International Arbitration Comparative Guide

Author:Dr. Nicholas Kessler
Profession:Orrick
 
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1 Legal framework

1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime - for example, does it govern oral arbitration agreements?

The German rules governing arbitration are contained in the Tenth Book of the Code of Civil Procedure, Sections 1025 and following (the 'German Arbitration Act'). An official English translation of the Code of Civil Procedure can be found at www.gesetze-im-internet.de/englisch_zpo/index.html.

Following the concept of the UNCITRAL Model Law on International Commercial Arbitration, the German Arbitration Act generally applies only to arbitral proceedings whose seat is located in Germany (Section 1025, paragraph 1 of the Code of Civil Procedure). By way of exception, some specific provisions are also applicable to foreign arbitral proceedings, such as those on the assistance of state courts pursuant to Section 1050 of the code. The enforcement of foreign awards is dealt with in Section 1061 of the code.

1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?

In accordance with the UNCITRAL Model Law, the German Arbitration Act distinguishes between arbitration proceedings seated in Germany on the one hand and those with their seat abroad on the other. However, no distinction is made with regard to the nationality of the parties involved - that is, the German Arbitration Act does not distinguish between domestic arbitral proceedings involving German parties only and international arbitral proceedings involving foreign parties.

1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?

The German Arbitration Act largely incorporates the UNCITRAL Model Law. However, some notable exceptions exist, including the following:

stricter formal requirements for the arbitration agreement - this must be concluded in written form, a requirement which is particularly strict where consumers are involved; the right to request a decision from a national court on the admissibility of arbitration prior to the initiation of proceedings; and greater power of state courts to enforce interim relief. Further modifications of lesser importance include the following:

an obligation to apply the substantive law of the country with which the subject matter is most closely connected, in the absence of a choice of law clause; the time limits for the initiation of annulment proceedings; and an explicit provision that, unless the parties agree otherwise, the decision on the costs of the tribunal shall be based on the outcome of the proceedings.

1.4 Are all provisions of the legislation in your jurisdiction mandatory?

The German Arbitration Act provides for flexibility. Hence, many of its provisions can be modified by the parties by mutual agreement. Some notable examples of mandatory provisions concern:

waiver of the right to challenge the award (which cannot be excluded in advance); and the tribunal's obligation to treat the parties equally and to grant them the right to be heard.

1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?

There are no plans to amend the German Arbitration Act. The most recent change was enacted in 2013, when a provision was added recognising the conclusion of an arbitration agreement through bills of lading. However, the rules of the German Arbitration Association were recently revised with effect as of 1 March 2018.

1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?

Germany has been a signatory to the New York Convention since 30 June 1961. It has made only one reservation: with respect to Article I, paragraph 1, and in accordance with Article I, paragraph 3 of the New York Convention, Germany will apply the convention only to the recognition and enforcement of awards made in the territory of another contracting state.

1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?

Germany is also a signatory to numerous other international arbitration treaties, including:

the European Convention on International Commercial Arbitration; the International Centre for Settlement of Investment Disputes Convention; and the Energy Charter Treaty. In addition to these multilateral agreements, Germany has concluded various bilateral treaties, mainly concerning trade relations or investment protection. Some of these also include certain arbitration-related regulations, which will generally prevail over the national provisions in case of any conflict (see Section 1064, paragraph 3 of the Code of Civil Procedure). However, the practical relevance of such cases is limited, since they will arise only where bilateral treaty contains norms that are even more favourable than those provided by the German Arbitration Act.

2 Arbitrability and restrictions on arbitration

2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?

As a general rule, all disputes relating to pecuniary claims are eligible for arbitration. Claims for non-pecuniary claims are arbitrable to the extent that they can be the subject matter of a settlement. For example, matrimonial and parenthood matters and similar matters are excluded from arbitration. In addition, residential tenancy disputes are generally non-arbitrable, as are most labour law disputes. Special legal requirements apply to actions for nullification or rescission of shareholders' resolutions; however, these actions can, in principle, be referred to arbitration.

2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?

The German Arbitration Act does not provide for a specific seat of arbitration for certain disputes.

3 Arbitration agreement

3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?

In accordance with the written form requirement of Article 7, paragraph 2 of the UNCITRAL Model Law, German law provides that in order for an arbitration agreement to be valid, it must be contained either in a document signed by the parties or in an exchange of letters, telefaxes, telegrams or other means of communication which provides a record of the agreement.

In commercial transactions, if the arbitration agreement is contained in a document which was sent by one party to the other, the silence of the other party can be deemed as consent.

Stricter formal requirements apply if one of the parties is a consumer. In this case, the arbitration agreement must be contained in a separate document and must be signed by the parties personally (or electronically with a qualified electronic signature). These special formal requirements can be replaced by notarised form.

The arbitration agreement must further specify a dispute that is arbitrable (see above).

3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?

According to the doctrine of separability, the arbitration agreement on the one hand and the main contract on the other one must be treated as two separate contracts which are completely independent of each other...

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