Draft Bill Commercial Courts: Booster for Civil Proceedings or a half-baked Idea?

The number of incoming cases at German civil courts has been declining for years [BMJ | Pressemitteilungen | Rückgang der Eingangszahlen bei den Zivilgerichten: Forschungsbericht an das Bundesjustizministerium übergeben]. On 25 April 2023, the Federal Ministry of Justice presented a draft bill [BMJ | Aktuelle Gesetzgebungsverfahren | Gesetz zur Stärkung des Justizstandortes Deutschland durch Einführung von Commercial Courts und der Gerichtssprache Englisch in der Zivilgerichtsbarkeit], which is intended to counteract the declining case numbers by establishing so-called Commercial Chambers and Courts and allowing proceedings to be conducted in English. However, the draft bill appears to be more of a cost-efficient way of implementing the requirements of the coalition agreement than actually increasing the competitiveness of the German civil court system. But let us wait for the coming drafts and discussions in parliament. Our blog already reported on the first key points of the Commercial Courts in February [Globalisation of court proceedings through so-called commercial courts | Advant Beiten (advant-beiten.com)].

According to the draft bill, the following proposals, among others, are to be implemented:

The federal states will be authorised to set up senates at the higher regional courts or highest regional courts, which will have jurisdiction for civil law disputes between entrepreneurs exceeding an amount in dispute of EUR 1 million. The parties may expressly or tacitly agree on the jurisdiction of these commercial courts. The federal states are per-mitted to bundle jurisdiction of the commercial court in one court and thus save resources across the federal states.
The federal states may provide for English as the language of proceedings at the commercial chambers of the regional courts and the commercial courts. This is intended to facilitate proceedings before these courts: Translations of English-language documents are no longer required. However, the courts are free to call in an interpreter at any stage of the proceedings. In the revision proceedings, it is then up to the Federal Court of Justice whether the proceedings are continued in German or English.
At the request of a party, information classified as confidential under section 2 No. 1 of the Act on the Protection of Trade Secrets shall be protected.
The involvement of third parties, e.g. by way of a notice of dispute, can quickly negate the advantage of English-language proceedings: The third party can object to the language of the proceedings within two weeks after the written pleading involving the third party.
The Commercial Courts should explicitly hold procedural conferences, so-called case management conferences or CMCs. CMCs have been common practice in arbitration proceedings for years in order to structure and actively manage arbitral proceedings.
Also reproduced from arbitration practice is the possibility of producing live verbatim transcripts.

Commercial Courts have certain parallels to arbitration without really being more attractive. The great advantage of arbitration is not so much the choice of any language but rather the expertise of the arbitrators: the parties can determine the arbitrator they consider most suitable. Commercial Courts are a first step towards modernising German civil procedure. However, they do not solve its fundamental problems. The current draft bill already contains some points that reduce the attractiveness of these courts. One example is that the amount in dispute must exceed EUR 1 million. However, the complexity and internationality of proceedings are rarely related to the amount in dispute.

Tobias Pörnbacher
Christina Weinzierl