Commercial Courts in Germany: A New Era for International Litigation
Mar 15, 2022
Introduction
For years, large corporations have been bypassing German courts in favor of foreign commercial or arbitration courts, seeking faster and more flexible legal processes in English. To address this trend, Germany’s Federal Ministry of Justice, led by Marco Buschmann (FDP), introduced plans in January 2023 to enhance Germany's legal system. The goal? Establish Commercial Courts that allow proceedings in English, making Germany a more attractive hub for international business disputes.
The Concept of Commercial Courts
In today’s globalized world, international trade and cross-border supply chains are driving a rise in transnational disputes. Businesses require swift resolution to maintain their competitiveness. However, German courts have struggled to meet these needs, prompting many companies to seek legal solutions abroad.
The Commercial Courts aim to change that by providing a competitive alternative:
Proceedings in English: One of the major draws is the ability to conduct entire commercial litigation in English, which could attract foreign companies and investors to resolve their disputes in Germany.
Focus on Exports and Business Relations: The new courts are designed to serve exporters and large businesses, encouraging them to choose Germany as their preferred venue for legal matters, bolstering the country’s economy and reputation as a business-friendly location.
Current Challenges
Currently, conducting proceedings in English is possible but limited. While oral proceedings can be held in English if all parties agree, all legal documents, including pleadings and rulings, must be in German. This language barrier, along with insufficient protection for trade secrets, has made it difficult for German courts to compete with international arbitration venues.
What Will Change? The new plan aims to overhaul these limitations by:
Allowing entire proceedings, from filings to final rulings, to be conducted in English.
Establishing special commercial chambers in higher regional courts (Oberlandesgerichte) to handle cases in English.
Providing a mechanism for the protection of trade secrets throughout the litigation process, from the time a claim is filed to the conclusion of the case.
Offering video hearings to modernize the courtroom experience, enabling remote testimony and evidence gathering.
A Step Forward for German Courts
The reforms are part of the broader agenda outlined in Germany's coalition agreement, which includes strengthening the country’s judicial infrastructure in light of globalization. Commercial Courts, with specialized judges and modern technology like word-for-word transcripts during hearings, are expected to streamline the resolution of complex commercial disputes, particularly those involving significant amounts of money (e.g., disputes exceeding 1 million euros).
Outlook: What Does This Mean for Businesses?
These changes position Germany as a serious contender in the arena of international commercial litigation, making it easier for global companies to opt for German courts over private arbitration or foreign venues. By introducing English-language proceedings and enhancing protections for sensitive business information, the reforms aim to reverse the decline in commercial cases heard by German courts, which saw a 44% decrease between 2010 and 2020.
Conclusion
The establishment of Commercial Courts in Germany marks a crucial reform in the country's judicial system. These specialized courts will offer a more attractive option for international disputes, especially for businesses engaged in cross-border trade. Time will tell if these courts can truly compete with established foreign institutions, but one thing is clear: Germany is ready to embrace a more global, modern legal system.
Need Legal Assistance?
If you have questions about international disputes or require legal support in English, our law firm specializes in German and international court proceedings. Contact us for a consultation on your specific legal needs.