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11.06.2021 | KPMG Law Insights

Conflict Resolution & (Alternative) Dispute Resolution – Commercial Courts – New Opportunities for International Law Enforcement in Germany

Commercial Courts – New Opportunities for International Enforcement in Germany

The new Commercial Courts offer internationally operating companies new opportunities to enforce their rights in Germany.

For a long time, London was the top address for international litigation. Since Brexit and thus the UK’s withdrawal from the European enforcement area, the Commercial Court of London in particular has lost some of its former outstanding importance. This gap could be closed in Germany. After all, what could be more natural than for the largest economic power in Europe to also take on a leading role in the area of jurisdiction?

This could counteract the trend that more and more disputes with an international dimension are being brought before arbitration courts abroad instead of before the German chambers for commercial matters. The English language plays a significant role in this. In order to make the state courts in our country more attractive again for internationally oriented clientele, some federal states have already seized the opportunity and have set up a quasi-international jurisdiction.

In Baden-Württemberg, for example, there has been a new chamber for international commercial disputes at the Mannheim and Stuttgart regional courts since November 1, 2020, in the form of the so-called “Commercial Court”. Here, internationally active companies can, for example, settle their disputes in the areas of commercial and corporate law, and in Mannheim they can also settle disputes arising from banking and financial transactions. In some cases, the Commercial Court in Baden-Württemberg has a minimum dispute value of EUR 2 million, for example in disputes arising from mutual commercial transactions.

The international positioning is advantageous for Germany as a business location, as trust is strengthened in cooperation with German companies with jurisdiction in Germany. In addition, there is the transparency of the procedure in the event of a case. It is well known from litigation in other countries: in addition to the foreign legal system, there is often a language of which the client and not infrequently also the local lawyer are not sufficiently proficient. English as a worldwide correspondence language helps a lot.

In certain areas, Germany has long had jurisdictions with an international focus, such as the long-established maritime court in Hamburg. In the Hanseatic city and also in Frankfurt, chambers have also existed for some time at the regional courts where hearings can be conducted in English.

According to a current legislative initiative of the German states of Hamburg and North Rhine-Westphalia, the states are now to be authorized to establish chambers for international commercial matters at the regional courts as well as special appellate panels at one higher regional court per state. It should then be possible to conduct the proceedings entirely in English, which includes not only the oral proceedings, but also the pleadings and documents introduced into the proceedings, as well as the judgment at the end. Furthermore, the parties shall be able to request a verbatim record of the proceedings if they so wish.

To the extent that a country does not wish to make use of the authorization to establish its own Commercial Court, it shall be able to join the Commercial Court of another country by means of an international treaty. The jurisdiction of such “international” panels often results from a choice of court agreement, if the parties have already recognized the advantage of a court hearing in English at the time of entering into the contractual relationship. While the English language of negotiation is increasingly making its way into the German courts, the dispute is still decided substantively according to German law. The procedural norms of the ZPO and the GVG also apply.

There is much to suggest that the new English-language chambers will strengthen the attractiveness of Germany as a legal location. German courts are already highly regarded internationally, due in particular to the high-quality training of judges, their personal independence, the German Code of Civil Procedure, and the transparency of costs. If now a structured internationality through fully English-language court proceedings prevails in the German court landscape, this will do the rest.

The demands on the parties involved in proceedings before a Commercial Court should not be underestimated. The Commercial Court Stuttgart / Mannheim, for example, advertises on its website that it has “excellently qualified and experienced judges with excellent knowledge of commercial law” who are “able” to conduct the hearing in English as requested by the parties, so that translations of English-language documents are said to be just as unnecessary as intermediary interpreters. This claim may rightly also be made of the parties’ representatives involved in the proceedings. In addition to the technical expertise already required in such relevant proceedings, the lawyers must have a proven routine in the English language. It is not enough to have “business fluent” English, which is now a prerequisite in international law firms when starting a career. There is an immense difference between providing legal advice, drafting contracts, and conducting meetings in English, and entering the ring for English-only litigation with experienced native-speaking colleagues on the other side.

KPMG Law not only advises its clients on all aspects of commercial law, but also has proven expertise in litigation. The lawyers we employ in international legal disputes are accustomed to operating in an English-speaking environment and, in this respect, to representing the interests of our clientele at a high level, even in litigation.

For companies operating internationally, the Commercial Courts in Germany offer new perspectives which must be exploited both at the outset in the structuring of contractual relationships and in the event of any disputes.

We are at your disposal for all questions concerning the Commercial Court and disputes with an international dimension – this also applies, of course, to an impending legal dispute in order to avoid possible disputes.

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