Reform of German Arbitration Law: Initial Key Point

"German law is already arbitration-friendly, but good things can always be made better." With these words, Dr Marco Buschmann German Federal Minister of Justice comments the initial key points of the reform of German arbitration law. These key points [Eckpunkte_Schiedsverfahrensrecht.pdf (bmj.de)] are intended to make Germany more attractive and competitive both as a place for arbitration and as a place for state court proceedings:

• The form-free conclusion of arbitration agreements between commercial business partners is intended to eliminate possible legal uncertainties that arise when arbitration agreements are concluded orally or in electronic form only. No changes are planned for arbitration agreements with consumers.
• In multi-party arbitration proceedings mechanisms for the appointment of arbitrators are to be introduced, which are to guarantee a clear and legally certain procedure, especially if multiple parties on one side of the proceedings disagree.
• The practice of conducting arbitration hearings by video conference, which is already in place today, is to be codified.
• Furthermore, arbitral awards shall be published with the consent of the parties. Thereby, arbitral awards may contribute to the further development of the law. Transparency would be increased.
• While it was previously merely possible to set aside positive decisions on the jurisdiction of arbitral tribunals pursuant Sec. 1040 (3) sentence 2 of the German Code of Civil Procedure (ZPO), in future this would also be possible for negative decisions.
• There is to be a further simplification for English-language arbitration proceedings and documents in English. In future, these will no longer have to be translated for proceedings before state courts that are conducted in conjunction with arbitration proceedings. This will significantly reduce the duration and expense of enforcement and annulment proceedings. This should also affect assistance of state courts in taking of evidence pursuant Sec. 1050 ZPO.
• To the extent the federal authorities have set up commercial courts, these shall be responsible for setting aside and declaring arbitral awards enforceable. (Regarding commercial courts see also the blog post of 7 February 2023: Globalisation of court proceedings through so-called commercial courts | Advant Beiten (advant-beiten.com)).

In addition to these projects, further measures are to be taken to accelerate both proceedings and the enforcement of decisions. In particular, it should be easier to enforce arbitral decisions regarding interim relief. This even applies if the place of arbitration is abroad.

The German Federal Ministry of Justice also provides an outlook on which other projects it will work on in the near future. The relevant keywords are emergency arbitrators, dissenting opinions, the concentration of jurisdiction across federal borders in Germany and the allocation of the assistance by state courts to the Higher Regional Courts.

Since it has been 25 years since the last reform of arbitration law, the project is to be supported without further ado. It remains to be seen which of the BMJ's proposals will make it into the draft law. As experience with institutional arbitration has shown, the proposed opt-in provision for the publication of arbitral awards is unlikely to achieve the desired goal. We will keep you up to date on this.

Dr Ralf Hafner

Tobias Pörnbacher