In January 2023, the German Federal Ministry of Justice published “Guidelines for the strengthening of the courts in commercial disputes and for the introduction of (English speaking) commercial courts” (Guidelines). The Guidelines are the first step in implementing a legislative project of the labor/liberal/green coalition. In their coalition agreement, the three parties had agreed to “allow the introduction of English-speaking specialized chambers for international commercial and business disputes.”
Currently, the possibilities to conduct civil/commercial proceedings in English before German courts are limited. Hearings can be held in English without an interpreter if the parties and the court agree, but all written submissions to the court, the minutes of the hearings and all court decisions must be in German. This is considered a reason why major commercial disputes are often referred to courts in other jurisdictions or to arbitration.
The proposed measures are intended to strengthen Germany’s position as a judicial and business center and to enable German courts to compete with recognized foreign commercial courts and arbitration centers such as London, Singapore, Paris, and Amsterdam. With the Guidelines, the ministry wants to offer fast, efficient, and attractive court proceedings that are geared to the needs of business.
The key changes proposed by the Guidelines are:
1. Proceedings in English before the district courts
If the proposal is implemented, the German federal states will be authorized to allow certain commercial litigation to be conducted in the English language before selected district courts. The prerequisites will be that (a) the parties agree on English as the language of the proceedings and (b) an objective reason for the choice of this language exists. The proceedings, including the court decision, shall then be conducted entirely in English including possible appeal proceedings. The German states will be entitled to create joint English-speaking chambers for more than one state.
2. Creation of “Commercial Courts” at the Courts of Appeal
The Guidelines propose that the federal states should be allowed to set up special first-instance panels at the courts of appeal (“Commercial Courts”) for large commercial disputes. If the value of a dispute reaches or exceeds a certain threshold, for example EUR one million, the action could be brought before a Commercial Court (instead of a district court) if all parties agree. The parties would be able to choose English language proceedings before the Commercial Court if there is an objective reason.
For proceedings before the Commercial Courts, the Guidelines propose that the minutes of the hearings should be verbatim records (as is common in arbitral proceedings) and that the parties should be able to read the verbatim record during the proceedings.
As in the case of the English-speaking chambers at the district court level, several states could create joint Commercial Courts under the Guidelines. The appeal against a decision of a Commercial Court would be allowed to the Federal Supreme Court. The Guidelines suggest that the appeal proceedings should also be conducted in Englisch if the proceedings before the Commercial Court were conducted in the English language.
3. Translation, business secrets, public hearings
To enable the enforcement in Germany and to support the further development of the law, the Guidelines propose that the English-language decisions of the district courts, the Commercial Courts and the Federal Supreme Court should be translated into German and published.
As to trade secrets, a more comprehensive protection than in today’s civil proceedings is suggested. The Guidelines propose to extend the procedural regulations under the Business Secrets Protection Act to all civil proceedings. At present, the courts can exclude the public from the hearing (or part of it) if an important trade secret is discussed. In the future, the protection of trade secrets may be extended to the time when the lawsuit is filed. Moreover, information classified as confidential should not be allowed to be used or disclosed outside of legal proceedings.
4. Video hearings
Prior to the Guidelines, the Federal Ministry of Justice had already presented a draft bill to promote the use of video conferencing technology in civil litigation. The goal of the bill is to make the existing civil procedural regulations for conducting video hearings and for recording video evidence more flexible and practical. The Ministry of Justice believes that this bill will also strengthen the use of conferencing technology in proceedings before the Commercial Courts.
5. Summary
Discussions about strengthening of Germany as an attractive place for the resolution of international commercial disputes are not new. Hopefully, this discussion will gain momentum and the Guidelines will become an important step towards the modernization of commercial litigation in Germany. If implemented, the Guidelines would make German courts more competitive and would strengthen Germany as an international center for dispute resolution. However, in view of the major challenges the German government is facing, it remains to be seen whether English-speaking Commercial Courts will remain an important concern for the government and the Guidelines will be followed by a draft bill before the end of this legislative period.
