Government proposal for English-language chambers and commercial courts – will Germany be bolstered as a venue for international commercial disputes?

Government proposal for English-language chambers and commercial courts – will Germany be bolstered as a venue for international commercial disputes?

The German Federal Ministry of Justice (BMJ) has published a key issues paper on strengthening the competitiveness of the German judiciary in international commercial disputes. It remains to be seen whether this can be achieved.

Numerous other states such as the Netherlands, Belgium, France, Singapore and Dubai have implemented commercial courts with an international focus to attract cross-border disputes. Now, the German government seeks to catch up and enhance Germany's attractiveness as a venue for international commercial disputes. As agreed in the German government's coalition agreement, swift and efficient court proceedings tailored to the needs of the economy shall be introduced. Thereby, the German Government intends to gain ground over private arbitration proceedings, which are often preferred when dealing with (international) commercial disputes. The paper, published by the BMJ, addresses the following key issues:

• Parties shall be able to conduct certain commercial disputes in English before regional courts (Landgerichte), provided that the parties agree and there is an objective reason. The entire proceedings, including written submissions, hearings and the judgement would be in English. The same would apply with regard to any appeals to higher regional courts (Oberlandesgerichte). The German federal states are to be allowed to jointly establish English-speaking tribunals at regional courts and special senates at higher regional courts (the so-called 'commercial courts') that are competent to judge on appeals.

• Where the value in dispute exceeds one million euros, the parties shall be free to skip the regional court level and bring the action directly before a commercial court. Only specialized judges with very good language skills shall be selected for the commercial courts. As before arbitral tribunals, verbatim transcriptions of the oral hearings are to be provided.

• Parties shall be able to appeal to the Federal Court of Justice (Bundesgerichtshof) against commercial court decisions. It shall also be possible to conduct the proceedings before the Federal Court of Justice in English, provided that the relevant senate gives its consent.

• The protections for trade secrets are to be expanded. Up to now, it is only possible to restrict the public access to the hearings in exceptional cases. There are no further restrictions on the use of information obtained during civil proceedings. Files can be inspected by third parties. Henceforth, business secrets disclosed in the course of court proceedings are subject to specific protection by prohibiting the disclosure of those information outside the proceedings.

• The use of videoconferences shall be promoted in proceedings before the commercial courts. Virtual hearing shall be possible, if the parties agree.

The key issues paper is a first step in the right direction: Having proceedings conducted in English, will make it easier for foreign companies to directly follow the course of their proceedings. The fact that the court of first instance could be skipped would reduce the long duration of proceedings in commercial disputes before German courts, an issue that is also perceived abroad. If the reform proves to be successful, it would push Germany's position in the competition for attractive judicial venues (which has long since flared up). However, a complete equivalence of German civil procedure with commercial arbitration cannot be achieved by the proposal. Proceedings before commercial courts would still be public in principal, their confidentiality is not guaranteed to the same degree as before arbitral tribunals. Moreover, a key advantage of arbitration is the considerable flexibility of the proceedings. By means of the case management, the parties and the tribunal can not only make arrangements on how the proceedings are organised but also with regard to rules of evidence. Such flexibility cannot be provided by a commercial court, which is bound to the rather inflexible Code of Civil Procedure. 

Moreover, one import important question remains unanswered by the key issues paper: Is there a sufficient number of judges willing and able to conduct complex commercial proceedings in English? This will require more than just generally good foreign language skills. Without extensive training programmes, it will hardly be possible to staff the envisaged English-speaking chambers and senates in the necessary quantity.  Hopefully, the BMJ will also develop solutions for this practical problem.