The Evolving Role of AI in German Dispute Resolution
30 January 2025
Can you obtain a freezing order against the assets of a party where there is a real risk of the assets being dissipated? Can you prevent a party from breaking their contractual delivery obligation regarding a product you need for your own production, from destroying evidence, or from imminently breaching an obligation of confidentiality?
Where the dispute underlying urgent situations as outlined above is governed by an arbitration agreement, a party seeking interim relief may have several options. Below, we outline the options under German arbitration law.
The first consideration is whether the requisite arbitral tribunal has already been constituted.
If it has, most institutional rules as well as German arbitration law allow for interim decisions made by the arbitral tribunal. However, in case the respondent does not voluntarily comply with the arbitral tribunal's interim decision, enforcement of the interim decision may become necessary but may not always be possible. Currently, German arbitration law explicitly allows for the enforcement of interim decisions made by arbitral tribunals seated in Germany but is silent regarding measures of foreign arbitral tribunals. The law grants discretion to the courts as to whether they enforce an arbitral tribunal's interim decision, and it is controversial which criteria the courts need to apply when exercising this discretion. Under the upcoming reform of the German arbitration law ("the draft bill" dated 26 June 2024, available HERE (in German only)), German courts are to enforce interim measures awarded by German and foreign arbitral tribunals, without any element of discretion. Enforcement is only to be denied if one of the specific restrictive grounds stipulated in the new law apply.
If the arbitral tribunal has not yet been constituted, the parties may consider seeking a decision by an emergency arbitrator ("EA") if provided for under the governing institutional rules or applicable arbitration law. Neither the rules of the German Arbitration Institute (DIS) nor German arbitration law provide for an EA, but other institutions such as ICC do. Enforcement of an EA's order may prove difficult in Germany as the provisions of German arbitration law dealing with the enforcement of interim measures made by arbitral tribunals do not expressly extend to EA orders. This issue is also not clarified under the draft bill. In practice, however, EAs' decisions are often voluntarily complied with by the parties, in order to avoid the negative consequences non-compliance may have in the arbitration on the merits.
A third option for a party in need of interim relief is to apply to the German state courts. State court interim relief in Germany is available even in cases where there is an arbitration agreement in place, if arbitral proceedings are already pending and if the arbitration is seated outside of Germany.
Parties to an arbitration agreement therefore have several options when seeking interim relief. The reform of German arbitration law will make seeking relief from an arbitral tribunal a more attractive option than before. An application before an EA might also be an option, in certain circumstances. At the same time, interim relief before the German state courts will remain a viable option, given that German state courts are known to grant immediately enforceable interim relief decisions quickly and efficiently.
