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German Federal Ministry of Justice publishes Draft Bill for the Modernisation of Arbitration Law

Tweaks and updates to maintain Germany’s attractiveness as a seat of arbitration: In addition to a number of small changes in the details of German arbitration law, the Draft aims to better align arbitration-related litigation such as challenge and recognition proceedings with the recently-created German Commercial Courts, which conduct high-volume commercial disputes entirely in English. Moreover, in a return to a previous version of German arbitration law, formalities requirements for arbitration agreements will be largely abolished in business-to-business contexts.

I. Fine-tuning, not overhaul

The Federal Ministry of Justice’s Draft Bill (here) is aimed at tweaking a number of minor points in the tried-and-tested German arbitral law, contained in Book 10 of the Civil Procedural Code. Since the last major update took place over 25 years ago, modifications were necessary to reflect technological progress, but also to react to changes in best practice in domestic and international commercial arbitration, for example the now-ubiquitous use of video conferencing. The Draft’s aim, reflected in its publication in both German and English – a rarity in the German legislative process –, is explicitly to “further … improve the competitiveness of the German arbitration law at the international level.” As a result, much of the Draft reacts to developments in Austria, France and Switzerland as reference jurisdictions, as well as to trends in international arbitration more generally.

II. Integration with the new Commercial Courts

Perhaps the Draft’s most significant feature is increased integration between (international) arbitration and the recently created German Commercial Courts, which hear high-value business claims entirely in English and aim to compete with institutions such as the English High Court and rival courts in jurisdictions such as France or the Netherlands. Drawing on the linguistic and technical expertise available at the German Commercial Courts, under the terms of the Draft these can be endowed with exclusive competence to hear arbitration-related disputes such as challenge or enforcement proceedings. Both proceedings and judgments are in English, with a German translation included for enforcement purposes. Even for those issues which – like evidence-gathering or enforcement – fall within the competency of lower-level courts, the Draft authorises the use of English-language documents unless the relevant court explicitly demands a translation. While this tends towards greater use of English, a point worth highlighting is that proceedings before the German Federal Court of Justice can only be conducted in English where that court agrees, meaning there is as yet no guarantee that a dispute commenced in English will remain in this language throughout.

Please download the complete client information here.

This client information contains only a non-binding overview of recent developments in German competition law and is not meant to replace legal advice. In case of comments or questions, please contact:

Prof. Dr. Jochem Reichert
Prof. Dr. Ben Steinbrück
Justin Friedrich Krahé


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