Establishment of commercial courts and chambers ‘makes German courts fit for international cases’

Businesses may agree to have their cases heard in English by specialised commercial courts provided the amount in dispute reaches at least €500,000. Whereas ordinary court proceedings in Germany foresee up to three instances, judgments by the specialised commercial courts can only be appealed once to the Federal Court of Justice. It is therefore expected that agreeing on the jurisdiction of a commercial court will help parties to have their disputes resolved more quickly.

For disputes with a lower amount in dispute, business can agree on the jurisdiction of the so-called commercial chambers if they want their case to be handled in English by judges specialised in the subject matter. Appeals against commercial chambers’ decisions can then be heard by a Court of Appeal or a commercial court with a potential further appeal round at the Federal Court of Justice.

Since 1 April, German federal states have had authorisation to set-up and authorise specialised courts for commercial matters, which can handle cases entirely in English. These courts may look at civil disputes between businesses except in cases involving industrial property rights, copyright and unfair competition law.

Carlo Schick, an expert in dispute resolution at Pinsent Masons, said: “The specialisation of commercial courts tied with their procedural flexibility, such as extended confidentiality options and liaising with the parties on procedural options in an early case management conference, provide businesses with an alternative to arbitration.”

“However, businesses should carefully consider in each case whether agreeing on the jurisdiction of a commercial court is suitable for the respective contract,” he said.

Johanna Weißbach, dispute resolution expert at Pinsent Masons, added: “When agreeing on the jurisdiction of a commercial court one should be aware that the amount of a later dispute might not reach the €500,000 threshold to allow the case to be handled by the commercial court. To not end up in ‘regular’ German court proceedings, this scenario should be reflected in the jurisdiction clause.”

Currently, six federal states have authorised and established commercial courts in Stuttgart, Bremen, Düsseldorf, Celle, Hamburg and Berlin. Further commercial courts will be established on 1 June in Munich and likely by the end of the year in Frankfurt and Saxony.

Several of the already established commercial courts specialise in matters ranging from freight and logistic services to supply chain and M&A disputes. 

Commercial chambers have already been established in Stuttgart, Berlin, Hamburg, Hannover, Braunschweig, Oldenburg, Düsseldorf, Bielefeld, Essen and Cologne.

The legislation provides avenues for specialisation of commercial chambers. The commercial chambers in Bielefeld and Essen specialise in renewable energy law, and Cologne’s in information and media technology, for example.

Surprisingly, not all federal states have ensured that appeals against decisions of specialised commercial chambers can be heard by equally specialised commercial courts. For instance, the commercial chamber in Bielefeld specialises in renewable energy disputes. The commercial chamber in Bielefeld resides in the district of the Court of Appeal in Hamm, which would consequently be competent to hear appeal proceedings under German civil procedure law. However, there is no commercial court at the Court of Appeal in Hamm. Appeal proceedings in renewable energy disputes instead fall within the competence of an ordinary, unspecialised, Court of Appeal. This may not be the parties’ preferred venue for appeal proceedings.

Weißbach said: “The system of commercial chambers and commercial courts is still developing. Particularities like the specialisation of the commercial court competent for potential appeal proceedings need to be considered when drafting jurisdiction clauses in favour of commercial chambers.” 

Although the commercial courts and chambers can be an attractive alternative to arbitration in some cases, this may not be true for everyone, according to Schick: “For disputes involving parties outside the European Union, arbitration agreements might still remain the favourable choice when it comes to the enforcement of awards”.
“While arbitral awards can be enforced internationally through the New York Convention, judgments by a commercial court or commercial chamber would have to take the usual path of recognition through national civil procedure law that can be tricky and lengthy,” he said.