convention on Recognition and Enforcement applies to judgments of the Swiss, Norwegian and Icelandic courts. German domestic law may apply either if these rules do not apply or if it is necessary to apply German law to complete the provisions of bilateral treaties. The relevant provisions are contained in the Code of Civil Procedure and in the Recognition and Enforcement Implementation Act.
Under the Brussels Ia Regulation, a creditor seeking enforcement of a foreign judgment must present a copy of the judgment and a standard certificate issued by the court that rendered the decision to the enforcing court. It is no longer necessary to file a request for execution as it was under the exequatur procedure. This process is in line with Regulation No. 805/2004, which abolished the exequatur proceedings for uncontested claims in 2005 and introduced a uniform European enforcement order that is directly enforceable in all EU Member States (for which a creditor may apply to the competent court of its own jurisdiction).
The grounds for non-recognition of a judgment under both the Brussels Ia Regulation and the Lugano Convention are essentially the same as under the Code of Civil Procedure. They are listed in Article 45 of the Brussels Ia Regulation, Article 34 of the Lugano Convention and Section 328 of the Code of Civil Procedure. The only difference is that, under the Code, recognition is also denied if reciprocity is not guaranteed or if the foreign court has no jurisdiction in accordance with German law.
vii Assistance to foreign courts
Service of foreign documents follows the same rules as service of German documents abroad. In addition, under Brussels Regulation No. 1206/2001, any court of a Member State may request that a German court takes evidence in Germany. In doing so, it may directly approach the competent German local court.
German authorities will also execute requests for the taking of evidence under the Hague Evidence Convention and the provisions of various bilateral treaties. Under the Hague Evidence Convention, the foreign authority sends a letter of request to the designated German central authority (usually the Ministry of Justice of the relevant German federal state). Such a letter must comply with several substantive and formal requirements and be accompanied by a certified translation. The German authority may refuse execution only on limited grounds.
Requests of foreign courts for information on German law are subject to the European Convention on Information on Foreign Law. The foreign court will send its request to the Federal Ministry of Justice in Berlin.
viii Access to court files
In principle, oral hearings, including court decisions and final judgments, are public (exceptions apply to proceedings before family courts). Only the parties to the litigation, however, may inspect the court files. Any other person seeking inspection of files must demonstrate a legally recognised interest to inspect all or part of the court records of a particular case. Another possible way for third parties to gain access to the files is to intervene in the pending action if the requirements of a third-party intervention are met.
ix Litigation funding
Third-party litigation funding by specialised litigation financing entities, usually insurance companies, has been permitted since the late 1990s.
According to one model, the insurer covers all court and attorneys' fees in exchange for a share of up to 50 per cent of what is recovered in successful claims or settlements. According to a more recent model, companies solely founded for such a purpose may acquire the entire claim.
In principle, lawyers must not fund actions by means of contingency fees or conditional fees. Pursuant to narrowly construed exceptions in the Lawyers Remuneration Act, which were updated in 2021, contingency fees are permissible in exceptional circumstances where otherwise a plaintiff would be unable to pursue a claim for payment claims not exceeding €2,000 and for certain debt collection services.
